Vendor risk management (VRM) is a critical component of your organization’s security and compliance. However, conducting your vendor reviews manually can be a complex and inefficient process that requires your team to tediously keep track of each vendor in use and investigate their security posture. This process only becomes more difficult as your business grows. Explore our guide to creating an effective, sustainable vendor risk management program.
What is vendor risk management?
Vendor risk management is the practice of vetting the vendors your organization uses and minimizing the risks they impose to your business. Given that each new vendor provides an opportunity for bad actors to access your systems and data, this is a crucial practice for your organization’s security.
Common challenges when developing a VRM program
It can be a struggle for businesses of all sizes to create a vendor risk management program that is scalable and effective. There are several challenges that make vendor risk management difficult:
Balancing a large number of tools
There are many tools available today that can help businesses improve their operations. The more tools that are brought into the organization's tech stack the more difficult it is to monitor and mitigate all the potential risks that come with each of these vendors.
Additionally, many organizations struggle with shadow IT — which is when employees and teams acquire tools without going through the proper procurement processes. This means these tools do not get a proper risk assessment and are being used without security team visibility, increasing the organization's risk.
Unwieldy manual tasks
Manual third-party risk management takes a significant amount of time. Routinely investigating the security posture of every vendor your business uses involves back-and-forth communications with the vendor, maintaining and tracking documents, managing spreadsheets, and discovering any rogue tools brought into the organization outside of typical protocols. This problem gets worse as the number of tools your organization uses grows.
Hindering business with security
With this many manual processes, it’s likely that the procurement process and risk assessment of each new tool may slow down the organization's growth. If your security team has a backlog of new tools to assess, the departments who need these tools are likely having to wait to start using them, slowing down progress across the organization.
It’s important to establish a vendor risk management program that is thorough enough to protect your data but efficient enough to keep your procurement process moving forward.
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How to implement a vendor risk management program
Follow these steps to create an effective yet sustainable vendor risk management program:
1. Create standardized vendor risk criteria
A strong vendor risk management program starts with establishing standardized security criteria that all your vendors should meet in order to do business with you.
Assessment criteria should include the following factors:
- Determining what types of data the vendor will need to access
- Measuring reliability and deliverability
- Verifying liability insurance
- Documenting the vendor’s compliance history
- Verifying what security procedures the vendor has in place
- Ensuring business continuity and disaster preparedness protocols are in place
- Ensuring the vendor has sufficient security breach protocols
- Determining if the vendor is financially stable enough to continue operating long-term
To guide your criteria development, there are 16 risk domains you should consider covering:
- Capacity to consistently deliver what you need from them
- Competitive enough to last in the market long-term
- Compliance with relevant regulations and certifications
- No unethical or illegal practices
- Data privacy policies
- Environmental, social, and governance (ESG) policies
- Event mapping and monitoring
- Financial stability
- Protection from geographic risks, like natural disasters
- Adherence to laws and requirements for importing and exporting
- Operational stability
- Can meet performance expectations
- Data security measures
- Vendor risk management program of their own
- Workplace health and safety policies
2. Inventory your vendors
Next, create a comprehensive list of all of your vendors and tools being used in your organization. This should include:
- Any and all software
- Cloud providers
- Service providers
- Any vendor that accesses your facility
This is difficult for many organizations because not all vendor decisions come through the proper procurement channels. To ensure you’re discovering all the tools connected to your systems, use a vendor risk management platform with discovery capabilities to automatically identify all third-party applications used by your organization.
3. Analyze and prioritize each risk
As you review your vendors’ risks and security, you’ll need to understand how each vendor impacts your organization and your information security. To do that, you need to analyze the access of each of your vendors.
Use that information to determine which vendors are the highest priorities for your security reviews and monitoring. Identify the vendors with the most critical data access and that could have the largest impact on your business and make those your highest priority.
4. Conduct security reviews and mitigate risks
Starting with your high-priority vendors, assess each vendor to determine if it meets your criteria and security standards. Once you know where each vendor stands, take action where needed to minimize the risks your vendors present to your business. This could mean limiting their access or offboarding them if they do not meet your security standards.
5. Create a re-assessment plan
A software update or a change to your vendor's privacy policies could result in changes to your organization’s risk. Because of this, you’ll need to routinely assess each of your vendor’s security using the same criteria you used for your initial review.
Depending on the compliance frameworks you adhere to, you may need to review certain vendors on a regular basis and commit to that going forward.
6. Keep access to a minimum and review access regularly
Ensure that you’re giving each vendor the least amount of data access possible without preventing them from doing the job you’ve hired them to do — this is referred to as least privilege. This lowers your organization’s risk and the impact they could have on your security. Conduct routine access reviews to make sure each vendor has the appropriate access.
