By Jennifer Crossman, Industry Contributor
In the evolving landscape of financial services, third-party and supplier relationships are expanding in both volume and complexity. As firms increasingly depend on external providers for critical services, the need to manage third-party risk has become a strategic and regulatory necessity.
"Your risk perimeter is no longer just your own four walls—it’s everyone you do business with," says Tim Albinson, Chairman of Aravo Solutions, a leader in third-party risk management (TPRM) platforms.
Financial institutions face risks that extend far beyond operational efficiency. Cybersecurity threats, data privacy issues, ESG compliance, and systemic supply chain vulnerabilities are all deeply intertwined with third-party performance. Regulatory bodies like the OCC, EBA, and FCA are issuing more rigorous guidance—and enforcement—on how institutions must govern these relationships.
“Too many organizations are still managing vendor risk with outdated tools and decentralized approaches,” Albinson explains. “You can’t manage what you can’t see. The key is to bring everything into a centralized, risk-based system that tracks the full lifecycle of each third-party.”
Modern TPRM isn’t just about compliance. It enables banks, insurance providers, and asset managers to make smarter, faster, and safer decisions. Albinson notes that firms that proactively manage risk—rather than reacting after the fact—are also the ones who are best positioned to innovate.
“TPRM isn’t about slowing the business down,” he adds. “It’s about building the infrastructure so that it can scale confidently and securely.”
As financial institutions continue to digitize, streamline, and expand their partner ecosystems, third-party risk must remain top-of-mind—not just for compliance teams, but at the board and executive level. Leaders like Timothy Albinson believe the conversation around risk is shifting from a regulatory box-checking exercise to a strategic enabler.