Third party risk management (TPRM) is a growing topic in cyber security, and for good reason.
In order to improve workflows or gain a competitive edge, businesses are always adding more vendors to their supply chain. These vendors provide everything from machinery and logistics support to software and other technological solutions.
But with more vendors and suppliers, organizations open themselves up to a larger threat surface. An attack on a single vendor can have a huge impact on organizations that work with them. This means organizations are under a constant threat of large-scale cyber risk amidst varying degrees of visibility.
There are often a lot of things to think about whether a company already has a third-party risk management program and wants to make it better or needs to add one to their current risk management processes.
We have put together a list of frequently asked questions about third party risk management so that you can get the answers you need for a good program.
Interviewing for a third party risk assessment role? You need to be ready for the tough questions that will evaluate your capabilities in this critical domain. As third parties like vendors and suppliers become integral to business operations, managing the risks they introduce grows ever more vital
In this competitive job market, third party risk assessment interviews will test your technical expertise as well as soft skills like communication analysis and problem-solving. The questions will assess your understanding of risk management frameworks, security practices, compliance standards, supply chain vulnerabilities, and more.
We’ve put together this comprehensive guide to help you prepare for and ace your upcoming third party risk assessment interview. Read on for sample questions, tips to craft winning answers, and the knowledge to showcase yourself as a top candidate.
Why Third Party Risk Assessment Matters
First let’s examine why third party risk management has become such a priority for organizations today. Some key reasons include
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Growing reliance on third parties: Companies are increasingly outsourcing core business activities to vendors, service providers, and partners. This expands their attack surface for risks.
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Data security threats: Third parties often handle sensitive data, posing huge risks of breaches and non-compliance which can severely damage an organization.
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Reputational hazards: Any negative incident with a third party can directly impact the company’s reputation with customers.
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Regulatory pressures: Regulations like GDPR have increased scrutiny on third party cybersecurity and compliance standards.
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Supply chain risks: Disruptions anywhere in the supply chain—80% of which comprise third parties—can cripple operations.
Clearly, organizations must implement rigorous third party risk assessment practices to avoid these dangers. That’s where you come in!
Common Third Party Risk Interview Questions and Answers
Let’s look at some frequent third party risk assessment interview questions along with sample answers:
Q1. How do you prioritize risks when assessing multiple third-party vendors?
When prioritizing vendor risks, I use a risk matrix approach, evaluating each risk based on potential impact and likelihood. I consider factors like criticality of the vendor service, compliance levels, data access sensitivities, and cybersecurity posture.
Using this matrix, I can map risks into high, moderate and low categories, letting me focus on the severe risks first. I also account for risk appetite, operational objectives and industry best practices when deciding on priorities. Previously, I utilized this method to accelerate due diligence on a vendor with repeated cyber incidents, complying with our low risk tolerance policy for data breaches.
Q2. What methods do you use to continuously monitor third party risks?
Continuous monitoring is critical for dynamic third party relationships. I implement regular assessments to verify security levels, compliance checks against policies, and audits for changing processes.
Automated tools help track vendor performance KPIs and risk indicators in real-time, alerting to anomalies. I maintain open communication channels with vendors to get alerts on any system or policy changes. For high risk vendors, I schedule quarterly reviews, ensuring risks are quickly addressed.
This vigilance has helped me identify issues like regulatory non-compliance early enough to implement corrective actions, protecting the organization.
Q3. How do you quantify the financial impact of third party risks?
I quantify third party risks into financial impact by following a 3 step process:
First, I categorize each identified risk like operational, compliance or reputational.
Next, I analyze likelihood of occurrence using data like past audit results. I estimate potential loss magnitude through methods like Monte Carlo simulations.
Finally, I derive the Annualized Loss Expectancy based on the probable frequency and severity. I also account for interlinked risks and qualitative data from subject matter experts.
