Third-party risk, also known as vendor or supplier risk, refers to the potential threats and vulnerabilities that arise from relying on external entities to provide goods, services, or support, particularly where the entity is supporting a critical service.
For organisations, managing these risks is crucial as they can impact operational efficiency, regulatory compliance, and overall business reputation if something goes wrong.
Effective third-party risk management involves assessing, monitoring, and mitigating risks associated with suppliers to ensure business continuity and to protect the interests of the organisation.