Business Risks
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Business Risks

How to Protect Your Company from Third Party Risk

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Business Risks
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Business owners know that third parties are vital to a business, but they also know they pose a significant risk. The combination of need and risk makes it important to consider steps to help reduce this risk since there is no way to avoid it. There are a number of things you can do to decrease your chances of suffering a loss due to a third party. Hopefully, you can implement some of the following suggestions.

Word of Mouth

You can use word of mouth to find trustworthy businesses. One reason you need to ask for references and read reviews before hiring a company is to reduce the chances of a problem. Try to look for signs of real honesty when you read reviews, or contact companies doing business with the third party you are considering. In essence, you want to find statements, or see if the third party has been honest with clients. Third parties that conceal pertinent information may end up putting companies like yours at risk, and you do not need that.

Plan of Attack

It may be a good idea to review the plan that the third party has regarding internal issues. What you want to see is how prepared the third party is regarding problems. Part of their plan should include contacting you to reduce the possibility of your company being affected by the issue. Be sure to pay attention to how shipment or delivery of product is handled when a problem arises. It is also important to find out how this third party handles a breach. Information breaches are at an all-time high, and the third party you trust needs to be prepared for this problem. In short, you need to be certain that the company is prepared for the worst, even if it never happens.

Badges of Trust

It may be a good idea to pay attention to the badges this third party has attained. Every company has certificates and business grades. For the most part, these badges are periodically updated. You need to be aware of each upgrade, just in case the third party loses a certificate. This is something that some dishonest third parties conceal, which is why you need to hire a company that specializes in certificate tracking to help track any changes. These changes can help you switch your affiliation with the third party you are working with until they get their certificate or grade back. Sure, you may trust the company you are working with, but you never know, so do not run the risk of not having a tracking company watching your back.

Relationship Work

It is important that you continue to nurture the relationship you have built with the third party company. You need to make yourself a valuable part of their business so that this third party truly understands its duty to your business. Be trustworthy, and make sure you help them earn your trust. Building on this mutual respect should help reduce the risks posed by the company because the company may end up feeling invested in your business, which is what you want. There are a number of ways to establish trust. For example, share changes to your business as soon as possible because changes can end up costing the third party some revenue.

Now, you know how to reduce third party risks, which could help you feel a little less stressed. Keep in mind that what you are doing is simply reducing the chances of a problem, but this does mean that it cannot happen. Make sure you take additional steps to protect your business, such as the right insurance and back up third party companies that may be helpful at completing tasks should this third party ever become unavailable.

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This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
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