Why It Matters
Organizations increasingly rely on third parties for critical functions — cloud hosting, payroll, payment processing, IT support. When a vendor suffers a breach, your organization is affected too. Some of the largest data breaches in history (Target, SolarWinds, MOVEit) originated through third-party vulnerabilities. Regulators hold organizations accountable for their vendors' security and compliance.
The TPRM Lifecycle
1. Identification and Inventory
- Maintain a complete register of all third parties
- Classify by criticality and data access level
- Map data flows to and from each vendor
2. Risk Assessment
- Evaluate security posture (questionnaires, certifications, audit reports)
- Assess financial stability and business continuity
- Review regulatory compliance status
- Check sanctions lists and adverse media
3. Due Diligence and Contracting
- Verify claims through documentation review
- Negotiate appropriate contract clauses (DPAs, SLAs, security requirements)
- Define audit rights and breach notification obligations
- Establish exit and transition plans
4. Ongoing Monitoring
- Continuous security monitoring (threat intelligence, rating services)
- Periodic reassessment (annual or based on risk level)
- Incident monitoring and response coordination
- Performance reviews against contractual obligations
5. Offboarding
- Secure data return or deletion
- Revoke access and credentials
- Verify compliance with contractual obligations
- Document lessons learned
Regulatory Requirements
| Regulation | Third-Party Requirements |
|---|---|
| GDPR | Data Processing Agreements (Article 28), processor due diligence, sub-processor authorization |
| NIS2 | Supply chain security assessment, vendor risk management as a required security measure |
| DORA | ICT third-party risk management framework for financial entities |
| SOX | Controls over outsourced processes affecting financial reporting |
| HIPAA | Business Associate Agreements for PHI access |
| PCI DSS | Service provider compliance validation |
Key Regulation
- GDPR Article 28 — processor obligations and DPA requirements
- NIS2 Article 21(2)(d) — supply chain security
- DORA (Regulation 2022/2554) — ICT third-party risk for financial services
- ISO 27001 Annex A.5.19–5.22 — supplier relationship security