Shift Left, Speed Up: Why You Should Assess Risk Before Signing a Contract

You’ve got a deadline. You need a vendor solution fast. Legal is waiting, IT is skeptical, and Procurement is ready to issue the contract. But just as the paperwork is about to be finalized, your Third-Party Risk Management (TPRM) team spots a red flag. Suddenly, the project stalls, timelines shift, and everyone feels the pressure.

This scenario is all too common. And it’s preventable. The key lies in a simple but powerful shift: considering risk earlier in the process and anchoring decisions in a clear, shared understanding of your organization’s risk appetite.

Start With Risk Appetite, Not Just Risk Review

Risk appetite is more than a formality. It defines how much risk the organization is willing to accept, and in what areas. When it is clearly communicated and applied early, it shapes the entire procurement process. Teams avoid chasing vendors that were never a fit, requirements become easier to define, and fewer last-minute surprises derail progress.

Example:

If your policy requires that cloud vendors provide annual penetration testing and avoid storing data in jurisdictions with weak privacy protections, including that guidance in the RFP allows Procurement and Legal to work more efficiently. Misaligned vendors are filtered out early, and evaluations stay focused on those who can meet your standards.

Action Steps:

• Translate your risk appetite into specific sourcing and contracting guidelines
• Share this guidance with Procurement, Legal, and business owners at intake
• Build practical tools like checklists or sourcing briefs that reflect appetite boundaries

Focus on the Product or Service Risk, Not Just the Vendor

Many TPRM programs wait until after a vendor is identified before conducting risk reviews. By that point, you’ve already built business momentum and it’s harder to make adjustments. Instead, begin by evaluating the risk introduced by the product or service itself.

Some services come with predictable exposure. Any vendor interacting with customers is likely to trigger privacy and reputational risk. A third party accessing internal systems may raise cybersecurity or regulatory concerns. These risks stem from the nature of the engagement, not the vendor’s identity.

Understanding this early helps teams define expectations, build sourcing strategies that reflect real exposure, and right-size the due diligence that follows.

Example:

Your product team wants to outsource development of a mobile app feature. A quick early review shows the feature will handle health data, which triggers HIPAA compliance. That insight allows you to include compliance requirements in the RFP and eliminate vendors who are not prepared.

Action Steps:

• Include a “risk profile” section in all internal vendor requests
• Ask early: What systems are involved? What data will be handled?
• Use the responses to flag high-risk requests and engage Privacy, Legal, or Security early

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Use Internal Risk Questionnaires to Set the Right Focus

Not all third-party engagements carry the same risk. A generic approach to due diligence slows everything down and often misses what matters. A standardized internal risk questionnaire allows you to assess inherent risk based on the type of service, before any vendor is chosen.

This helps you avoid over-reviewing low-risk vendors or under-reviewing high-impact ones. It also aligns everyone on what is being outsourced, why it matters, and what depth of review is appropriate.

Example:‍

Two vendors offer translation services. One handles marketing copy, while the other processes confidential legal documents. While the services sound similar, the underlying risk is not. An internal risk questionnaire helps distinguish between the two by assessing what is being outsourced and how sensitive it is. Those insights then shape the depth and focus of due diligence.

Action Steps:

• Create an internal questionnaire that categorizes services by risk domain (data, operations, regulatory, etc.)
• Assign baseline risk levels to common request types for consistency
• Use the results to shape due diligence scope and vendor selection

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Different Risks, Different Controls: Align Reviews to the Exposure

Once you understand the risk introduced by the product or service, the next step is to align your due diligence accordingly. Not every engagement requires the same level of scrutiny. Tailoring controls to the type of service, rather than applying a uniform review to every vendor, ensures that effort is focused where it matters most. A vendor handling payment card data may require evidence of PCI DSS compliance. A development partner should demonstrate secure coding practices and vulnerability testing. A customer-facing vendor needs to meet privacy expectations and protect brand reputation. Right-sizing your due diligence helps avoid over-reviewing low-risk engagements or missing critical gaps in higher-risk ones.

Vendor due diligence should evaluate whether the provider can meet those control needs. It is not just about what service they offer, but whether they are mature and reliable enough to deliver it safely.

Key traits to evaluate:

• Organizational maturity
• Security posture
• Operational resilience
• Reputation and ethics

Example:‍

You are considering a cloud provider to store sensitive contracts. Based on the nature of the data, you require robust access controls and a documented incident response plan. If the vendor cannot demonstrate these, they are not a good fit.

Action Steps:

• Define control requirements based on the specific risk of the service
• Align assessment questions to those controls
• Customize due diligence to focus on relevant risk areas

Avoid Last-Minute Surprises by Embedding Risk Early

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When risk evaluation happens at the end, it tends to block progress. When it happens early, it becomes a planning tool that helps the project succeed. Early consideration of risk allows teams to focus on viable vendors, avoid rework during contracting, and align stakeholders before timelines are at risk.

Example:‍

You select a vendor quickly to meet a launch date. But during final review, you learn they store data offshore in a country with weak privacy protections. The contract has to be scrapped, and timelines reset. A quick early check would have saved time and frustration.

Action Steps:

• Include “risk readiness” guidance in RFP and intake templates
• Build modular contract clauses tailored to different risk types
• Schedule early-stage checkpoints for high-risk engagements

Make Risk a Shared Responsibility

TPRM does not work in isolation. Managing third-party risk well requires shared ownership across Procurement, Legal, IT, and business teams. Embedding risk early depends on alignment, communication, and a common understanding of what risk appetite means.

When everyone knows the expectations up front, reviews move faster, and projects stay on track.

Action Steps:

• Add risk discussions and reviews to early intake and planning workflows
• Train cross-functional teams on how to use risk appetite in decision-making
• Track time saved and exception rates to demonstrate value

Conclusion: A Smarter, Simpler TPRM Starts with Timing

The success of third-party risk management has less to do with how many controls are checked and more to do with when risk enters the conversation. When risk is considered early, organizations gain options, avoid backtracking, and make faster, more informed decisions. A clear risk appetite sets the boundaries, early scoping reveals real exposure, and shared ownership keeps the process moving.

TPRM works best not as a final hurdle, but as a strategic tool that shapes decisions from the start. By shifting left and embedding risk at the launch point, organizations turn risk management into a source of clarity, speed, and alignment across every engagement.

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