Our RiskBusters Bust the TPRM Myth that You Can’t See Nth-Party Risks

Written by: Jeffrey Wheatman

In the world of Third-Party Risk Management (TPRM), one of the most stubborn and persistent myths is that you can’t see beyond your third parties—into your fourth, fifth, or even nth parties—to identify and mitigate risks. This belief has long influenced how organizations approach risk management, often leading to a narrow focus on direct vendors while ignoring the broader, interconnected web of dependencies that make up the modern supply chain. But as the latest episode of “RiskBusters” shows, this dangerously misleading myth doesn’t just need debunking—it needs to be obliterated.

Why Do People Believe This Myth?

The belief that you can’t see beyond your third parties is rooted in the complexity of today’s interconnected business ecosystems. Organizations rely on multiple vendors, each of whom has their own vendors, creating a cascading chain of third, fourth, and fifth parties. Keeping track of these relationships can feel like an insurmountable task.

Traditionally, contracts have been the primary tool for managing these risks. Organizations often rely on contract language to require their vendors to monitor and report on their sub-processors (essentially, fourth parties). They are forced to assume that if their third-party vendors are contractually obligated to manage their own vendors, the risk will be adequately contained. However, this approach often leaves a significant blind spot. Contracts might provide a false sense of security but don’t offer real-time visibility into the entire vendor ecosystem, and companies rely on their vendors’ best efforts to monitor their third-party ecosystems. Often, vendors find it too difficult to commit to reporting incidents in their third-party ecosystem, so they refuse to add it to contracts in the first place.

Regulations like data processing laws try to solve this problem by requiring that organizations not only identify but also actively monitor and manage risks associated with their sub-processors, while notification laws specify how quickly a breach must be reported. But there is still the issue of communication delays. If a fourth party experiences a breach, the organization might only find out until after a significant lag—if the fourth party informs the third party and the third party then decides to inform you. This delay can be detrimental, putting organizations days behind in their response to a potential crisis. 

Another reason this myth persists is the reliance on manual processes. Organizations may attempt to reach out to their vendors to inquire about their fourth or fifth parties. The reality? The response rates are dismal. As we point out in this episode of “RiskBusters,” waiting for these replies can be like waiting for rain in a drought—never-ending and ultimately unfruitful.

The Importance of Seeing Risk Beyond Third Parties

Ignoring the risks posed by fourth, fifth, and sixth parties can lead to catastrophic consequences. The interconnected nature of modern supply chains means that a vulnerability at any level can cascade, potentially causing widespread damage across the entire ecosystem. For instance, if a critical fourth party is compromised, it could jeopardize the operations of several third parties simultaneously, leading to a major disruption.

We actually found such a cascading risk in our own ecosystem. When Black Kite first introduced our Vendor Map feature, Bob Maley, our Chief Security Officer, used it to assess the ransomware susceptibility within our own vendor ecosystem using the Ransomware Susceptibility Index^® (RSI^TM) filter. Initially, the direct (tier one) vendors seemed secure, but further investigation revealed a significant risk at the fourth-party level. This fourth party, used by 90% of our tier one vendors, had a high RSI value. A ransomware attack on that single fourth party could potentially have devastating consequences to our business by taking down our third-party ecosystem. This risk would have gone unnoticed without the ability to see beyond our third parties. This is why it’s critical not only to see beyond your third parties but to actively monitor and manage these risks.

Busting the Nth-Party Risk Myth: How Black Kite Makes It Possible

As the “RiskBusters” episode and our CSO’s insights demonstrate, the belief that you can’t see beyond your third parties is a relic of the past. With advancements in TPRM technology, like Black Kite’s Supply Chain module featuring the vendor map, organizations can now gain unprecedented visibility into their entire vendor ecosystem. These tools allow you to not only map out your direct vendors but also track their sub-processors and beyond, providing a clear, real-time view of potential risks at every level.

Instead of relying solely on contracts or manual processes—which are often slow and unreliable—organizations can now leverage data-driven tools to monitor their extended supply chain proactively. This approach enables faster identification of vulnerabilities, more effective risk mitigation, and a stronger overall security posture.

Check Out Episode 1 Now!

The Nth-Party Myth Is Busted—So Now It’s Time for a New Approach

The idea that you can’t see beyond your third parties in TPRM is a myth that no longer holds up under scrutiny. With the right tools and a proactive approach, you can gain the visibility you need to protect your organization from risks hidden deep within your vendor ecosystem.

Before Black Kite’s Supply Chain module launched, the notion that “You can’t see beyond your third parties” was in fact true. You couldn’t see beyond your third parties. But now, that’s no longer the case. It’s time to retire the outdated belief that your risk management ends with your third parties and embrace a more comprehensive, data-driven strategy. After all, in today’s interconnected world, visibility isn’t just an option—it’s a necessity.

See Black Kite’s Supply Chain for yourself with a free demo.