Third-Party Risk Management

The process of identifying, assessing, and mitigating privacy and security risks arising from relationships with external vendors, service providers, and business partners who access or process personal data. Effective third-party risk management recognizes that organizations remain liable for vendor violations even when not directly in control. Key components include: vendor screening and due diligence before engagement, risk assessment based on data sensitivity and processing activities, contractual protections including data processing agreements, ongoing monitoring of vendor compliance and security, incident response and breach notification obligations, audit rights and periodic reviews, and offl-boarding procedures when relationships end. Organizations should: maintain vendor inventories categorized by risk level, implement tiered due diligence based on risk, require security questionnaires and certifications, establish vendor performance metrics, monitor vendor incidents and breaches, and maintain termination rights for serious violations. As data processing ecosystems grow complex, third-party risk becomes a leading privacy concern—most breaches involve third parties.