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SPMC Watchers’ Hall inaugurated

DAVAO CITY — The watchers’ hall at the Southern Philippines Medical Center (SPMC) was officially inaugurated on Saturday with Senator Christopher Lawrence “Bong” T. Go, leading the ribbon cutting.

The five-story SPMC Pahulayan Building, which has a capacity of 140 people, has an elevator, toilets, washing areas, benches, and a roof deck with a total area of 2,054.84 square meters.

The facility, which was funded under the Fiscal Year 2021 Regular Infrastructure Program with an original contract amount of P151.5 million, aims to serve the families and watchers of patients admitted at the SPMC who often come from far-flung areas and cannot afford to spend for accommodations near the hospital.

“Sometimes there are more watchers than patients. In one patient, there are sometimes two or three watchers, especially when they come from far away, far-flung areas or outside Davao City. But we are implementing a guideline, ‘one patient, one watcher’,” said Dr. Ricardo B. Audan, SPMC chief, in an interview.

The Pahulayan Building is a brainchild of former President Rodrigo R. Duterte when he was the mayor of Davao City. It started as a one level building in 2012.

The construction of the five-story building began on November 9, 2021. After two years and four months of construction, the facility was completed on March 17, 2024.

The services at the SPMC Pahulayan Building are free of charge. — Maya M. Padillo

BoC-Clark seizes P708,000 ‘Kush’

SHELBY IRELAND-UNSPLASH

THE Bureau of Customs (BoC) said it seized P708,000 worth of marijuana at the Port of Clark, it said on Sunday.

In a statement, BoC confiscated 472 grams worth of high-grade “Kush” marijuana declared as “Mens Vintage Threads Jean Straight Leg Fit (30/34) Girls,” which arrived on Oct. 25.

The shipment was flagged by the BoC’s X-ray Inspection Project after it detected “unusual images,” and a K-9 unit pointed out the presence of illegal substances.

Customs said the physical examination was conducted in coordination with the Philippine Drug Enforcement Agency (PDEA), Philippine National Police —  Aviation Security Group, National Bureau of Investigation Pampanga District Office, Department of Justice, and Barangay Dau officials in Mabalacat City.

“Authorities found two pieces of black and transparent plastic pouch containing two pieces of plastic wrapped with yellow-orange jelly-like textures suspected to be marijuana derivatives, and a piece of transparent plastic couch containing 472 grams of fruiting tops suspected to be high-grade marijuana,” BoC said.

A warrant was issued to seize and detain the shipment after chemical analysis by PDEA confirmed the substances as tetrahydrocannabinol and marijuana. — Aubrey Rose A. Inosante

BARMM cops seize P6.8M worth drugs

PHILSTAR FILE PHOTO

COTABATO CITY — Policemen confiscated P6.8 million worth of crystal meth (shabu) from a couple who fell in an entrapment operation in Datu Odin Sinsuat on Saturday.

Brig. Gen. Romeo J. Macapaz, director of the Police Regional Office-Bangsamoro Autonomous Region in Muslim Mindanao, told reporters on Sunday that Oks Ayunan Odin and his wife, Bellia Antilino Odin, are now detained, awaiting prosecution for the violation of the Comprehensive Dangerous Drugs Act of 2002.

Mr. Macapaz said the couple was immediately arrested after selling to personnel of the Sultan Kudarat Municipal Police Station, led by Lt. Col. Esmael A. Madin, a kilo of shabu, costing P6.8 million, in a tradeoff on Saturday afternoon in the town proper of Datu Odin Sinsuat, Maguindanao del Norte.

The entrapment operation was first laid by Mr. Madin and his subordinates in Barangay Salimbao in Sultan Kudarat, but the Odins asked their contacts in the Sultan Kudarat Municipal Police Station.

Mr. Madin told reporters their counterparts in the Datu Odin Sinsuat Municipal Police Station, under Lt. Col. Samuel Roy M. Subsuban, assisted them in carrying out the operation that resulted in the arrest of the Odins and the seizure of millions worth of drugs. — John Felix M. Unson

Shares may drop further amid weak sentiment

PHILIPPINE STAR/KRIZ JOHN ROSALES

PHILIPPINE SHARES may remain on a downtrend this week as investors stay cautious while awaiting clarity on the policy direction of the Trump administration and following weak domestic data. 

