Third-party risk management (TPRM) is a process of analyzing and minimizing risks associated with outsourcing to third-party suppliers or service providers. For example, it includes financial, environmental, reputation and security risks. The reason for these risks is that suppliers have access to the intellectual property rights, sensitive data and personally identifiable information (PII) of enterprises. Because the third-party relationship is very important to business operation, third-party risk management is an important part of network security strategy.

Enterprises face many potential risks when cooperating with third parties:

Network security risk: information leakage or economic loss caused by network attacks, security loopholes or other security incidents. Therefore, enterprises need to reduce risks through the due diligence process before introducing suppliers and continuous monitoring of the whole supplier life cycle.

Operational risk: the risk that a third party may cause business operations to be interrupted. This needs to be managed through service level agreements (SLA) and business continuity and incident response plans. According to the importance of suppliers, enterprises can choose more suppliers for backup (this practice is more common in the financial services industry).

Legal, regulatory and compliance risks: third parties may generate legal, regulatory or agreement risks. This is especially important for financial services, health care and government organizations and their business partners.

Reputation risk: the risk of negative public opinion caused by a third party. Bad reviews caused by services provided by third parties will have a negative impact on corporate image and reputation.

Strategic risk: Due to third-party suppliers, enterprises may not be able to achieve their business objectives.

The third party is a supplier, partner or other entity that directly conducts business with the enterprise, and the fourth party is a supplier or service provider that cooperates with the third party of the enterprise. The fourth party (or "the nth party") reflects the deeper relationships in the supply chain, which are not necessarily connected with enterprises through contracts, but through third parties.

I hope the above content can help you. If in doubt, please consult a professional lawyer.

Legal basis:

Article 174th of the Criminal Law of People's Republic of China (PRC)

Those who set up commercial banks, stock exchanges, futures exchanges, securities companies, futures brokerage companies, insurance companies or other financial institutions without the approval of the relevant competent departments of the state shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also be fined not less than 20,000 yuan but not more than 200,000 yuan; If the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years, and shall also be fined not less than 50,000 yuan but not more than 500,000 yuan.

Whoever forges, alters or transfers the business licenses or approval documents of commercial banks, stock exchanges, futures exchanges, securities companies, futures brokerage companies, insurance companies or other financial institutions shall be punished in accordance with the provisions of the preceding paragraph.

If a unit commits the crimes mentioned in the preceding two paragraphs, it shall be fined, and the directly responsible person in charge and other directly responsible personnel shall be punished in accordance with the provisions of the first paragraph.