As organizations mature their security programs, one of the biggest challenges often lies outside internal systems—managing third-party or vendor risks. As per Vanta’s 2024 State of Trust Report, 46% of organizations reported that at least one vendor experienced a breach during their partnership.

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This statistic underlines an undeniable fact—your supply chain security is only as secure as its weakest link. In this case, your most vulnerable vendor.

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Vendor risk management (VRM) is a structured way to manage the risks your third parties expose you to. A well-designed VRM framework helps you identify those risks early, monitor their status, and reduce the odds of compliance violations and operational disruptions.

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In this article, we’ll discuss the five distinct steps or stages that help you set up an effective VRM framework—but first, let’s revisit some basics.

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What is a vendor risk management framework?

A VRM framework is a set of policies, procedures, and controls that outline how your organization identifies, evaluates, and addresses third-party risks. The framework sets risk management guidelines for the entire vendor lifecycle, including vendor due diligence, onboarding, ongoing risk management, and offboarding.

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A comprehensive VRM framework is critical for safeguarding your organization against potential operational disruptions, data loss, non-compliance penalties, and reputational harm caused by third-party security failures.

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By following a standardized VRM approach, your teams gain centralized visibility into the vendor risk landscape. This helps them evaluate and rank risks better and prioritize remediation strategies accordingly.

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What are the benefits of a VRM framework?

Your organization’s attack surface expands with each vendor, supplier, and service provider you onboard. Even with a robust security posture, your organization may still experience breaches if you don’t account for those risks. A VRM framework serves as a foundation for building an integrated, organization-wide risk management strategy that supports consistent evaluations and risk-informed decision-making across all vendors.

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One of the greatest benefits of a vendor risk management process is that it streamlines how organizations evaluate and confirm the contractual obligation and information security standards they rely on."

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Jill Henriques

GRC Subject Matter Expert, GTM, Vanta

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LinkedIn

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Implementing a well-designed VRM framework also brings the following benefits:

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• Proactive risk identification: A comprehensive VRM framework helps you identify and address third-party vulnerabilities through dedicated verification procedures
• Enhanced business continuity: With the right VRM safeguards in place, your organization can minimize the risk of potential downtime or service disruption if a third-party breach occurs
• Faster incident response: A VRM framework assigns roles and responsibilities for managing response and communication after security incidents, which helps your team proceed efficiently
• Streamlined compliance: A well-documented VRM framework aligns with regulatory requirements across standards and regulations, which makes attestation of certification audits more manageable
• Long-term impact: While implementing a VRM framework requires an up-front investment, you may save resources over time with reduced remediation work and earn goodwill through well-coordinated vendor relationships

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The 5-stage vendor risk management framework

Every organization should tailor their VRM framework based on factors like its size, third-party risk landscape, and regulatory requirements. The five stages outlined below will give you a foundational structure to build upon:

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1. Ensure leadership buy-in
2. Establish vetted vendor onboarding procedures
3. Develop secure vendor collaboration policies
4. Implement ongoing vendor risk assessment processes
5. Formalize secure vendor offboarding to minimize residual risks

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{{cta_withimage20="/cta-blocks"}}  | Vendor Risk Assessment Checklist

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Stage 1: Ensure leadership buy-in

Before you can start developing your VRM framework, you must secure leadership buy-in. Executive support enables top-to-bottom and cross-functional alignment across the organization, so you’ll have an easier time integrating policies and procedures across relevant departments.

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To secure leadership buy-in, the best strategy is to present a written report of the threat vectors vendors introduce, such as financial, security, and reputational threats. You’d also want to illustrate your arguments with organization-specific data on vendor-related security incidents, such as incident history documentation.

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As part of your solution strategy, you can reference real-world examples to demonstrate how a VRM framework can support long-term risk reduction and alignment with future security outcomes.

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Stage 2: Establish vetted vendor onboarding procedures

After leadership alignment, you’d want to start working on repeatable vendor onboarding procedures to ensure every vendor meets your security and compliance standards.

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To establish comprehensive onboarding procedures, you should first outline your organization’s risk profile, security and privacy practices, compliance obligations, and standard operating procedures. You can use the collective data to gather and review documentation such as vendor risk questionnaires, certifications, and audit reports from a security lens, and confirm if a third party can safeguard sensitive data.

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Other key vendor onboarding criteria you should consider defining include:

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• Relationship lifecycle: Clarify the vendor relationship duration and future business objectives, if the information is available
• Access limits: Clarify the type of data and systems the vendor will access on your behalf
• Service level agreements (SLAs): Determine the baseline performance expectations and expected security and privacy actions on behalf of the vendor
• Compliance requirements: Define the regulations and standards the vendor must meet as part of the business relationship, such as HIPAA or ISO 27001
• Risk level: Assess and classify the type of risk introduced by each vendor based on factors like priority level and criticality of service

Stage 3: Develop secure vendor collaboration policies

Once you’ve evaluated and onboarded your vendors, use clear policies and operational safeguards to ensure effective collaboration on the desired functions.

