Third-party relationships continue to expose Canadian businesses to reputational risk

Although outsourcing and partnerships have long proven effective in increasing efficiency, expanding capabilities and growing businesses, executives across the country say they urgently need to radically change their TPRM operating models. and their approach to third party risk management.

“The pandemic has been a real wake-up call for Canadian organizations,” says Jérôme Thirion, KPMG partner and national leader in supply chain management. “We constantly hear from our customers about vendors not being able to deliver, or issues with counterfeiting, overcharging, data breaches and other issues with third parties. This has put a strain on their ability to meet the needs of their customers, and this highlights an urgent need for companies to strengthen their TPRM programs.”

Almost two-thirds (65 percent) of survey respondents believe it was “sheer luck” that they avoided a major third-party incident during the pandemic, and 81 percent say they urgently need to make TPRM more consistent across their business.

“It is clear that TPRM must remain a priority on the agendas of the executive and the board of directors”, declares Edouard Bertin Mourot, partner of KPMG in Risk Consulting. “We still see TPRM handled in pockets of the business, while third-party risks are business-wide issues and need to be managed accordingly. A holistic TPRM operating model enables businesses to obtain this risk-based, transversal and aggregated view of the risk of third-party exposures, necessary to better reduce the risks of their business and strengthen their operational resilience.

Of course, covering the wide range of risks requires a specific skill set, and 65 percent of organizations say they do not have sufficient internal capacity to manage all of their third-party risks. “Companies need to increase their TPRM budgets and invest in both technology and training programs,” says Karim Sadek, partner of KPMG in Risk Consulting and co-leader of Blockchain Services. “It’s also critical to leverage technology to improve visibility into risk, which will help them be much more responsive to potential disruptions.”

The report outlines five key steps Canadian organizations should take to improve their TPRM programs and further strengthen their resilience to risk:

  1. Elevate TPRM to suite C: Continuously engage business management in the third-party risk landscape, giving appropriate attention and budget to the TPRM.
  2. Build an overall TPRM operating model: Establish a formal TPRM operating model with adequate resources (people and technology) to enable holistic and continuous risk management and monitoring.
  3. Establish 360 degree visibility: Gain complete visibility into all third parties and the material risks that come with them.
  4. Prepare for hardware scenarios: Perform regular and detailed scenario planning to become more resilient to risk.
  5. Collaborate within the industry: Consider a “co-opetition” model to share supplier information and develop a unique and valuable perspective within an industry and ultimately optimize resource allocation at TPRM.

About KPMG Canada
KPMG LLP, a limited liability partnership, is a Canadian-owned and operated full-service audit, tax and advisory firm. For more than 150 years, our professionals have provided consulting, accounting, auditing and tax services to Canadians, inspiring trust, fostering change and driving innovation. Guided by our core values ​​of Integrity, Excellence, Courage, Together, For the Better, KPMG employs more than 10,000 people in more than 40 locations across Canada, serving private and public clients. KPMG is consistently ranked among the from Canada best employers and one of the best places to work in the country.

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For further information: Sonja Cloutier-Bosworth, National Communications and Media Relations, KPMG in Canada, 416-777-8175, [email protected]