Mitigating Risks with Third Party Partnerships

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Mitigating Risks with Third Party Partnerships

It has long been proven that engaging in outsourcing as part of your business strategy increases the strategic value of your firm. Whether you seek to save time and money, gain access to the expertise you don’t have in-house, or identify new ways to support your growth. Understandably though, depending on a third-party to drive critical processes exposes your company to additional risks.

Take for example, the current novel coronavirus pandemic sweeping the globe and affecting every organization, no matter the size, market, or location. The breadth of how this pandemic will adversely affect your business operation will vary based on the importance you placed on risk mitigation planning before the pandemic hit. Thorough preparation and planning will help mitigate risks when and if they present themselves.

Contingency planning should go far beyond what you are experiencing today, and your company must be resilient to adapt swiftly to changes in the marketplace and conditions of the economy.

As you think about the future of your business, performing a risk mitigation assessment today will help strengthen your operating model to ensure you remain afloat while the current pandemic washes over us. As you eventually begin to plan for a brighter day, consider the following approach to mitigating risks with your third-party vendors:

  • Analyze how operations will be affected in each location an outsourcing vendor resides. The geographical location of service delivery matters as much, if not more, during a crisis as it did during your initial location assessment.
  • Place the most critical processes with a vendor whose own risk mitigation plan has been well tested and proven. The current pandemic is identifying craters in many offshore vendor’s business continuity plans. Those who did not have a multi-tier plan in place have significantly suffered as social distancing forced the closure of offices around the globe. Luckily, many US-based, onshore vendors have continued to have great success in meeting the demands of their clients, while ensuring the health and safety of their employees.
  • Understand your vendor’s cyber-security protocols and limitations. Ensure your vendor has adequate security to support both an onsite and remote workforce environment. Cyber-security protocols must heighten during a time of crisis, not relaxed due to failure to plan.
  • Develop an internal infrastructure to support a remote workforce effectively. The infrastructure includes the type of relationship you have with your vendor, their corporate culture, as well as access to the tools needed to work remotely (laptops, communication devices, access to power and internet).
  • Calculate the actual cost of offshoring, including what you may end up losing if service delivery centers are forced to close. Are the benefits of sending work offshore (typically lower cost) worth the potential loss of service during a crisis?
  • Explore how deploying a digital workforce increases productivity levels and the potential impacts on productivity if you do not implement a digital transformation initiative.
  • Consider investing in an independent risk assessment to uncover potential disruptions to business operations you may have overlooked.

Investing time into a risk mitigation plan will safeguard your bottom line in the unfortunate event that a global crisis hits again, or the current pandemic continues for longer than currently forecasted.