More Vendors, Less Chaos: Why Growing Companies Need a Third-Party Risk Management Framework

A third-party risk management framework (TPRM) might sound like something only large corporations need, but it is a smart move for businesses at any stage of growth. As a company builds momentum and works with more vendors, suppliers, and service providers, it becomes even more critical to stay organized and intentional about those relationships. 

63% of companies manage between 50 - 500 vendors in their TPRM program. Having a framework in place helps company leaders make thoughtful decisions, stay aligned with compliance requirements, growth initiatives, and create partnerships that truly support your success.

“When you take the time to build a third party cyber risk management framework, you are investing in the strength and stability of your business. It is about creating partnerships that support your goals and give you peace of mind as you scale.”

— Lauro Chavez, Managing Partner at Silent Sector

In this blog, we will break down what a TPRM framework actually is and walk through the key elements that make it work. You will learn how to start building your own approach, even if you are just beginning to think about vendor risk. Whether you are growing steadily or gearing up for a big leap forward, this guide is here to help you build with confidence.

What is a TPRM Framework?

A TPRM framework is a structured approach used to evaluate and manage the risks that come with working with outside vendors, contractors, suppliers, and service providers. It defines how a business will identify, assess, monitor, and respond to potential risks introduced through these external relationships.

At its core, the framework encompasses clear policies, repeatable processes, and defined responsibilities for managing third-party relationships throughout their entire lifecycle, including every step —from onboarding the vendor to offboarding. 

It provides businesses with a consistent framework for determining which vendors to trust, the level of oversight required, and how to mitigate exposure to issues such as service interruptions, compliance problems, or security vulnerabilities.

While the specific structure can vary, most third-party risk management frameworks include:

• Risk-based vendor classification. Grouping vendors by criticality and exposure to help prioritize oversight.
• Due diligence procedures. Collecting information and verifying that vendors meet security, compliance, or operational standards before engagement.
• Contract standards. Including clear terms that define responsibilities, expectations, and safeguards for both parties.
• Ongoing monitoring. Regularly reviewing vendor performance and tracking any changes that may introduce new risk.
• Disengagement planning. Having defined steps to exit relationships cleanly and securely when needed.

These elements help businesses stay organized, maintain accountability, and ensure vendor partnerships continue to support broader goals.

Benefits of Developing a Third-Party Risk Management Policy

As companies grow, vendor relationships often multiply faster than expected. A third-party risk management policy makes it easier to manage that growth without compromising security, compliance requirements, or momentum. It provides teams with a reliable way to stay ahead of risk while remaining focused on business goals.

Here’s what a clear TPRM policy brings to the table:

• Better visibility into vendor relationships
  A centralized process helps teams see who is working with whom and what each vendor is responsible for.
  
  
• Stronger data and system security
  Vendors with access to sensitive information or systems are reviewed more consistently, reducing the chance of breaches.
  
  
• Simplified onboarding and faster timelines With set requirements and review steps, new vendors can be approved and integrated more efficiently.

• Stronger client and partner confidence Companies that demonstrate thoughtful oversight often win more trust from customers, investors, and collaborators.
  
  
• Lower risk of disruption as the business scales The more vendors a company works with, the harder it becomes to manage risk informally. A policy helps maintain consistency as complexity increases.
  
  
• Built-in accountability across teams Everyone involved knows their role, which reduces delays, confusion, and overlooked responsibilities.

What Does Third-Party Risk Management Look Like In Practice?

Understanding how a third-party risk management framework works becomes easier with real-world context. 

Here are a few third-party risk management examples that highlight its value:

• Security assessment before onboarding a cloud provider. Reviewing data handling practices and requiring SOC 2 documentation to ensure alignment with internal security policies.
  
  
• Adding a termination clause to a vendor contract. Including language that outlines how data must be deleted or returned at the end of the relationship.
  
  
• Ongoing monitoring of a payroll provider. Conducting annual reviews of service performance and checking for updates in regulatory compliance status.

Steps to Build a Third-Party Risk Management Program

According to KPMG, in 2023 73% of organizations reported having experienced at least one significant disruption caused by a third party within the past 3 years. This highlights the importance of developing a robust approach to building a third-party risk management framework. 

