What is a vendor management policy, and why does your company need one?
As your business works to ensure that it is effectively securing sensitive data and information, putting in place a vendor management policy is a key part of building a holistic compliance risk management strategy. It is a best practice for any organization working with sensitive data and customers’ personally identifiable information (PII) to develop a policy to review all vendors — every third-party, contractor, or associate with whom you do business — and to establish requirements for the level of information security that vendors should maintain.
Vendor management and the path to compliance
Building a vendor management policy will also help bring your company into regulatory compliance. As companies of all types outsource services to third and fourth parties and beyond — and as data breaches have become unfortunately common — regulators have expanded security and data management requirements in various sectors to ensure that companies are effectively and proactively managing supply chain risks. A vendor management policy is often a key component of demonstrating your company’s compliance with today’s regulations.
Consider your security posture inside and out
How does vendor management figure into your company’s overall cybersecurity? Your company may think first of cybersecurity as an internal matter — and your internal security posture is of key importance. But when your organization engages a wider network of vendors and partners in the delivery of services that access or manage sensitive customer data, the security of those external vendors — and the risk associated with their data and network access — become just as important as how you handle security internally.
Policy begins with a cross-company team
Where should your company begin to create a vendor management policy? Start by assembling a team with representatives from across your company. You will want to ensure that your vendor management team is populated by members from different departments, bringing different perspectives on your business. Your decision-makers should be represented, as should your IT security department, someone from your procurement team, a lawyer, and someone from your business unit. You may consider other team members as needed, depending on your particular business model. Your vendor management team will be tasked with building a comprehensive list of all the third-party vendors, contractors, partners, and associates with whom you work.
Review your vendor list
Review your vendor list with a critical eye
Once your team has assembled this master list of vendors, it should be reviewed with a critical eye on which vendors have access to sensitive and valuable data, and which vendors are able to access your corporate network. Vendors in these categories are your highest risk, and your company will want to focus on examining the security practices these organizations have in place to handle sensitive data and information, and establishing systems and controls by which you can monitor their ongoing security and reduce the risk inherent in your partnership.
Monitoring current vendors — and selecting future vendors
Putting in place a vendor management policy to assess and monitor your current vendors is key to managing the security of your business ecosystem. You will also want to look ahead to future vendor and partner relationships, and to apply the knowledge gained through your assessment of existing vendors to make decisions about future partnerships. Integrating vendor reviews into your vendor management policy will allow your company to understand the potential risks of utilizing a vendor’s product or service. A vendor review process will assess a vendor’s capacity to maintain effective and appropriate security practices critical to their business — and yours.
Where vendor management and SOC 2 compliance meet
You may also find that the vendor management process is streamlined by working with vendors who meet security standards such as SOC 2 compliance. A company that is SOC 2 compliant will have gone through the SOC 2 audit process and will have had the opportunity to assess its security practices across five Trust Services Criteria: Security, Availability, Processing Integrity, Confidentiality, and Privacy. Every SOC 2 report includes the Security category, and additional categories can be included depending on the company’s needs.
As a part of your vendor management policy and vendor review processes, your company may choose to implement tools like compliance software to support the monitoring and verification of your third party associations over time. Continuous monitoring software will help your company determine if partners are consistently maintaining their security at a level that meets your needs, and will alert you to any risks or vulnerabilities that may arise.
Vanta is your automated security and compliance expert. Our continuous monitoring software and robust range of automated checks that conform to the SOC 2 standard can help your company get compliance audit-ready, fast — and support your vendor management efforts as you work to ensure the security of your holistic business ecosystem.