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Volume 31, Issue 2

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Thursday, 12 July 2018 14:34

Making Third-Party Risk Management Drive Value

Reimagining Risk

A recent Deloitte poll surveyed nearly 2,400 professionals in a bid to better understand third-party or extended enterprise risk management (EERM) programs and explore how enhanced management of these programs can drive value for an organization. Deloitte’s Dan Kinsella explains why executives should reimagine EERM for value creation.

The benefits related to expanding a company’s capabilities beyond the traditional four walls of an organization are too big to ignore, but many executives see challenges in managing the third-party risk involved. Unfortunately, these challenges can obscure the perceived value in expanding the enterprise and test the resolve of decision-makers who want to make it happen.

That’s the thrust of the poll, which surveyed professionals across a range of industries, including banking and securities, technology, investment management, travel, hospitality and services, insurance and other sectors. A mere 3.9 percent of respondents in the survey defined their EERM efforts as “optimized.”

That means a small fraction of organizations have matured EERM to the point of having an integrated strategy and decision-making, continuous improvement and investment, executive champions and highly customized decision support tools with external data. In constructing our poll, we positioned these as some of the key attributes necessary to mature EERM programs and create value. In developing these attributes, organizations can better streamline with improved confidence the management of third parties. So why do so few companies have these attributes in place to do EERM well?