In my role with Global SRN, I am leading a major market research program to identify the impact Intelligent Automation and Business Analytics is having on current TPRM operations. We are very pleased to share that in all we have 30 TPRM Executives from large global financial organizations, 13 TPRM community partners and 3 academic partners helping develop, distribute and interpret the research results.
As I speak with leaders in each of these areas of the TPRM community, a consistent theme has emerged: TPRM organizations are struggling to secure the skills necessary to support todays operations and are highly concerned about the ability to identify and attract the skills necessary to transform their operations to meet business and regulatory demands. The core issue being how to evolve a community of operational risk professionals from a ‘rule-based’ orientation to a ‘judgment-based’ capability.
With the adoption of Business Analytics and Intelligent Automation, TPRM leaders will require First Line of Defense teams that understand the dynamics of their assigned Line of Business combined with analytical skills to quickly identify patterns and irregularities to take proactive measures. With the population of FLOD associates today primarily having operational risk backgrounds, there is likely a significant re-alignment on the horizon.
Responses continue to stream in for the IT-TPRM.com survey on the impact of Digital Transformation on TPRM operations. We remain on track to share the full survey Mid-June!
The survey ask respondents to identify the digital technology dynamics impacting their organization currently or in the coming 12 months. To no surprise, Cloud, Cybersecurity & Automation are consistently identified as the technologies of greatest impact. The surprise so far is how low Blockchain is trending as a key area of focus for TPRM leaders.
At the recent RMW GCOR conference, during the regulator panel they stated the areas of great focus and interest is Cloud, Automation & Distributed Ledger (Blockchain). Are TPRM leaders not seeing what is emerging on the horizon or not clear as yet how it will impact their operations? Share your thoughts! Please take 3 1/2 minutes to take the survey.
Global Banks and Financial Institutions are under severe pressure to reduce operating cost while at the same time deliver on a Digital Transformation agenda that enhances customer experience and produces new revenue streams through expanded product offerings. To meet this challenge, these organizations are increasingly turning to Automation (RPA/AI) to gain operational efficiency and FinTech platforms to satisfy their digital agenda; both introduce incremental risk to their enterprise risk profile.
This dynamic is forcing Enterprise and Operational Risk leaders to re-think the treatment of technology third parties. As technology solutions have expanded beyond IT and are engaged across operations, Technology Third Party Risk Management first line and second line teams are being challenged to move beyond vulnerability and resilience to address the full spectrum of an expanded technology portfolio. To do so, FLOD and SLOD will need to be dedicated, multi-discipline teams. FLOD focused on collaboration across key internal parties with SLOD providing oversight and coordination with Audit, Compliance and enterprise leaders.
Working closely with procurement, Technology TPRM leaders need to establish clear positions on Right of Survivorship, Change in Ownership, Termination and other likely events when dealing with micro-venture backed companies. This will enable rapid contracting establish consistent risk categorization and support regulator expectations.
In preparation to design a targeted survey for Technology Third Party Risk Management (TPRM) emerging trends and best practices, I have had the opportunity to interview a dozen Enterprise Risk and Operational Risk leaders at major global banks and financial institutions. Based on the insights gained in these conversations, the following areas were continually voiced as areas of top priority for effective Technology TPRM execution. We will dig into each of these areas with the upcoming research effort.
·Effective TPRM of technology partners is at the forefront of enterprise and operational risk leader’s agendas
·Technology TPRM is more than Vulnerability Assessments and Threat Management
·Algorithm-centric risk practices are inadequate to assess Technology TPRM
·Comprehensive First Line of Defense (FLOD) execution is necessary for Second Line of Defense (SLOD) to effectively achieve goals and objectives
·SLOD leaders must be able to effectively communicate and collaborate across IT leaders, procurement, audit and compliance. Knowledge of the services, intended processes and contract terms are key.