VRM, TPRM, AND SCRM
In the ever–changing business world, organizations need to be equipped to mitigate risk and maximize safety across their supply chain. Risk management techniques such as Vendor Risk Management (VRM), Third Party Risk Management (TPRM), and Supply Chain Risk Management (SCRM) can help organizations reach these goals.
What are VRM, TPRM and SCRM?
VRM, TPRM and SCRM are all practices designed to assess, address and mitigate the risks associated with third–party vendors, their products and services, as well as protect organizations from any potential disruption in the supply chain. All of these programs involve assessing the risks associated with a vendor or supplier before doing business with them in order to protect the organization from any unwanted risks.
How do they differ?
VRM is an approach that focuses on the process of assessing, monitoring, and managing the risks associated with third–party vendors. This process helps organizations identify, confirm, and track the various vendors and other external resources used in the supply chain. It also includes activities such as screening and periodic assessments to monitor compliance, performance, and safety.
TPRM involves a vendor–centric approach to manage and monitor the risk associated with third–party vendors. This approach includes activities such as onboarding new vendors, conducting due diligence, performing compliance and audit checks, and providing continuous monitoring of vendor
SCRM is a formal process of assessing, monitoring, and controlling risks (such as financial and operational risks) that could disrupt the entire supply chain. SCRM focuses on the entire value chain, including the upstream (supplier relationships, so VRM) and downstream (customers and service providers).
How TPRM differs from VRM?
Third–party risk management and Vendor risk management are two similar but distinct processes for assessing and mitigating risk in an organization. Both involve identifying and assessing potential risks posed by external vendors and other third parties, but TPRM focuses on risks that could adversely affect the organization as a whole, while VRM focuses on risks that could adversely affect the organization’s relationship with the vendor. TPRM is a broad process that encompasses all risks that could potentially affect the organization, including financial, reputational, and operational risks. VRM, on the other hand, is focused narrowly on risks that could adversely affect the organization’s relationship with a particular vendor. Both TPRM and VRM are important tools for managing risk in an organization. TPRM provides a comprehensive view of all risks that could potentially affect the company, while VRM shows the risk associated with a particular vendor.
Should I have VRM, TPRM and SCRM in place to prevent my company from cyber risk?
Organizations must have a robust risk management strategy if they wish to proactively combat the onslaught of cyber threats. As part of this effort, Vendor Risk Management (VRM), Third–Party Risk Management (TPRM) and Supplier Chain Risk Management (SCRM) must be taken into consideration– although it’s important to recognize that no single measure can guarantee 100% security. However, with an effective plan in place, businesses can feel more confident about their defensive precautions.