7. Communicate vendor risk management protocols organization-wide
Vendor risk management should be part of your organization’s culture. Once you have an established vendor risk management program in place, bring the rest of the team up to speed and explain the role each department plays in the strategy.
How automation can facilitate your vendor risk management
Move from managing your vendor risk via tedious and point-in-time reviews to continuous, automated reviews that are done quickly and easily. Vanta’s Vendor Risk Management solution lets you automate vendor onboarding, risk assessment, and remediation so you can spend less time on vendor reviews and more time strengthening your security posture.
Here are some of Vanta’s Vendor Risk Management solutions’ capabilities:
- Automatic vendor discovery: Automatically discover third-party applications being used by your employees, whether approved by IT or not.
- Risk assessment workflows: Assign inherent risk levels to vendors using a detailed risk rubric that can be customized to your requirements.
- AI-powered security reviews: Manage the end-to-end security review process in one place and use Vanta AI to automatically analyze and document findings about the vendor’s security posture from SOC 2 reports, DPAs, and other sources.
- Procurement integrations: Connect your procurement system to seamlessly record, triage, and respond to security review requests from Vanta.
Take a tour of Vanta’s Vendor Risk Management platform or request a demo to learn more.
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Risk
Vendor risk management: What it is and how to do it effectively
Risk
Vendor risk management (VRM) is a critical component of your organization’s security and compliance. However, conducting your vendor reviews manually can be a complex and inefficient process that requires your team to tediously keep track of each vendor in use and investigate their security posture. This process only becomes more difficult as your business grows. Explore our guide to creating an effective, sustainable vendor risk management program.
What is vendor risk management?
Vendor risk management is the practice of vetting the vendors your organization uses and minimizing the risks they impose to your business. Given that each new vendor provides an opportunity for bad actors to access your systems and data, this is a crucial practice for your organization’s security.
Common challenges when developing a VRM program
It can be a struggle for businesses of all sizes to create a vendor risk management program that is scalable and effective. There are several challenges that make vendor risk management difficult:
Balancing a large number of tools
There are many tools available today that can help businesses improve their operations. The more tools that are brought into the organization's tech stack the more difficult it is to monitor and mitigate all the potential risks that come with each of these vendors.
Additionally, many organizations struggle with shadow IT — which is when employees and teams acquire tools without going through the proper procurement processes. This means these tools do not get a proper risk assessment and are being used without security team visibility, increasing the organization's risk.
Unwieldy manual tasks
Manual third-party risk management takes a significant amount of time. Routinely investigating the security posture of every vendor your business uses involves back-and-forth communications with the vendor, maintaining and tracking documents, managing spreadsheets, and discovering any rogue tools brought into the organization outside of typical protocols. This problem gets worse as the number of tools your organization uses grows.
Hindering business with security
With this many manual processes, it’s likely that the procurement process and risk assessment of each new tool may slow down the organization's growth. If your security team has a backlog of new tools to assess, the departments who need these tools are likely having to wait to start using them, slowing down progress across the organization.
It’s important to establish a vendor risk management program that is thorough enough to protect your data but efficient enough to keep your procurement process moving forward.
{{cta_withimage5="/cta-modules"}}
How to implement a vendor risk management program
Follow these steps to create an effective yet sustainable vendor risk management program:
1. Create standardized vendor risk criteria
A strong vendor risk management program starts with establishing standardized security criteria that all your vendors should meet in order to do business with you.
Assessment criteria should include the following factors:
- Determining what types of data the vendor will need to access
- Measuring reliability and deliverability
- Verifying liability insurance
- Documenting the vendor’s compliance history
- Verifying what security procedures the vendor has in place
- Ensuring business continuity and disaster preparedness protocols are in place
- Ensuring the vendor has sufficient security breach protocols
- Determining if the vendor is financially stable enough to continue operating long-term
To guide your criteria development, there are 16 risk domains you should consider covering:
- Capacity to consistently deliver what you need from them
- Competitive enough to last in the market long-term
- Compliance with relevant regulations and certifications
- No unethical or illegal practices
- Data privacy policies
- Environmental, social, and governance (ESG) policies
- Event mapping and monitoring
- Financial stability
- Protection from geographic risks, like natural disasters
- Adherence to laws and requirements for importing and exporting
- Operational stability
- Can meet performance expectations
- Data security measures
- Vendor risk management program of their own
- Workplace health and safety policies
2. Inventory your vendors
Next, create a comprehensive list of all of your vendors and tools being used in your organization. This should include:
- Any and all software
- Cloud providers
- Service providers
- Any vendor that accesses your facility
This is difficult for many organizations because not all vendor decisions come through the proper procurement channels. To ensure you’re discovering all the tools connected to your systems, use a vendor risk management platform with discovery capabilities to automatically identify all third-party applications used by your organization.
