Concentration risk refers to the risk of loss or harm from relying too heavily on one third party.

Evaluating third-party risk involves assessing resilience, efficiency, and scalability threats.

Financial institutions need to understand internal processes before evaluating third-party risks.

A comprehensive inventory of critical processes is necessary for evaluating inherent and residual risks.

Risks should be assessed in terms of resilience, efficiency, and scalability.

Resilience risks involve disruptions impacting core service delivery.

Efficiency risks include scenarios where one supplier may not offer the best value for money.

Scalability risks refer to outcomes satisfactory for current needs but insufficient for future goals.

Mitigation strategies include diversifying third-party relationships and thorough risk assessments.