Jonathan PrewittThe postings on this site are my own and do not necessarily represent FTI Consulting’s positions, strategies or opinions.
Welcome back to the grand game of Third-Party Risk Management! We’ve navigated the labyrinth of vendor audits, and now it’s time to take a step back and look at the bigger picture. Today, we’re diving into strategic planning in TPRM—because if you’re treating it like a game of checkers, you’re already losing. This is chess, folks, and it’s time to start thinking several moves ahead.
The Chessboard of TPRM: Why Strategy Matters
Let’s be clear: TPRM isn’t just about reacting to problems as they arise. If you’re constantly putting out fires and scrambling to fix issues on the fly, you’re playing checkers—moving one piece at a time with no real plan. But in the high-stakes world of business, you need to be playing chess, where every move is part of a larger strategy, carefully calculated to outmaneuver risks and keep your company on top.
Strategic planning in TPRM means thinking beyond the immediate issues and considering how third-party risks can evolve over time. It’s about anticipating future threats, planning for worst-case scenarios, and positioning your organization to handle whatever comes your way. In short, it’s about being proactive, not reactive.
Anticipating the Opponent’s Moves: The Future of Vendor Risks
The first rule of strategic planning? Always assume that risks will evolve. Just like a skilled chess player anticipates their opponent’s moves, you need to anticipate how vendor risks might change over time. What might seem like a minor issue today could turn into a major crisis tomorrow if you’re not prepared.
Consider the rise of new technologies, changes in regulatory environments, and shifts in the global economy. Each of these factors can introduce new risks or exacerbate existing ones. The vendors that are reliable today might struggle to keep up with these changes, and if you’re not thinking ahead, you could find yourself in checkmate.
Building a Risk-Aware Culture: Everyone Plays a Role
In chess, every piece on the board has a role to play, and the same is true in TPRM. You can’t manage third-party risks effectively if only a few people in your organization are aware of them. Strategic planning requires building a risk-aware culture where everyone understands the potential threats posed by third-party vendors and knows their role in mitigating them.
This means training your staff to recognize red flags, encouraging open communication about potential risks, and fostering a mindset that values caution over complacency. When everyone is playing the game with the same level of awareness, your organization is much better positioned to respond to risks quickly and effectively.
The Long Game: Balancing Risk and Opportunity
Strategic planning isn’t just about avoiding risks—it’s also about recognizing and seizing opportunities. In chess, sometimes the best defense is a good offense, and the same is true in TPRM. By carefully analyzing your vendor relationships, you can identify opportunities to strengthen your position, improve your processes, and even gain a competitive advantage.
For example, a vendor that excels in a rapidly evolving area of technology could offer your company the innovation it needs to stay ahead of the curve. But to capitalize on that opportunity, you need to be confident that the vendor can handle the associated risks. Strategic planning helps you balance these considerations, so you’re not just avoiding threats but actively positioning your company for success.
Adapting to Change: The Key to Winning
The best chess players are those who can adapt to changing circumstances, and the same is true in TPRM. No matter how well you plan, there will always be unforeseen events—new regulations, unexpected vendor issues, or sudden market shifts. The key is to be flexible and willing to adjust your strategy as needed.
This means regularly reviewing your TPRM strategy, updating your risk assessments, and being willing to pivot when necessary. A rigid approach might work in the short term, but over time, it will leave you vulnerable to the unexpected. The best strategies are those that can evolve along with the risks they’re designed to manage.
The Final Move: Strategic Partnerships
Ultimately, strategic planning in TPRM isn’t just about managing risks—it’s about building strong, resilient partnerships with your vendors. Just like in chess, where a well-coordinated attack requires multiple pieces working together, successful TPRM requires collaboration between your organization and your vendors.
By approaching your vendor relationships with a strategic mindset, you can foster partnerships that are not only more secure but also more productive and beneficial in the long run. When you and your vendors are aligned in your goals and strategies, you’re both better positioned to navigate the challenges ahead.
In my next post, I’ll dive into “Building a Risk-Aware Culture: Getting Everyone on Board with TPRM,” where we’ll explore how to create an organizational culture that values and actively participates in risk management.
Until then, keep your eyes on the board, think several moves ahead, and remember: in the game of TPRM, strategy is everything.
See you in the next act!
Jonathan Prewitt