The Omicron variant has now spread around the world and, in many regions, has brought about revamped restrictions. Those factors are leaving their mark on third-party risk management, which continues to require nimble and dynamic handling.
Travel restrictions, nationwide lockdowns and worldwide instability have resulted in complex supply chain disruptions that highlight multiple underlying risk factors between business relationships. While some business impacts have subsided due to increased adoption of COVID-19 vaccines, with the Omicron variant now being connected to an increase in infections, it’s clear we are not out of the woods just yet.
This article will examine the pandemic’s effects on third-party risk management (TPRM) and how the new variant of the COVID-19 virus has increased TPRM complexity.
Global Response to the Omicron Variant
First identified by scientists from South Africa in November 2021, the Omicron variant is believed to be responsible for an increase in cases, and infections related to the variant had been confirmed in 57 countries through mid-December. Even in countries where pandemic restrictions were harsh, such as Japan and Israel, Omicron cases have been reported.
In response, dozens of countries reinstated pandemic restrictions, including imposing or strengthening travel bans in the hopes of preventing further proliferation of the variant. While these measures are being done in the interest of global public health, there is no denying the impact that slowing or altogether stopping international travel can have on the global supply chain. We need only look to the negative effects that occurred before the newest variant emerged.
How TPRM Has Evolved Since the Onset of COVID-19
The global pandemic brought to light the underlying third-party risks that many companies face today. Many supply chains experienced disruptions, leading to an international shipping crisis and widespread third-party vulnerabilities due to the rapid adoption of remote work and cloud technology.
It doesn’t matter if it’s a brick-and-mortar store that outsources its janitorial and maintenance department or a tech company that outsources its customer service — this widespread economic disruption reveals how vulnerable various industries are to third-party operational failures, bankruptcy and even data breaches.
These issues have left many companies exposed to external economic conditions and the internal risk posed by their insecure IT infrastructure or that of their third-party vendors.
Common TPRM Issues Amid the Omicron Variant
With the Omicron variant resulting in an uptick in COVID-19 infections in the U.S. and many other countries, there’s an understandable fear that companies won’t begin to see a light at the end of the tunnel for quite some time. To illustrate our point, here are some of the most common TPRM issues that organizations are facing as new variants continue to emerge.
Even before the pandemic, data breaches were on the rise. According to a 2019 report, an estimated 4.1 billion records were exposed in data breaches in that year alone.
In addition to the volume of attacks rising generally, the pandemic has also ushered an era of major cyber security attacks. With many companies forced to shift to remote working arrangements in 2020, businesses everywhere ventured to digital environments without proper measures for data security. Perhaps relatedly, the average cost of a data breach rose to more than $4 million in 2021.
Businesses are always at risk of operational disruptions, but the pandemic has drastically heightened this problem. The sudden and unpredictable nature of COVID-19 left many service providers unable to perform their operations. This, in turn, sent businesses scrambling to find other services on short notice.
Many companies depend on third parties to perform essential functions in their manufacturing process. Unfortunately, these same companies suffered the most at the height of the pandemic after neglecting long-term security in favor of immediate solutions. Many suppliers went out of business, forcing firms up the supply chain into bankruptcy.
It’s no surprise that the COVID-19 pandemic caused a substantial economic downturn, and while many businesses have started to recover, we could see a regression due to the omicron variant. Unfortunately, companies that are only starting to realize the importance of their third-party partners or have engaged in unsafe relationships may be surpassed by their competitors who’ve taken the necessary steps to safely leverage third-party vendors.
How TPRM Can Help You Stay Above Board
So, how can you safely engage with third parties and increase your competitive advantage while limiting the burden on your organization? The answer is with third-party risk management solutions. Such solutions can help you streamline your TPRM operations and automate much of the tedious manual processes that monopolize critical staff members.
Here are a few key benefits:
- It helps your company be more adaptive. A good TPRM solution allows you to be more agile and proactive in responding to third-party risks.
- Gives your organization a bird’s-eye view of all its vulnerabilities. You can have all your third-party relationships outlined in a single report, letting you and your stakeholders understand where your organization stands at all times.
- Allows you to prioritize the most severe risks. If your resources are already limited, you need to know which problems to solve first. With the kind of view that a TPRM solution affords you, your organization is empowered to make bold decisions in mitigating risks.
- More efficient organizational operations. It’s easier to onboard new third-party partnerships with a well-established TPRM solution so that you can proceed with your business plans without worry.
- Enhances overall third-party relationships. A big part of managing your third-party risk is maintaining a good relationship with your providers. Having a managed TPRM allows you to open conversations and strengthen relationships.
Whether your organization is still being impacted by COVID-19 or facing new threats due to emerging variants, embracing a TPRM solution is an excellent strategy to reduce potential risks and threats.