Third-party relationships introduce significant risks across cyber security, procurement, legal, privacy, data governance, and HR. Organisations must adopt structured approaches to mitigate these risks while maintaining operational efficiency. This table summarises different risk management strategies, their advantages, and their limitations.
Third-party risk management approaches
| Approach | Description | Advantages | Disadvantages |
| Centralised | A single team manages all third-party risks across the organisation. |
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| Decentralised | Each business unit independently manages its third-party risks. |
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| Hybrid | Central governance sets policies, while business units execute risk management within guidelines. |
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Organisations must align their third-party risk management approach with their risk appetite, operational needs, and regulatory requirements. While a centralised model ensures consistency, decentralisation offers flexibility. A hybrid model often provides the best balance. Regardless of approach, integrating role-specific risk management strategies is essential for comprehensive protection.
How does your organisation manage third-party risks? Share your approach in the comments or reach out for a discussion on best practices.
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