TPRM for financial institutions: Balancing humans and AI
In blog 1 of this series, we discussed operational visibility and dynamic risk tiering for Third Party Risk Management. Once you know which vendors matter most, you need to keep up. Many financial institutions have invested heavily in risk classification, due diligence frameworks and governance structures. Yet TPRM teams still struggle with backlogs, onboarding delays and growing regulatory expectations. Too much analyst time is spent on administration instead of risk management.
The irony is that most TPRM work is not risk analysis. It is chasing documents, validating supplier responses, updating registers, reviewing contracts and preparing reports. These are all necessary activities, but rarely ones where expertise creates the most value.
Automation should remove friction, not judgment or accountability
AI is increasingly used across risk management functions. The most successful institutions are automating the effort surrounding those decisions. Technology handles repetitive tasks so analysts can focus on exceptions, escalations and business judgment.
AI can flag a missing control or highlight an increase in vendor risk, but it should not decide whether that risk is acceptable. Determining if a claims platform can continue operating after a control deficiency is identified, or whether a critical supplier should be reclassified after a cyber incident, remains a human decision.
Five areas consistently deliver value:
Intake and classification
Evidence and document collection
Questionnaire analysis
Continuous monitoring
Reporting and register maintenance
The EU AI Act reinforces a human-in-the-loop approach
As financial institutions explore AI-powered TPRM capabilities, governance is becoming just as important as efficiency. The EU AI Act places a strong emphasis on transparency, accountability and human oversight for higher-impact AI use cases. While TPRM activities such as document analysis or contract reviews can benefit significantly from AI, organizations remain responsible for the decisions that follow.
Where AI creates immediate value
One common frustration is reviewing supplier questionnaires and assurance reports. Consider a claims management platform used by a large insurer (a Tier 2 technology provider). During onboarding, the vendor submits a SOC 2 report, security questionnaire and business continuity documentation. Instead of spending hours manually reviewing every document, AI can identify contradictory statements, missing controls and areas requiring further investigation, allowing analysts to focus on judgment rather than administration.
The same principle applies to contract reviews. Under DORA, financial institutions must include specific provisions in contracts with ICT service providers, including audit rights, incident notification obligations and termination rights. Reviewing hundreds of contracts manually is slow, costly and inconsistent. AI-driven contract analysis can automatically flag missing or noncompliant clauses, allowing legal and procurement teams to focus on remediation rather than document hunting.
The strongest TPRM programs remove administrative drag and thereby protect human judgment
Automation allows risk professionals to spend more time on the decisions that actually reduce exposure. That means less time sending reminder emails, updating spreadsheets and reviewing documentation for completeness, and more time assessing critical dependencies, investigating emerging supplier risks, validating remediation plans and advising the business on where risk is truly increasing. In other words, machines process evidence. People make risk decisions.
For more considerations and practical steps, download the guide From policy to practice: How to operationalize TPRM in the financial sector.
Ready to advance your TPRM? Get in touch
Davide Bonalumi
Senior Manager Cybersecurity
+31615045242
