Vendor Risk Management

[AJR1]

Hello,

Is there a difference between 4th Parties and Subsidiaries? I am going off the newest store release into my PDI and working on hierachy 

Thanks,

Adam

[SwarnadeepNandy]

Hello @AJR1,

Yes, there is a difference between 4th parties and subsidiaries. A subsidiary is a company that is more than 50% owned by a parent company or holding company1. A subsidiary is a separate and distinct legal entity from its parent company, but the parent company has considerable influence over its operations and decisions. A subsidiary’s financials are reported on the parent’s consolidated financial statements.

A 4th party is a company that contracts with your third party, which is a company that you outsource...2. A 4th party is not directly related to your company, but it poses a potential risk to your company through its connection with your third party. A 4th party’s financials are not included in your or your third party’s statements, but you may be able to identify them from your third party’s System and Organization Control (SOC) reports.

I hope this helps you understand the difference between 4th parties and subsidiaries. If you want to learn more, you can check out the following links:

• Subsidiary Company: Definition, Examples, Pros & Cons - Investopedia
• Subsidiary vs. Affiliate: What’s the Difference? - Investopedia
• Subsidiary vs. Wholly-Owned Subsidiary: What’s the Difference?
• What is Fourth-Party Risk? | UpGuard
• First, 2nd , 3rd , 4th, 5th Parties: How to Measure the Tiers of Risk
• Fourth Party Vendors: Managing Extended Supply Chain | Prevalent
• What is Third-Party vs. Fourth-Party Risk? And How to Manage Both

Hope this helps.

Kind Regards,

Swarnadeep Nandy