This financial estimation provides tangible metrics to gauge risk levels against the organization’s appetite. In the past, it has enabled data-driven decision making on high-risk vendor relationships.
Q4. How have you handled conflicting interests between stakeholders during an assessment?
Managing conflicting stakeholder interests is delicate but can be navigated with open communication. In one case, our legal team required stricter data privacy controls for a vendor while procurement focused on cost savings.
I scheduled collaborative meetings with both teams to discuss each perspective transparently. We weighed the long-term risks of non-compliance against the vendor’s pricing advantages.
Ultimately, I recommended a balanced approach – investing in additional vendor security controls while partially absorbing the increased costs internally as an acceptable compromise. This upheld compliance without alienating procurement stakeholders.
Tips to Prepare for the Interview
To truly excel in your third party risk assessment interview, keep these tips in mind:
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Demonstrate technical knowledge: Showcase your expertise in risk management frameworks like ISO 31000, SIG, and NIST standards.
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Highlight soft skills: Emphasize strengths like analytical thinking, communication, and relationship management.
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Use specific examples: Draw from your experience to provide detailed, believable responses. Quantify achievements.
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Ask smart questions: Inquire about risk management strategies employed by the organization to show interest.
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Explain the “why”: Discuss the business impact of risks and how your approach helps mitigate them.
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Stay updated: Brush up on the latest regulations, risks, and industry best practices beforehand.
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Practice aloud: Rehearse your answers until you can express them clearly and confidently.
With meticulous preparation using these tips, you will be equipped to handle even the toughest third party risk assessment interview questions. Show them you have the technical brilliance, business acumen and communication abilities to be their next risk management superstar!
Are there specific risk management frameworks to align with?
This depends on what kind of business you have and what kind of data you and your third parties might handle.
There isn’t a single risk management framework that works in every industry or location, but SOC 2, ISO 27001, and the NIST Risk Management Framework 2 are some of the most common ones. 0, NIST 800-171. Some of these are overall security frameworks that contain elements that address third-party risk.
Each of these frameworks gives a risk management program a list of rules and guidelines that should be followed.
No matter which framework or set of frameworks your company chooses, it’s important to know what the controls require and how they fit into the way you do things now.
What is Third Party Risk Management? How is it any different from overall risk management?
There are rules and steps that companies use to make sure that third parties, like suppliers, contractors, vendors, and service providers, don’t pose too many risks to their business. This is called third party risk management.
Third party risk is a part of a company’s overall risk management program. This program should deal with risks at all levels and in all departments of the company.
This is related to overall risk management and lets the security team give top management a full picture of the dangers and threats that could affect the business, based on any outsiders who have access to private data or network areas.
It’s important to keep in mind that this blog is mostly about managing cyber security risks for third parties. However, risk management in general would cover other types of risks, like financial and professional ones.
TPRM Interview Questions and Answers (Third Party Risk Management)
FAQ
What questions should I ask in a third party risk assessment?
What questions are asked during a third-party risk assessment interview?
In this article, we’ll delve into some of the typical questions that might be asked during an interview for a third-party risk assessment role, providing insights and guidance on how to present your experience and understanding effectively. 1. How do you prioritize risks when assessing multiple third-party vendors?
Why should you ask a third-party risk management question?
The question helps them understand your thought process, experience, and familiarity with risk management strategies, specifically when it comes to third-party relationships. Your answer will demonstrate your level of expertise and ability to mitigate potential threats and vulnerabilities arising from vendor interactions.
What makes a good third-party risk assessment?
The careful calculation of risk acceptance is a sophisticated aspect of third-party risk assessment. Candidates should be ready to discuss how they evaluate potential benefits against threats and align decisions with the company’s risk appetite.
Do you need a third-party risk assessment & due diligence?
Most companies have some level of third-party risk assessment and due diligence in place. However, it must be more than a box-checking exercise. Data security questionnaires, credit checks and other legal background checks are still essential and are crucial to do before contracting.
