Third-Party Risk Management Policy: What to Include (+ Template)

What Is a Third-Party Risk Management Policy?

A third-party risk management (TPRM) policy is the internal document that defines how your organization manages the risk created by vendors, suppliers, contractors, and the SaaS and AI tools your team uses. It answers the questions an auditor — or a board member after a vendor breach — will ask: Who can approve a new vendor? How do we decide which ones are risky? What do we require from them? How often do we re-check? What happens when we stop using them?

Without a policy, third-party decisions get made ad hoc: one team signs up for a tool with a click, another emails a vendor a questionnaire once and never follows up. The policy makes the process consistent, defensible, and repeatable — which is exactly what frameworks like SOC 2 and the SEC's Reg S-P require.

Policy vs. Procedures: What's the Difference?

Auditors will ask for your "policies and procedures," and the distinction matters:

• The policy states what you do and why — the rules, principles, and requirements. ("All vendors with access to customer data must complete a security review before approval.")
• The procedures describe how you do it — the actual steps, owners, and tools. ("The vendor owner sends the SIG Lite questionnaire via the TPRM platform; security reviews responses within 5 business days.")

Keep them separate but linked. The policy should be stable and rarely change; the procedures can evolve as your tooling does.

What to Include in a Third-Party Risk Management Policy

Every effective TPRM policy covers these sections. Use them as your outline.

• 1. Purpose & scope. What the policy covers — which third parties (vendors, suppliers, contractors, SaaS, AI tools) and which data and systems. Don't forget shadow IT and shadow AI; if your policy only covers procurement-approved vendors, it misses your biggest exposure.
• 2. Roles & responsibilities. Who owns the program, who approves vendors, who performs reviews, and what each business unit is accountable for.
• 3. Risk tiering / classification. How you rank third parties (critical, high, medium, low) — ideally based on the sensitivity of the data and the level of access each one has.
• 4. Due diligence requirements. What you require before approval, by tier: questionnaires (SIG, CAIQ, custom), SOC 2 or ISO certifications, DPAs, BAAs, pen-test results, and insurance.
• 5. Ongoing monitoring & reassessment. How you watch vendors after onboarding (breach alerts, expiring certificates) and how often you re-review each tier.
• 6. Offboarding. The steps to terminate a relationship safely: revoke access, retrieve or delete shared data, and document closure.
• 7. Exceptions & enforcement. How exceptions are requested, approved, and time-boxed — and the consequences of non-compliance.

The most common gap isn't a missing section — it's a policy that's well-written but unenforceable, because nothing in the company's stack can actually discover shadow vendors, tier them by real data exposure, or prove offboarding happened.

✨ From Policy to Practice: Enforcing It With Strac

A policy that lives in a Word document is an audit finding waiting to happen. The clauses only matter if you can operationalize them — and that's where most programs break down.

Strac's TPRM module, part of Strac Comply, turns each policy clause into something you can actually run and evidence:

• Scope clause → Strac discovers shadow IT and shadow AI from real data flows, so "all third parties" actually means all of them.
• Risk-tiering clause → vendors are scored by the sensitive data they touch, not a self-reported guess.
• Due-diligence clause → security reviews, AI document assessment, and document collection are tracked per vendor.
• Monitoring clause → continuous breach and data-flow alerts, with reminders before SOC 2s and DPAs expire.
• Offboarding clause → Strac can revoke access and delete shared data, not just mark the vendor inactive.

Every action is logged, so your policy isn't just words — it's backed by evidence an auditor can review.

Free Third-Party Risk Management Policy Template

You don't need to start from a blank page. A workable TPRM policy template includes:

• A one-paragraph purpose statement and a scope section listing covered third-party types and data.
• A roles table (program owner, approver, reviewer, business owner).
• A risk-tier matrix mapping data sensitivity and access to a tier, with required due diligence per tier.
• A monitoring & reassessment cadence table (e.g., critical vendors reviewed quarterly, low-risk annually).
• An offboarding checklist and an exceptions workflow.

Want the editable version, mapped to SOC 2, ISO 27001, and Reg S-P? Talk to Strac and we'll share the template and show you how to enforce it automatically.

🌶️ Spicy FAQs for Third-Party Risk Management Policy

What is a third-party risk management policy?

It's the written document that defines how your company evaluates, approves, monitors, and offboards the vendors and tools that touch your data and systems. It establishes the rules; the accompanying procedures describe the steps.

What should a TPRM policy include?

Seven sections: purpose and scope, roles and responsibilities, risk tiering, due diligence requirements, ongoing monitoring and reassessment, offboarding, and an exceptions/enforcement process.

What's the difference between a policy and procedures?

The policy states what you do and why (the rules); the procedures describe how you do it (the steps, owners, and tools). Auditors expect both, and evidence that you follow them.

How often should you update a TPRM policy?

Review it at least annually, and after any major change — a new framework requirement, a significant vendor incident, or a new class of third party like generative AI tools.

How do you enforce a third-party risk management policy?

Enforcement requires tooling that can discover every third party, tier them by risk, track reviews and documents, and prove offboarding. Strac's TPRM module maps to each policy clause and logs the evidence automatically.

Does SOC 2 require a third-party risk management policy?

Yes — SOC 2's CC9 criteria expect vendor risk assessment and oversight, which a TPRM policy formalizes. ISO 27001, GDPR, and Reg S-P have similar expectations.

The Bottom Line

A third-party risk management policy is the backbone of a defensible vendor program — but a policy you can't enforce is just paperwork. The strongest programs pair a clear, framework-mapped policy with tooling that makes each clause real: discovering every third party, tiering by actual data exposure, tracking every review, and proving offboarding.

That's what Strac's TPRM module delivers as part of Strac Comply. Book a demo for the editable policy template and a look at the vendors already touching your data.