Perspectives

From zero to thirty (thousand)

Accelerating your extended enterprise risk management (EERM) program

For many organizations, the global third-party ecosystem (or extended enterprise) has become an increasingly complex and important source of strategic advantage. But managing this extended enterprise has also become increasingly challenging. One potential solution: Extended enterprise risk management (EERM).

Is your extended enterprise risk management (EERM) program moving at the speed of light?

​Disruptive events have led to business continuity issues, reputational damage, and regulatory enforcement actions and penalties. Third-party risk (as well as fourth- or fifth-party risk that's deeper in the extended enterprise ecosystem) may have been considered isolated risks to specific areas of the business. But with respect to some headlines that refer to damaged corporate reputations, the culprit often wasn't the organization itself. It was a third-party provider.

Learning to recognize, anticipate, and manage extended enterprise risk can help dramatically reduce exposure. It can also lead to performance improvements that can drive value creation.

How can you “go from zero to thirty thousand”—accelerating from zero to the speed of light—within your EERM program? Leveraging a new model can help.

Extended enterprise risk management (EERM), delivered as a utility, can help organizations better anticipate and manage exposures in a cost-effective, standards-based way. And for third parties, it can drive competitive advantage.

How can a safe cruising speed in the extended ecosystem be risky?

While your extended enterprise helps you contain costs and drive profit, it can also be a source of exposure and cost (read more about From zero to thirty). The increase in the number of connections beyond the walls of your organization—and beyond the walls of your business partners—is accelerating rapidly. And the risks associated with the critical functions these business partners perform can't be completely outside your control.

Many organizations are being managed in a decentralized way. Some have a combination of internal departments, where many are working in silos and others may be connected. Procurement, legal, internal audit, operations, and other functions have taken the responsibility to manage third-party providers and their risks. This most often has led to redundant assessments. It also creates increased costs, underfunded programs, and inconsistent application of controls to stem potential risk and regulatory compliance exposure, intellectual property loss, and the real potential for compromised customer, business partner, and employee information.

Is there a better way to gain speed?

​Enterprises and their service providers are recognizing that current manual, siloed, and potentially redundant processes related to the management of third parties is unsustainable. But what if the cost and effort to manage third parties—along with the accompanying risks—shifted?

One potential solution—such as the one offered by CyberGRX and Deloitte—is a utility for all parties. A third-party utility or consortium model is a centralized approach, where enterprises and their third parties accelerate and transform their legacy models for receiving and providing third-party assessments. It delivers an actionable, risk-based, and analytics-driven shared platform.

What’s the upside of using a utility?

With a focus on real threat exposures around the world, four distinct benefits emerge for both the enterprise and the third-party provider:

  • The costs are mutualized. A common platform and standards bring a consistent approach in conducting third-party risk assessments, which shares the expense across organizations and creates a cost-effective execution model.
  • Efficiencies across the board are realized. Using this model, there's a reduced time to complete assessments and continued validation without incremental effort by either the enterprise or the third party.
  • A standard approach is gained. Leveraging market, industry, and regulatory standards, the platform helps to validate compliance to regulatory requirements across an enterprise's and the service provider's entire third-party ecosystem.
  • The approach is repeatable, sustainable, and ready. For third parties and their suppliers and partners, the time and effort to comply with myriad risk assessments, forms, and paperwork is reduced. Perform once and apply to all makes it not only easier to do business with an organization, but it also helps them create competitive advantage.

The end result? You can enhance third-party programs, create efficiencies, and build confidence in a digital world.

How can you get from zero to thirty thousand?

​Changing the third-party risk management paradigm at the speed of light is critical. Shifting resources that historically focused on point-in-time data collection and validation to create a true third-party risk management approach via a shared platform is fairly straightforward.

Start with the market leaders. Our CyberGRX strategic alliance helps enterprises quickly enhance their third-party programs cost effectively, create efficiencies, and build confidence in their organization's extended enterprise risk posture.

Learn more and request a demonstration.

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Let's talk

How can you lead, navigate, and disrupt? Accelerate your performance and simplify the complexity of your extended enterprise.

Kevin Gallagher
Managing Director
Deloitte Risk and Financial Advisory
Deloitte & Touche LLP
+1 212 436 6072

 

Scott Gauch
Principal | Extended Enterprise Ventures Leader
Deloitte Risk and Financial Advisory
Deloitte & Touche LLP
+1 213 996 5792

 

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