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Best Practices

Value Through Risk

How to create a leadership view on management of third-party risks as a business driver.

By Dan Kinsella | Updated on October 17, 2018

Corporate treasurers and finance managers, as well as CEOs, board members, and other stewards of the business, generally pride themselves on recognizing and leveraging new forms of value in the organization. The good news for these executives is that many of them are sitting on a lode of untapped value, which they may be able to harness using extended enterprise risk management (EERM).

That’s because many organizations have extensive opportunities to tap the potential of third-party assets that exist beyond the traditionally recognized boundaries of the organization. What does it mean to extend the enterprise, and what’s the nature of the value and risk that comes with these third-party assets?

Simply put, executives extend the enterprise every time they use a cloud service, outsource a business process, or otherwise spread operations beyond the traditional four walls of the company. Whenever this happens, benefits and risks are derived from those interactions with third parties. The benefits may be new or enhanced services; cloud resources, in particular, are vital for the range and scalability of services they can bring. The risk comes from needing to trust that these third parties—and their subcontractors—are making no mistakes in handling data, ensuring privacy, or doing anything else that would harm the business.

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