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Start by setting up transparent communication channels to streamline communication for relevant parties and enable faster incident response times. The next step is defining data sharing and security policies, which should specify:

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• What data can be accessed
• Who may access it
• How the data is secured

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Another helpful practice is conducting joint risk audits and sharing your findings with vendors to encourage more efficient gap remediation. Establish clear risk mitigation and remediation timelines so your vendors can adapt to your organization’s priorities. 

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Stage 4: Implement ongoing vendor risk assessment processes

Once vendors are onboarded, focus on running ongoing vendor risk assessments (VRAs) at a cadence that aligns with your operations. Most vendors undergo an initial risk assessment in the previous step, but their risk profile may change over time.

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Establishing an ongoing evaluation process helps you reassess vendor performance and account for any new vulnerabilities they bring. This is especially important for vendors that access critical systems or sensitive data.

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When conducting ongoing risk assessments, a best practice is to communicate with stakeholders and risk owners across departments. Factor in their opinion on vendor risks and the organization’s current risk appetite and regulatory landscape to keep your VRA practices relevant.

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Some of the key criteria you should consider during ongoing VRAs include:

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• Compliance posture: Identify any relevant frameworks and regulations the vendor has already met or is in the process of complying with, and if there are any blocks to the process
• Security gaps: Document areas where the vendor’s security posture fails to meet your SLA standards and take remedial or contractual measures
• Fourth-party risk: Verify if your vendor monitors their own third-party contractors (hence, fourth-party to you) and holds them accountable for security risks

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{{cta_withimage5="/cta-blocks"}}  | How to minimize third-party risk

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Stage 5: Formalize secure vendor offboarding to minimize residual risks

A VRM framework is incomplete without defined vendor offboarding workflows. The offboarding process involves transferring assets or terminating access to sensitive data and systems. Your risk management framework should include offboarding tasks such as:

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• Closing user access points and checking for lingering access
• Checking for unretrieved data in vendor systems
• Ensuring all vendor-related records (SLAs, risk assessments, etc.) are up-to-date and accessible internally for future audits
• Communicating with relevant stakeholders about vendor termination
• Conducting a final risk assessment before offboarding

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You can also establish a requirement for an internal audit to ensure that all loose ends are tied after the vendor contract ends.

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A recommended best practice is to include a polished vendor offboarding checklist in your VRM framework. That way, you can ensure consistent, secure, and accountability-boosting procedures across vendors and task owners.

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Tip: Continue monitoring the effectiveness of your VRM framework at regular intervals. You can track key metrics like incident response times and SLA compliance rates to evaluate if the framework is still aligned with your needs or could use updates.

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3 key challenges to implementing VRM framework

Implementing a VRM framework can come with a few challenges, primarily:

• Lack of visibility into the vendor ecosystem: It’s almost impossible to get a transparent, real-time overview of the risk profile of all your vendors. You may never fully know 100% of the critical risks in your third-party ecosystem, especially if you have poorly documented vendors.
• Continuous monitoring: We established that ongoing oversight is an essential part of the VRM framework. The only downside is that the process is exhausting without the right software. The constant evaluations and audits can overwhelm teams, especially as your vendor network grows.
• Manual workflows and resource constraints: Even without continuous monitoring, maintaining a VRM framework manually can be tricky for lean teams. The fatigue can get worse if security teams have to review vendor questionnaires, conduct due diligence assessments, and manage threats simultaneously at a growing scale.

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You can mitigate these challenges with a dedicated VRM solution like Vanta. With numerous integrations, the platform can automate repetitive tasks such as filling out or reviewing questionnaires, centralizing documentation, and continuous monitoring, freeing up your team’s capacity significantly.

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{{cta_withimage20="/cta-blocks"}}  | Vendor Risk Assessment Checklist

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Explore end-to-end vendor risk management with Vanta

Vanta is a trust management platform that streamlines risk management throughout the vendor lifecycle. Whether it’s discovering vendors, risk assessment, or remediation, you can leverage the AI-powered solution to automate many everyday VRM processes. Customers who used Vanta AI to complete the vendor security review process have cut down the time spent on security reviews by up to 75%.

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The platform offers a dedicated VRM product with features like:

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• Out-of-the-box risk evaluation templates 
• Inherent and residual risk scoring that you can tailor to program maturity
• Automated evidence collection powered by 375+ integrations
• Streamlined vendor assessment process
• Reduced manual effort for audit readiness
• Faster risk identification and remediation times

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You can watch this free online webinar to learn more about navigating VRM with Vanta. You can also schedule a custom demo to access a tailored overview of how the platform can support your team.

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{{cta_simple17="/cta-blocks"}}  | VRM product page

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