On Friday, the Philippine Stock Exchange index (PSEi) sank by 0.53% or 37.26 points to end at 6,977.18, while the broader all shares index declined by 0.2% or 7.84 points to close 3,883.80.

Friday’s close was the PSEi’s worst finish in nearly two months or since it ended at 6,944.88 on Sept. 11.

Week on week, the benchmark index dropped by 2.3% or 165.78 points from its 7,142.96 finish on Oct. 31, posting a third consecutive week of losses.

“Local equities tracked regional counterparts’ rout [last] week after Donald J. Trump’s election victory spooked growth outlook outside of the United States,” online brokerage firm 2TradeAsia.com said in a market note.

“The local market continues to exhibit bearish movements, this time breaking below the 7,000 support line. Foreign funds have been exiting the market,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

For this week, the US election result could continue to affect market sentiment, he said.

“We may see some bargain hunting in this week’s trading. A strong ascent is not expected yet, however, as investors may continue to deal with our slow third quarter economic growth, weak peso, and the challenging global economic outlook due to the possibility of protectionist policies in the US amid a Trump presidency,” Mr. Tantiangco said.

Philippine gross domestic product (GDP) grew by 5.2% in the third quarter, slower than the revised 6.4% expansion in the second quarter and the 6% print in the same period last year. This was below the 5.7% median forecast in a BusinessWorld poll of 12 analysts.

In the first nine months, GDP growth averaged 5.8%, below the government’s 6-7% annual target.

Still, the market could receive a boost from the release of corporate results and expectations of more interest rate cuts here and abroad, Mr. Tantiangco added.

“Robust third-quarter and first nine-month corporate results and hopes of a continuous monetary policy easing here in the Philippines amid permitting factors, namely the country’s controlled inflation situation, the growth slowdown, and the Federal Reserve’s own policy easing, may give the market a boost,” he said, adding that the PSEi could retest its 7,000 support this week.

For his part, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail that the market’s immediate minor resistance is at 7,065-7,170.

“The underlying upward trend for four months already remains intact for as long as it remains above the immediate support at 6,710 to 6,880 levels,” he said.

2TradeAsia.com placed the PSEi’s immediate support at 6,800-6,850, primary resistance at 7,000, and secondary resistance at 7,200. — Revin Mikhael D. Ochave

Peso to remain rangebound after Trump win, Fed rate cut

PHILSTAR FILE PHOTO

THE PESO could move sideways against the dollar this week and stay at the P58 level following the result of the US elections and the US Federal Reserve’s latest rate cut.

The local unit closed at P58.26 per dollar on Friday, strengthening by 47 centavos from its P58.73 finish on Thursday, Bankers Association of the Philippines data showed.

Week on week, however, the peso declined by 16 centavos from its P58.10 finish on Oct. 31.

“The dollar-peso ended lower [on Friday] mainly due to the 25-basis-point (bp) cut from the Fed,” a trader said by phone.

The Fed’s rate cut led to a generally weaker dollar and lower US Treasury yields on Friday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For this week, the trader said the peso could consolidate as the market continues to digest the US 2024 presidential election results and the Fed’s rate decision.

Mr. Ricafort added that the peso’s movement could also be affected by the release of October US producer and consumer inflation data this week.

Both Mr. Ricafort and the trader see the peso moving between P58 and P58.50 versus the dollar this week.

The Federal Reserve cut interest rates by a quarter of a percentage point on Thursday as its policy makers began taking stock of what could become a more complex economic landscape when President-elect Donald J. Trump takes office next year, Reuters reported.

Fed Chair Jerome H. Powell said the results of Tuesday’s presidential election, which paved the way for a US chief executive who has pledged widespread deportation of immigrants, broad-based tariffs, and tax cuts, would have no “near-term” impact on US monetary policy.

Mr. Powell said the Fed will continue assessing data to determine the “pace and destination” of interest rates as officials reset currently tight monetary policy to account for inflation that has slowed markedly in the past year and is nearing the US central bank’s 2% target.

But as the new administration’s proposals take shape, the Fed chief said the central bank would begin estimating the impact on its twin goals of stable inflation and maximum employment.

“It’s a process that takes some time,” said Mr. Powell, who spoke in a press conference following the Fed’s decision to reduce its benchmark overnight interest rate to the 4.5%-4.75% range. “It’s all of the policy changes that are happening. What’s the net effect? The overall effect on the economy at a given time? That’s a process… we go through all the time with every administration.”

