Third Party Risk

Third party risk is the umbrella term for all potential threats and weaknesses that a company can experience as a result of its interactions with outside suppliers, partners, or service providers. These dangers may result from a number of things, such as the handling of private information, financial transactions, legal obligations, and operational procedures. Strategic, reputational, operational, financial, and regulatory risks are some of the several types of hazards.

Examples of third-party risks include, but are not limited to, data breaches brought on by third-party vendors, monetary losses brought on by fraud or poor service provision by third-party service providers, or reputational harm brought on by a third party's disregard for laws or industry norms. To assist organizations, third party risk management involves locating, evaluating, and reducing these dangers.