The Growing Importance of Third-Party Risk Management

Third-party risk management is becoming increasingly critical for organizations as market dynamics and regulatory requirements evolve. With a focus on suppliers and partners, companies face heightened challenges in managing risks associated with third parties, especially in light of recent incidents affecting the supply chain. Loren Johnson highlights the case of Sriracha, which experienced a chili shortage due to reliance on a single supplier, illustrating the dangers of concentration risk. This growing focus on third-party relationships encompasses not just financial and delivery risks, but extends to issues such as cyber threats and ethical supply chain practices, necessitating a comprehensive approach to risk management.