Evolving business models have led companies to become more integrated with their suppliers, distributors and other third parties. Even as regulation grows more stringent, the increase in outsourcing has left companies more vulnerable to breaches or violations caused by their third-party partners.
With both financial and legal consequences at stake—not to mention potential brand and reputational damages—board members face a challenge of great complexity. How do boards oversee third-party risks when, by their nature, third parties operate outside of the company’s controlled environment?
In this episode, Barbara Berlin (a director with PwC’s Governance Insights Center) answers several pertinent questions regarding the board’s risk oversight:
- Why are third-party risks more prevalent today?
- What are the most common types of third-party breaches companies are facing?
- What questions should boards be asking to minimize third-party risk?
Berlin walks board members through best practices for prioritizing external risks. She outlines action items for all parties involved: management, general counsel, audit committees, and the whole board.