Third-Party Risk Management Best Practices for Retail

BLOG 5 MINS | February 5, 2020
Third-Party Risk Management Best Practices for Retail

To say the retail industry is highly dependent on suppliers is an understatement.

Because vendors handle so much sensitive information about a retail business and its customers, there are a lot of hidden dangers in using them. Suppliers could potentially expose your retail business to legal, reputational, financial, and cybersecurity risks – whether they know they’re doing it or not.

While you can’t stop using suppliers as a retailer, you can calculate and treat risks when purchasing goods and services from them.

In fact, third-party risk management (TPRM) should be a critical aspect of any modern information security program in the retail industry. Using TPRM software allows retailers to keep sensitive data confidential, meet regulatory standards, and prevent operational mistakes.

Watch our video for more best practices for retailers and PCI DSS compliance.

Relationship Lifecycle Management

A third-party risk management (TPRM) strategy and solution gives those in the retail industry the power to manage the entire supplier relationship lifecycle. Retailers can do everything from streamline supplier selection, evaluation and contracting, as well as ongoing monitoring and vendor offboarding.

The benefits of purpose-built TPRM software are simple, but compelling:

  • Assess third-party risks and performance
  • Identify bottlenecks and gaps in the supply chain
  • Collaborate and communicate more effectively with suppliers

Automated relationship lifecycle management is the smart approach to TPRM because it reduces manual errors and saves tedious man-hours of work. When a retailer understands the risk level of a supplier, it can leverage that information to fuel needed changes such as regulatory compliance. This allows them to avoid drowning in third-party risk, too.

Compliance with Regulations

Recently, regulatory changes and new laws are making third-party risk a board-level conversation. This makes it harder for retailers and their suppliers to execute processes efficiently and within the parameters of these legal requirements. 

Third-party risk management meets these regulatory challenges head on.

Retailers need TPRM software that supports standards, frameworks, and laws specific to the retail industry, including:

TPRM takes one of the most onerous parts of dealing with suppliers and turns it into a transparent process for all parties involved. It streamlines communication so everyone is on the same page. Beyond data security, a well-run TPRM program is one of the best ways to help your retail business meet its legal obligations with recordkeeping.  

Supplier Risk and Performance Monitoring

It’s one thing for a retailer to understand it needs to track the actions of its suppliers. It’s quite another to execute it.

Fast-paced technological change, multiple vendors, and a myriad of moving parts means manual monitoring is out of the question. In addition, documenting what suppliers are doing isn’t only good for business, it’s vital for PCI DSS compliance. 

Modern technology makes it possible to automate the ongoing monitoring of third-party service providers.

TPRM software gives retailers the tools to track vendor compliance over time, as well as changes to the scope or nature of the supplier relationship. For example, a supplier may be able to take on more or less responsibility over time. As new regulations emerge, they may also may fall behind on compliance. Retailers can also gain access to ongoing oversight of risks, contracts, and responsibilities for each supplier.

Watch our video for more best practices for retailers and PCI DSS compliance.

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