The first years of President Joseph R. Biden’s administration, for example, saw passage of major infrastructure and other spending bills that added to growth but, many economists feel, also contributed to the eventual breakout of inflation that the Fed had to suppress with rapid rate hikes in 2022 and 2023.

Inflation has since fallen and Fed policy rates are coming down as well, a process Mr. Powell said is still expected to lead over time to a more neutral rate of interest that neither stimulates nor restrains the economy.

Yet the exact destination remains unknown, and may become even harder to pin down if fiscal and tax policies change as rapidly as Mr. Trump has pledged, particularly given the political tailwind of Republican control of the US Senate and possibly the House of Representatives.

Mr. Powell, who was appointed by Mr. Trump and then eventually clashed with him during the Republican president’s first term, will now oversee monetary policy during those first critical months of the new administration.

Mr. Trump indicated over the summer, and a CNN report on Thursday reaffirmed, that he would let Mr. Powell continue as Fed chief until the end of his current four-year term in May of 2026 — and Mr. Powell said bluntly on Thursday that he would not resign if asked. The president, he said, had no authority under law to remove the head of the Fed, a position confirmed by the Senate, over a policy disagreement. — A.M.C. Sy with Reuters

Firms exiting China over Trump tariff threat could land in PHL

REUTERS

By Justine Irish D. Tabile, Reporter

INVESTMENT could grow under the second Trump administration, in the form of manufacturers relocating out of China, while services, which are less affected by tariffs, could benefit from deepening integration of the US and Philippine economies, regulators and industry officials said.

Growth of US investments to be sustained even under President-elect Donald J. Trump, said the Philippine Economic Zone Authority (PEZA) and the information technology and business process management (IT-BPM) industry.

PEZA Director General Tereso O. Panga said via Viber “that deep ties will continue to be shared between the US and the Philippines, especially in trade and business” under a Trump administration.

Economic zones managed by PEZA “remain the home of premiere US locators and we foresee this to continue under (Mr. Trump). As President Marcos proclaimed, the US-Philippines relationship will blaze a path of mutual prosperity,” he added.

He said manufacturers in China could seek alternative production bases when the new US government follows through on its threat to raise tariffs on all imported products.

They could opt to “establish manufacturing in the US while shifting some of their production outside of China while retaining a presence in Asia,” he said.

He said that the Philippines can be a preferred investment destination in ASEAN and the Indo-Pacific due to its demographics, fiscal incentives, the presence of high-tech manufacturing companies, trade privileges, and a stable economy.

“Through the economic zones, we can readily host manufacturing companies that relocate their factories or invest in new facilities in the Philippines,” he added.

Meanwhile, the IT and Business Process Association of the Philippines (IBPAP) said that it is confident that the IT-BPM industry will achieve its targets under the new US government.

“IBPAP remains confident that the industry will continue to sustain its growth projections and achieve its baseline targets in jobs and service export revenue,” IBPAP said in an e-mail in response to queries from BusinessWorld.

“The demand continues to be strong from North American investors across the various sectors of IT-BPM,” it added.

AmCham Executive Director Ebb Hinchliffe said that the chamber will continue working with the US government to strengthen economic ties between the US and the Philippines.

“We will always continue to do so under any administration. We will keep working to build on the progress made to boost our trade and economic relationship and increase US investments in the Philippines,” he said via Viber.

Disaster funds reckoned at nearly P284B at end of Oct.

PHILIPPINE STAR/MIGUEL DE GUZMAN

THE Department of Budget and Management (DBM) reported a balance of nearly P284 billion for the National Disaster Risk Reduction and Management Fund (NDRRMF) as of the end of October.

“As of Oct. 31, 2024, the NDRRMF has a total available balance of P283,900,878, net of the P1-billion allocation for parametric insurance coverage of government facilities against natural calamities,” Budget Secretary Amenah F. Pangandaman told BusinessWorld via Viber on Nov. 7.

Ms. Pangandaman said in a letter to the National Disaster Risk Reduction and Management Council (NDRRMC) dated Sept. 25, that it recommended the potential use of the P1-billion parametric insurance appropriation for the NDRRMF Program. 

To date, an NDRRMC decision on the matter is under review.

The NDRRMF has been allotted P31 billion in the 2025 National Expenditure Program, representing a P10.5 billion increase from the P20.5 billion allocation in 2024 in the General Appropriations Act.