3. Analyze and prioritize each risk
As you review your vendors’ risks and security, you’ll need to understand how each vendor impacts your organization and your information security. To do that, you need to analyze the access of each of your vendors.
Use that information to determine which vendors are the highest priorities for your security reviews and monitoring. Identify the vendors with the most critical data access and that could have the largest impact on your business and make those your highest priority.
4. Conduct security reviews and mitigate risks
Starting with your high-priority vendors, assess each vendor to determine if it meets your criteria and security standards. Once you know where each vendor stands, take action where needed to minimize the risks your vendors present to your business. This could mean limiting their access or offboarding them if they do not meet your security standards.
5. Create a re-assessment plan
A software update or a change to your vendor's privacy policies could result in changes to your organization’s risk. Because of this, you’ll need to routinely assess each of your vendor’s security using the same criteria you used for your initial review.
Depending on the compliance frameworks you adhere to, you may need to review certain vendors on a regular basis and commit to that going forward.
6. Keep access to a minimum and review access regularly
Ensure that you’re giving each vendor the least amount of data access possible without preventing them from doing the job you’ve hired them to do — this is referred to as least privilege. This lowers your organization’s risk and the impact they could have on your security. Conduct routine access reviews to make sure each vendor has the appropriate access.
7. Communicate vendor risk management protocols organization-wide
Vendor risk management should be part of your organization’s culture. Once you have an established vendor risk management program in place, bring the rest of the team up to speed and explain the role each department plays in the strategy.
How automation can facilitate your vendor risk management
Move from managing your vendor risk via tedious and point-in-time reviews to continuous, automated reviews that are done quickly and easily. Vanta’s Vendor Risk Management solution lets you automate vendor onboarding, risk assessment, and remediation so you can spend less time on vendor reviews and more time strengthening your security posture.
Here are some of Vanta’s Vendor Risk Management solutions’ capabilities:
- Automatic vendor discovery: Automatically discover third-party applications being used by your employees, whether approved by IT or not.
- Risk assessment workflows: Assign inherent risk levels to vendors using a detailed risk rubric that can be customized to your requirements.
- AI-powered security reviews: Manage the end-to-end security review process in one place and use Vanta AI to automatically analyze and document findings about the vendor’s security posture from SOC 2 reports, DPAs, and other sources.
- Procurement integrations: Connect your procurement system to seamlessly record, triage, and respond to security review requests from Vanta.
Take a tour of Vanta’s Vendor Risk Management platform or request a demo to learn more.
{{cta_simple6="/cta-modules"}}
Proactively manage vendor risk, easily
Get best practices from security leaders on how to manage third-party risk while reducing inefficiencies.
See how VRM automation works
Request a demo to see how Vanta can automate up to 90% of your VRM processes.
Proactively manage vendor risk, easily
Get best practices from security leaders on how to manage third-party risk while reducing inefficiencies.
See how VRM automation works
Request a demo to see how Vanta can automate up to 90% of your VRM processes.
Proactively manage vendor risk, easily
Get best practices from security leaders on how to manage third-party risk while reducing inefficiencies.
See how VRM automation works
Request a demo to see how Vanta can automate up to 90% of your VRM processes.
| Role: | GRC responsibilities: |
|---|---|
| Board of directors | Central to the overarching GRC strategy, this group sets the direction for the compliance strategy. They determine which standards and regulations are necessary for compliance and align the GRC strategy with business objectives. |
| Chief financial officer | Primary responsibility for the success of the GRC program and for reporting results to the board. |
| Operations managers from relevant departments | This group owns processes. They are responsible for the success and direction of risk management and compliance within their departments. |
| Representatives from relevant departments | These are the activity owners. These team members are responsible for carrying out specific compliance and risk management tasks within their departments and for integrating these tasks into their workflows. |
| Contract managers from relevant department | These team members are responsible for managing interactions with vendors and other third parties in their department to ensure all risk management and compliance measures are being taken. |
| Chief information security officer (CISO) | Defines the organization’s information security policy, designs risk and vulnerability assessments, and develops information security policies. |
| Data protection officer (DPO) or legal counsel | Develops goals for data privacy based on legal regulations and other compliance needs, designs and implements privacy policies and practices, and assesses these practices for effectiveness. |
| GRC lead | Responsible for overseeing the execution of the GRC program in collaboration with the executive team as well as maintaining the organization’s library of security controls. |
| Cybersecurity analyst(s) | Implements and monitors cybersecurity measures that are in line with the GRC program and business objectives. |
| Compliance analyst(s) | Monitors the organization’s compliance with all regulations and standards necessary, identifies any compliance gaps, and works to mitigate them. |
| Risk analyst(s) | Carries out the risk management program for the organization and serves as a resource for risk management across various departments, including identifying, mitigating, and monitoring risks. |
| IT security specialist(s) | Implements security controls within the IT system in coordination with the cybersecurity analyst(s). |
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