If you've ever sat in a meeting where someone confused Governance, Risk and Compliance (GRC) with Third Party Risk Management (TPRM) — or treated them as competing frameworks — you're not alone. These terms get used interchangeably more often than they should. The reality is that while they're fundamentally different disciplines, they're deeply interdependent.
The Short Answer
GRC is the umbrella discipline for how an organisation governs risk and compliance overall. TPRM is a specific risk domain within that umbrella, focused entirely on third parties.
It’s almost like GRC being the operating system, and TPRM one of the critical applications running on it.
What Is GRC?
GRC encompasses how your organisation manages risk and compliance as a whole. It's the strategic framework that ensures you're making informed decisions, staying compliant, and managing risk across every part of the business.
GRC covers three core pillars:
- Governance: how decisions get made, who's accountable, what policies exist, and how oversight happens
- Risk: identifying, assessing, and prioritising all types of risk across the organisation
- Compliance: meeting legal, regulatory, and contractual obligations
Types of risk typically in scope:
- Cyber and information security
- Operational risk
- Financial risk
- Regulatory and compliance risk
- Privacy and data protection
- Third-party risk (this is where TPRM lives)
Who typically owns GRC:
- Board of Directors
- Risk and compliance teams
- Legal departments
- Sometimes the CISO or CIO, depending on organisational structure
What GRC produces:
- Enterprise risk registers
- Policies and control frameworks
- Board-level reporting
- Audit evidence
- End-to-end assurance that risk is being managed
In essence, GRC is strategic and structural. It sets the rules, defines risk appetite, and provides the framework for how the entire organisation approaches risk.
What Is TPRM?
TPRM focuses exclusively on risks introduced by external parties. These could be suppliers, vendors, SaaS providers, managed service providers, partners, or contractors. For a more in-depth guide to TPRM, read our related article.
While GRC looks at risk holistically, TPRM addresses the critical question of what risks the organisations you depend on introduce.
Key questions TPRM answers:
- Who has access to our systems and/or data?
- What could go wrong if this supplier is breached or fails?
- How critical is this third party to our operations?
- Can we defend this relationship to regulators or auditors?
Typical TPRM activities:
- Supplier tiering (categorising as critical, high, medium, or low risk)
- Security and privacy assessments
- Contractual control verification
- Ongoing monitoring and reviews
- Implementing internal compensating controls to mitigate supplier deficiencies
Who typically owns TPRM?
- Risk teams
- Security teams
- Procurement
- Sometimes Compliance or Legal
What TPRM produces:
- Supplier risk scores and profiles
- Approved or restricted vendor lists
- Evidence for regulatory compliance
- Clear "accept, mitigate, or avoid" decisions on third-party relationships
At its core, TPRM is operational and execution focused. It applies risk management principles specifically to your supplier ecosystem.
Side-by-side comparison
|
GRC |
TPRM |
|
Broad, organisation-wide |
Narrow, supplier-specific |
|
Strategic and structural |
Operational and execution-focused |
|
Covers many risk domains |
Focuses on third-party risk only |
|
Board-level oversight |
Day-to-day risk decisions |
|
Framework and governance |
Assessments and controls |
How GRC and TPRM Should Work Together
This is the part where many organisations struggle. GRC and TPRM aren't competing functions — they're interdependent.
The ideal flow:
- GRC defines the framework – It sets risk appetite, establishes policies, and determines reporting requirements
- TPRM operationalises those rules – It applies the GRC framework specifically to suppliers and third parties
- TPRM feeds data back into GRC – Real-world supplier risk data informs board reporting and enterprise risk assessments
When this model breaks down, or was never implemented effectively in the first place, the consequences can include:
- Box-ticking assessments that don't reflect actual risk
- Inconsistent supplier approval decisions
- Inability to confidently defend risk positions to regulators
- The dreaded "We assessed them once three years ago" syndrome
Without proper integration, TPRM becomes a compliance exercise rather than a meaningful risk management function. And GRC loses visibility into one of the most significant risk areas modern organisations face.
Why This Distinction Matters
Understanding the difference between GRC and TPRM isn't just semantic, it has real implications:
- For boards and executives: you need GRC to understand your overall risk posture, and you need TPRM to tell you whether your supplier ecosystem is a material weakness in that posture.
- For risk and security teams: TPRM can't exist in a vacuum. It needs to ladder up to enterprise risk management through GRC, or it becomes disconnected from business priorities.
- For procurement and vendor management: your decisions need to be informed by both the strategic risk appetite (GRC) and the specific risk profile of each supplier (TPRM).
Where to Go From Here
If your organisation is grappling with either GRC or TPRM — or the connection between them — start by asking:
- Do we have a clear risk appetite defined at the board level?
- Are our third-party risk decisions aligned with that appetite?
- Can we demonstrate to auditors or regulators that we know what's happening in our supply chain?
- Is TPRM feeding meaningful insights back to enterprise risk reporting?
Getting this right doesn’t mean implementing more tools or running more assessments. Instead, it requires ensuring that the way you govern risk organisation-wide is truly reflected in how you manage the third parties you depend on.
Want to explore how third-party risk supports your broader GRC objectives? Let's talk about how you can build a practical, operational TPRM approach that works for you.