“The DBM is looking to tap other sources of funds to support the continued relief and rehabilitation of vulnerable areas,” Ms. Pangandaman said.

The Contingent Fund, along with available funds from the regular budgets of various departments, unprogrammed appropriations, and Local Government Support Fund – Financial Assistance to Local Government Units, as other sources that can be tapped to augment the replenished Quick Response Fund (QRF), she said.

The QRF is a stand-by fund applicable to preparatory activities, relief, and rehabilitation in case of disasters and calamities.

“Per our record, apart from DSWD (Department of Social Welfare and Development) and DPWH (Department of Public Works and Highways) there are currently no other pending requests on hand for QRF replenishment from other first-responder departments/agencies,” Ms. Pangandaman said.

She said QRF replenishment, chargeable against the NDRRMF, may be provided to departments or agencies when their QRF balance reaches a critical level of 50%. — Aubrey Rose A. Inosante

Storm-weakened rice production expected to drive PHL imports in 2025

PHILSTAR FILE PHOTO

By Adrian H. Halili, Reporter

PHILIPPINE rice imports in 2025 will be driven by the expected decline in the production of palay (unmilled rice) this year, analysts said.

“We will have to import more next year to cover up the drop in production this year. Aside from this, demand for rice will increase because of the annual growth in the population,” Federation of Free Farmers national manager Raul Q. Montemayor said via Viber.

In its latest Grain: World Markets and Trade Report, the US Department of Agriculture (USDA) said the Philippines is projected to import about 5.1 million metric tons (MMT) in 2025.

The USDA’s new forecast represents a 200,000 MT upgrade from the estimate of 4.9 MMT issued in October. The projection for next year is slightly higher compared to the 5 MMT forecast for 2024.

The Philippine Department of Agriculture (DA) said palay production will likely decline 3.24% to a four year low of 19.41 MMT in 2024. This is equivalent to about 12.69 MMT of milled rice.

In 2023, actual palay output was 20.06 MMT. The new 2024 forecast also represents a downgrade from the 20.1 MMT estimate the DA issued in August.

The USDA said rice consumption in the Philippines is growing in line with population growth.

“The Philippines is importing record amounts due to a combination of population growth and reduced import tariffs. Thus far in 2024, the Philippines relied on Vietnam for more than 80% of imports,” the USDA said.

In June, President Ferdinand R. Marcos, Jr. signed Executive Order (EO) No. 62 which lowered the tariff on imported rice until 2028 to 15% from 35%. EO 62 was meant to tame rice prices and plug gaps in rice production.

The USDA is projecting domestic rice production of 12.3 MMT in milled rice equivalent for 2025. This slightly lower than the 12.33 MMT estimated for this year.

As of the third quarter, palay production declined by 12.4% to 3.33 MMT from 3.8 MMT the same period last year, data from the Philippine Statistics Authority (PSA) showed.

Mr. Montemayor said that the rice imported this year would partially offset any anticipated drop in rice production.

“End-of-year stock levels will most probably be lower than normal, which means we will have to import more next year barring any significant increase in local production,” Mr. Montemayor added.

The DA said that it is aiming for a national rice inventory of 3.83 MMT by the end of the year. This is equivalent to about 100 days’ demand.

The national rice inventory rose 6.8% year on year to 1.66 MMT in September, according to the PSA.

Former Agriculture Secretary William D. Dar said rice imports will likely remain at around 4 MMT next year, but production remains threatened by weather events.

“The challenges continue like erratic weather events like typhoons and flooding as well as low total factor productivity,” Mr. Dar said in a text message.

The Philippines experiences about 20 tropical cyclones each year. The government weather agency, known as PAGASA (Philippine Atmospheric, Geophysical and Astronomical Services Administration), has logged about 14 tropical cyclones entering the Philippine Area of Responsibility (PAR), with about two expected to enter PAR this month.

Earlier in the year the Philippines faced dry conditions during El Niño, leading to droughts and dry spells in various regions.

The Philippines is also set to experience La Niña, which heightens the likelihood of tropical cyclones, low-pressure areas, and the Intertropical Convergence Zone. La Niña also intensifies the Southwest Monsoon.

PAGASA estimated a 71% chance of La Niña occurring between September and November, likely persisting until the first quarter of 2025.

