Fourth Parties

What are fourth parties?

Fourth parties are your third parties’ subcontractors (i.e., their own third parties). It is important to understand who your critical fourth parties are and the level of risk they may pose (e.g., Do they have access to data and systems? Would their failure would have a significant impact on your business operations?). Fourth parties are increasingly being connected to concentration risk.

How do fourth parties fit into my TPRM program?

A company may have numerous vendors engaged with them at any given time, but are they aware of each of the vendors their third parties subcontract with? Without a clear understanding of fourth-party relationships connected with their vendors, companies leave themselves vulnerable to issues such as cyber-attacks, supply chain disruptions, and outages.

In addition to operational risks fourth parties can pose to organizations, regulatory bodies are paying increased attention to these sub-vendors and are holding organizations more and more responsible for not just their third-party vendors, but fourth-party vendors as well.

Best practices for managing fourth parties include:

• First identifying the most critical third parties to business operations
• Identifying who their third parties are, and analyzing the relationships and responsibilities of each of their subcontractors
• Holding third parties accountable such as through language that provides identification and protection within third-party relationship contracts
• Ensuring TPRM software is up-to-date with all relevant third- and fourth-party information, so as to catch an issue before it occurs (having the ability to map and associate fourth parties to third- party engagements is useful in this context)

How can Aravo help companies manage their fourth parties?

Aravo for Third-Party Risk Management (TPRM) provides automated solutions that helps companies onboard, monitor and manage third-party relationships, with functionality that allows you to map and manage their fourth parties (and n-party relationships). Through Aravo’s SaaS platform, companies have an understanding of their critical vendors’ resiliency and recovery capabilities with the ability to understand their exposure to fourth party and concentration risk (link to concentration risk glossary page) taken into account. Any impacts to operations or compliance issues are managed proactively, helping to avoid major incidents such as data breaches or regulatory penalties.  

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