However, for a program to be good, it does not require a large team or specialized software. What it does require is a clear plan and a focus on consistency.

Step 1: Get executive and stakeholder buy-in
Risk management impacts multiple areas of the business, including legal and compliance, finance, and operations. Gaining support from leadership ensures that the process is taken seriously and appropriately resourced.

Step 2: Identify and catalog all current vendors
Begin by creating a comprehensive list of all third parties with which the business collaborates. Include vendors, contractors, service providers, and platforms. This provides visibility into the full scope of external relationships.

Step 3: Prioritize vendors and assess risk levels
Not every vendor presents the same level of risk. Rank each based on factors such as data access, regulatory exposure, service criticality, or geographic location. This helps determine where to focus attention first.

Step 4: Develop policies and standardized workflows
Create simple, repeatable procedures for evaluating new vendors, reviewing contracts, and monitoring existing relationships. Clear policies support consistency across departments and reduce confusion.

Step 5: Implement basic tools or manual tracking systems
At the early stages, spreadsheets or shared documents may be enough. The goal is to centralize information, maintain version control, and track activity in a single location.

Step 6: Establish ownership
Define who is responsible for managing third-party risks. This may be one person or shared across teams. Assigning clear ownership helps avoid gaps or delays in the process.

Step 7: Plan for scale and automation down the road
As vendor networks grow, manual processes may become harder to manage. Keep notes on what works well and where pain points appear. This sets the stage for future automation or software integration when the time is right.

Common Pitfalls When Implementing a TPRM Program (and How to Avoid Them)

Treating TPRM as a One-Time Checkbox Exercise

A common mistake is performing vendor due diligence during onboarding but failing to revisit it. Many regulatory frameworks, including SOC 2, ISO 27001, and HIPAA, expect ongoing vendor oversight. 

Continuous risk evaluation and periodic reassessment is a key factor of a TPRM program. Organizations may risk non-compliance or increased security risks if regular reviews and assessments aren’t a priority.

Overlooking Non-Digital and Reputational Risk Factors

Third-party risk management has traditionally focused on compliance with cybersecurity standards and regulatory requirements. Now, 89% of TPRM programs include risks beyond cyber risks.

Failing to assess a vendor’s business practices, labor standards, or public reputation can expose the organization to customer concerns, brand damage, or downstream disruption. A well-rounded framework considers more than technical controls. It accounts for how third parties affect trust, continuity, and long-term business resilience.

Assuming Existing Contracts Cover Risk Requirements

When businesses begin building a third party risk management framework, it's common to assume that vendor contracts already account for most risk-related concerns. 

In reality, many agreements were created without input from security, compliance, or legal stakeholders. They often lack specific language around data handling, breach notification, audit rights, or service-level obligations. Reviewing and updating contract terms to align with the framework is a critical part of formalizing vendor oversight, and a common early-stage gap.

Underestimating Low-Cost Or “Friendly” Vendors

Small, inexpensive vendors often fall outside formal review processes, but regulatory obligations do not scale by contract value. If a low-cost vendor processes protected data, transmits sensitive information, or supports regulated functions, they must be included in the TPRM process just like larger providers.

Not Defining Ownership Across Departments

Third-party risk impacts multiple domains, including legal, IT, security, compliance, and procurement. Without defined ownership, tasks fall through the cracks. Most regulatory frameworks require transparent governance, including well-defined roles, established escalation procedures, and documented responsibilities for vendor oversight throughout the lifecycle.

Lay the Right Groundwork for Your TPRM Framework and Program

A third-party risk management framework creates clarity, consistency, and accountability across vendor relationships. For growing companies, it offers a way to scale with control, reduce unnecessary exposure, and meet regulatory expectations without stalling momentum. 

Silent Sector works with companies at every stage of maturity to build and strengthen risk management processes, including third party risk management processes. 

From policy development and control design to compliance alignment and security architecture, the team helps organizations establish scalable, right-sized frameworks. The result is a TPRM program that supports growth while protecting what matters most.

For businesses preparing to take the next step in formalizing vendor oversight, Silent Sector provides the guidance and expertise needed to build with confidence.

Contact us today for a free TPRM consultation.