“The government must intensify its efforts to promote science and technology-based solutions and measures to boost productivity and increase income of farmers,” Mr. Dar said.

Nickel Asia sees US critical minerals deal allowing PHL to focus on battery-use nickel

BW FILE PHOTO

A CRITICAL minerals agreement with the US will help cut dependence on the China and Indonesia export trade and allow the Philippines to focus on the type of nickel products used in batteries, Nickel Asia Corp. President and Chief Executive Officer Martin Antonio G. Zamora said.

At the Pilipinas Conference 2024 last week, Mr. Zamora said China, the biggest stainless steel producer, and Indonesia, a major producer, were his company’s main ore buyers.

“Most of the stainless steel is produced and consumed in China and Indonesia — what we call class two nickel,” Mr. Zamora told a panel discussion.

“To reduce our dependence on China, I would focus on class one nickel, which is the battery type of nickel,” he added.

To achieve this, he said that the Philippines will need to seal a critical minerals agreement with the US to allow the latter to better compete with China in the battery market.

“If we do that and we partner with, for example, a Japanese company to invest in the plant, and we also partner with battery and electric vehicle (EV) makers; in exchange for that technology and capital, they get off take from our nickel,” he added.

Part of the attraction is the ability “to produce at a higher ESG (environmental, social and governance) standard,” he said, adding that any price disadvantages could be offset by incentives offered by the US government.

“The US government incentivizes consumers to buy EVs, and they offer tax credits,” he said.

He said the Philippines needs to pursue deals attractive to potential investors.

“It will require cooperation among various parties. We need the critical minerals agreement with the US so that we can supply to the US and enjoy subsidies,” he added.

Earlier this year, the Department of Trade and Industry said the Philippines proposed to join Japan and the US in their own critical minerals agreement.

The US and Japan signed their deal March 28, 2023 to shore up their critical minerals supply chains and promote the adoption of EV battery technology. — Justine Irish D. Tabile

Immediate resolution urged for Meralco rate reset issue

BW FILE PHOTO

By Sheldeen Joy Talavera, Reporter

THINK TANK InfraWatch PH called on the Energy Regulatory Commission (ERC) to act immediately on a long-overdue decision on Manila Electric Co.’s (Meralco) fifth regulatory reset.

In a letter to the ERC dated Oct. 30 addressed to then-acting ERC Chairperson Jesse Hermogenes T. Andres, InfraWatch Convenor Terry L. Ridon urged the regulator to release its decision on Meralco’s fifth regulatory period (5RP) covering the years 2022 to 2026.

“This will not only ensure that the benefits promised under PBR (performance-based regulation) are realized by customers but will also send the appropriate signals for investors to come in,” Mr. Ridon said.

Under the Electric Power Industry Reform Act of 2001, or EPIRA, the ERC is tasked with establishing and enforcing a methodology for setting transmission and distribution wheeling rates for distribution utilities.

Distribution utilities such as Meralco are subject to a PBR and a a rate reset process prior to the start of the next regulatory year.

The rate reset process is a forward-looking exercise that requires the regulated entity to submit forecast expenditures and proposed projects over a five-year period, to be reviewed by  the ERC, which will then adjust rates.

Mr. Ridon said it is “high time” for the ERC to issue a formal order on the 5RP to allow parties to proceed with the 6RP, which will commence on July 2026.

He said Meralco’s rate reset should have been issued before July 1, 2022.

The same rules on rate reset “cannot legally be made to apply to a period that has already lapsed and where the forecasts are no longer relevant because actual costs have been incurred,” he said.

“To hold otherwise would be to deprive the PDUs (private distribution utility) and the consumers of PDUs alike of substantive and procedural due process,” he said.

Mr. Ridon said that the decision to consider the 5RP as lapsed is “correct and fair,” and is consistent with the ERC’s own rules and practice.

Asked to comment, ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said she has yet to see the letter.

She said at a briefing last week that the commission hopes to issue its decision within the year.

Ms. Dimalanta said the commission has revisited the matter and made some “modifications” following a recent Senate hearing.

Meralco Senior Vice-President and Head of Regulatory Management Jose Ronald V. Valles has said that an estimated P16 billion worth of refunds are expected once the ERC resolves the rate reset and considers the 5RP a lapsed period.

“That’s a big, big, big relief for the consumers. That’s why we want to have closure already,” Mr. Valles said in a briefing.

He said that the power distributor is awaiting an official decision from the ERC to trigger the filing of the application for refund and start preparations for the next period of rate reset.

“In our review of the specific case of Meralco and the regulated entities under PBR, one thing is for sure — there needs to be changes and it has to start with strict adherence to timelines,” Mr. Ridon said.

Gov’t procurement seen as pathway for future exporters to build up track record

BW FILE PHOTO

WOULD-BE exporters can explore government contracting to establish a domestic track record prior to venturing into exports, the Philippine International Trading Corp. (PITC) said.

In a statement, the Philippine Exporters Confederation, Inc., said that businesses should take advantage of the Tatak Pinoy Act.

PITC Vice-President for International Trading Services Joel S. Rodriguez said: “Priority is being given to domestic industries supplying the government under the Tatak Pinoy law.”

Signed into law in February, the Tatak Pinoy (or Proudly Filipino) Act aims to help industries raise their quality standards and drive up the value of their goods and services.

“It is a good tactic to supply to the government because it has the biggest budget for procurement,” Mr. Rodriguez said.

“Under countertrade, we also obligate foreign suppliers to buy from the Philippines. As of to date, we have generated countertrade deals of over $500 million,” he added.

He said interested businesses should register with the Philippine Government Electronic Procurement System and look at the list of items required by the government.

“Would-be exporters are being encouraged to do business with the government because buyers often ask how well the supplier has been performing in the local market,” he said.

“So it is very important for the exporters to establish a good track record in the domestic market … chances that exporters will penetrate mainstream overseas markets will improve if they have a track record in the domestic market,” he added.

Mr. Rodriguez noted the growing demand for food products, furniture, decor, and handicrafts, though buying behavior is changing.

“It is notable that foreign buyers now prefer to buy in smaller quantities from different sources and no longer purchase in bulk,” he said.

“The export market is open to micro, small and medium enterprise producers that have export-ready products that offer competitive prices and comply with international standards,” he added. — Justine Irish D. Tabile

Managing third-party risk

IN BRIEF:

• Shifting from traditional Third-Party Risk Management (TPRM) to agile, real-time methodologies is crucial due to the intricate interdependencies and evolving cyber threats in IT operations.

• Proactive TPRM, powered by AI, enables organizations to predict and respond to third-party risks swiftly, ensuring continuous IT security.

• Embracing transparency and strategic collaboration with vendors fortifies TPRM, equipping organizations to handle emerging challenges and maintain robust IT systems.

In an era where technology is deeply integrated into business operations, managing third-party risk has become a critical concern for organizations worldwide. The traditional methods of Third-Party Risk Management (TPRM) are being challenged by the fast-paced and complex nature of modern IT environments, where external vendors play a pivotal role in day-to-day operations. As the reliance on third parties grows, so does the potential for risk, making it imperative for TPRM strategies to keep pace with the dynamic landscape of IT risks.

This article seeks to explore the transformative approaches necessary for managing third-party risks effectively, ensuring that organizations can maintain robust IT operations amid the ever-present threat of external vulnerabilities.

THE EVOLUTION OF TPRM IN IT OPERATIONS
The complexity and interconnectivity of modern IT operations demand a more agile and continuous approach to managing third-party risks. This necessity is underscored by the escalating frequency and sophistication of cyber threats, which can significantly impact IT operations.

As businesses become more reliant on third-party vendors for essential services, the potential for risk exposure grows, highlighting the need for TPRM strategies that can adapt to new threats as they emerge. The evolving landscape of TPRM in IT operations requires a strategic shift from static, periodic assessments to a dynamic, real-time risk management model that is capable of identifying and mitigating risks promptly.

ADAPTING TO REAL-TIME THREATS
The transition from a traditionally reactive TPRM approach, characterized by annual assessments, to a more proactive and dynamic model marks a significant shift in risk management practices. This shift necessitates the continuous monitoring of third-party activities to swiftly identify and address potential risks.

As an example, a global organization implemented continuous real-time monitoring tools to proactively assess third-party risks. By leveraging advanced analytics and real-time data, they were able to swiftly detect and mitigate potential vulnerabilities introduced by external vendors, enhancing their overall security posture. Continuous threat intelligence and monitoring solutions allowed the organization to detect and respond to third-party risks in real time, minimizing the window of exposure to potential threats.

Integrating cyber threat intelligence (CTI) into this proactive TPRM framework offers a strategic advantage, transforming reactive security measures into a forward-thinking, intelligence-driven approach.

By enabling real-time monitoring of potential vulnerabilities and emerging threats, CTI enhances the ability to share tactical intelligence with industry peers and conduct comprehensive risk assessments, thus strengthening the overall security posture of the extended enterprise. The importance of this approach was starkly highlighted by incidents such as the CrowdStrike incident, which exposed vulnerabilities in third-party risk management and had profound implications for critical IT infrastructure.

Incidents such as these serve as wake-up calls, prompting organizations to reevaluate their TPRM practices. The evolution of TPRM practices post-incident, focusing on lessons learned and the implementation of strategies to prevent similar issues, is essential for safeguarding IT operations against the ubiquitous risk of third-party threats.

INTERDEPENDENCIES BETWEEN TPRM AND IT OPERATIONS
The interdependencies between TPRM and IT operations are becoming increasingly apparent as third-party failures, such as cybersecurity breaches or service outages, directly impact IT operations. These incidents can have cascading effects across an organization, affecting everything from data security to business continuity.

For example, an organization that experienced a service disruption due to issues with a third-party provider strengthened its incident response and disaster recovery plans by implementing redundancy measures and conducting regular recovery drills. This integration of TPRM and IT operations ensured that the organization could swiftly recover and maintain operational stability during future vendor-related disruptions.

The integration of TPRM with IT disaster recovery and incident response planning is crucial for building resilience. Organizations must employ redundancy, backup systems, and other measures to mitigate the impact of third-party risks on IT operations. Understanding these interdependencies is vital for developing robust TPRM strategies that can withstand the ripple effects of third-party issues and maintain operational stability.

NAVIGATING UNFORESEEN CHANGES AND UNVETTED UPDATES FROM VENDORS
The challenge of navigating unforeseen changes and unvetted updates from vendors is becoming increasingly relevant. Vendors’ software or service updates are often released without comprehensive testing, and these can introduce significant vulnerabilities or compatibility issues. Organizations must develop adaptive response mechanisms to quickly adjust to these changes.

For instance, one organization faced unexpected compatibility issues when a vendor released a critical software update without thorough testing. In response, they established an automated testing environment to assess vendor updates before deployment, allowing for seamless integration with existing systems and minimizing operational disruptions.

This includes maintaining robust patch management processes, utilizing automated testing environments, and employing rapid deployment frameworks to ensure the continuity and security of IT operations. By adopting such strategies, organizations can better manage the risks associated with unpredictable vendor changes and maintain the integrity of their IT infrastructure.

FUTURE-PROOFING TPRM
Future-proofing TPRM strategies with advanced technologies and collaboration is essential for staying ahead of potential third-party risks. Leveraging AI and machine learning can provide predictive insights into third-party risks based on patterns and trends, enabling organizations to anticipate IT disruptions before they occur.

For example, a logistics company used AI-driven predictive analytics to identify potential disruptions from third-party providers, such as delays due to external factors. This allowed them to adjust operations proactively, minimizing risks and maintaining service continuity.

Enhancing vendor collaboration and transparency ensures that all parties are aligned on updates, vulnerabilities, and risks. Additionally, the continuous integration of feedback from IT incidents, risk assessments and cyber threat intelligence into the TPRM framework drives ongoing improvements, ensuring that TPRM strategies remain effective and aligned with the evolving IT landscape, providing organizations with actionable intelligence, facilitating informed decision-making, and fostering a proactive security posture.

EVOLVING TOGETHER — THE FUTURE OF TPRM IN IT-DRIVEN ENVIRONMENTS
As IT operations continue to evolve at a rapid pace, the need for an evolving, dynamic approach to TPRM becomes increasingly apparent. Organizations must view TPRM as an integral component of their IT strategy and resilience planning, rather than as a mere compliance requirement.

Managing third-party risk in an IT-centric world requires a forward-thinking approach that embraces advanced technologies, collaboration, and continuous improvement. By adopting dynamic TPRM strategies and viewing them as integral to IT strategy, organizations can confidently and effectively navigate the challenges of an IT-driven environment and secure their operations for the future.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

 

Joseph Ian M. Canlas is a risk consulting partner and ASEAN core consulting quality leader, and Christiane Joymiel C. Say-Mendoza is a risk consulting partner, both of SGV & Co.

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