According to Vanta’s State of Trust Report, almost half of all organizations said their vendor had experienced a data breach since the beginning of their relationship. A vendor's weaknesses don't stay on the vendor's side of the contract. Every provider you grant access to production data, customer records, or internal tooling becomes part of the risk profile your customers, auditors, and regulators will hold you to, which is why vendor risk assessments have moved from a procurement formality to a security control in their own right.
Most teams already run some version of a vendor review, so the harder question is whether that review holds up. Consistency is usually where programs break down. Two reviewers read the same questionnaire and land on different ratings, tiering happens by instinct instead of by data access, and the SOC 2 report behind a low-risk rating quietly expires without anyone noticing. Each of those gaps has a specific fix, and all of them start with writing the process down.
This guide covers how to run vendor risk assessments that stay consistent as your vendor list grows, whether you're building a process for the first time or tightening one that's drifted. Here's what you'll learn.
- What a vendor risk assessment is and how it fits into a wider vendor risk management program
- Why vendor risk assessments matter for your security posture and regulatory obligations
- How often to run them, and which events should trigger a review outside the normal schedule
- A six-step process for conducting vendor risk assessments end to end
- Best practices, how to assess AI vendors, and the failure modes that undermine assessment programs
What is a vendor risk assessment?
A vendor risk assessment (VRA) is the systemized process of identifying, scoring, prioritizing, and monitoring risks associated with third-party vendors (e.g., suppliers, agents, or software providers). VRA is integrated into your procurement, outsourcing, and security workflows and is typically conducted as part of a vendor risk management (VRM) program.
A typical vendor assessment process closely examines various aspects of a vendor’s business, such as:
- Security information
- Operational data
- Financial performance
- Relationships with their third parties
If performed well, a vendor management risk assessment lets you proactively identify the threats your vendor might bring and remediate them before they turn into incidents.
Why is a vendor risk assessment important?
Effective VRAs protect your organization from diverse and potentially complex third-party risks that build onto its risk profile. They ensure that the benefits of a potential relationship outweigh the threats and help minimize the impact of those threats.
Additional benefits of an effective vendor assessment program include:
- Better visibility of vendor risks: As you expand your vendor network, you need a standardized mechanism to understand vendor-related issues. Comprehensive VRAs provide visibility to such threats and can prevent them from going unnoticed.
- Proactive incident response planning: Vendor risks can emerge in different contexts, each requiring unique remediation strategies. Timely risk assessments let you come up with incident response plans tailored to a risk event.
- Reduced regulatory risks: Many regulatory frameworks and standards require VRAs, so conducting them becomes part of regulatory compliance.
- Enhanced stakeholder trust: In many industries, avoiding VRAs can lead to reputational damage. A demonstrable understanding of your risk landscape makes stakeholders like customers and investors more confident about your operations.
When should vendor risk assessments be conducted?
Vendor risk assessments should be conducted at least annually so you stay on top of your vendors' changing risk profiles. If the initial assessment reveals notable threats, you might also want to reassess more frequently based on the specific risks.
Besides ongoing risk reviews, three scenarios call for their own assessment.
During the request for proposal (RFP) process
A risk assessment for vendor qualification should be conducted as part of regular due diligence once a vendor responds to your RFP. It lets you immediately disqualify a vendor carrying an unacceptable level of risk.
Throughout the vendor lifecycle
A vendor's initial risk profile will change with time, so you'll need to perform ongoing reassessments after the initial vendor risk identification to stay on top of new threats.
Whenever a risk event occurs
You need to assess a vendor's risk profile following an undesirable or imminent incident. For example, if a vendor has been involved in a security incident, you'll want to evaluate the incident's impact on your organization, as well as the security measures the vendor has in place to prevent its occurrence in the future.
How often should vendor risk assessments be conducted?
Assessment frequency should follow the vendor tier rather than a single calendar rule applied to everyone. Critical vendors warrant a full annual review with continuous monitoring in between, standard vendors warrant an annual attestation refresh, and low-risk vendors can be reconfirmed at renewal. The logic is that a vendor's review cadence should track its exposure, so the vendors that can reach production data or regulated records get reviewed most often. An annual baseline lines up with what SOC 2, ISO 27001, and PCI DSS programs typically expect, which makes it a reasonable floor for anything holding sensitive access.
Those intervals are only the baseline, since a fixed calendar can't anticipate the moments when a vendor's risk changes. Certain events override the schedule entirely, including a vendor breach disclosure, a change in data or access scope, a subprocessor change, or the expiry of an attestation report. A vendor that adds a new integration to your production environment has changed its risk profile that day, not at the next annual review. Writing these trigger conditions into the assessment record at the outset is what turns a point-in-time review into an ongoing control.
How to perform vendor risk assessments in 6 steps
To ensure comprehensive risk coverage and streamlined VRA workflows, follow these expert-vetted steps:
Step 1: Understand different risk types and define risk criteria
Action follows awareness—so start by listing the different types of vendor risks that should be on your radar. Some of the most common categories are broken down in the following table:
After you’ve outlined the scope of risks, define your risk criteria and tolerance levels depending on how strict you want your vendor assessments to be.
“
Organizations should have repeatable risk criteria that reflect their risk appetite based on impact and likelihood.”
For example, if your vendor provides AI solutions, your risk criteria can be a 99.9% platform uptime and compliance with ISO 42001.
It’s good practice to keep your risk criteria standardized and applicable to all vendors in a specific industry. Whether you’re performing a third-party vendor security assessment or a more comprehensive review, you can leverage tools like VRM software to ensure your risk team uses the same criteria and assessment processes.
Step 2: Create a vendor risk assessment questionnaire
Vendor risk assessment questionnaires are widely accepted as an effective method of collecting the data you need to assess vendor risks. They let you examine a vendor’s general risk posture with great accuracy, as well as understand their measures to defend against and respond to various threats.
When it comes to structuring the questionnaire, you should develop a vendor risk assessment form that helps you collect information on the key risk drivers you outlined in Step 1. Typically, vendor risk assessment questions will address the following:
- Data security policies
- Internal controls
- Compliance posture
- Financial reports
- Business continuity plans
If your vendor uses subcontractors (who are not contractually obligated to you), you may also want to collect data on the fourth (or nth) parties in the transaction. In such cases, your questionnaire should assess the vendor’s approach to third-party risk management (TPRM), so you have the awareness necessary to minimize your potential attack surface. It’s also recommended that organizations formalize fourth-party risk management requirements in their master service agreements (MSAs) or statements of work (SOWs). This allows you to set expectations for how vendors must evaluate and manage their own third parties.
While you’re free to create questionnaires from scratch, you can also use established ones like the Shared Assessments SIG questionnaire, or pull from recognized frameworks like the NIST Cybersecurity Framework. These questionnaires are drafted by security experts and incorporate regulatory guidelines and standards for a wide range of industries.
Step 3: Analyze questionnaire responses using risk assessment matrices
Once you have your vendor security questionnaires answered, the next step is to analyze the responses on a tactical level. Although not mandatory, the best practice here is to create a risk assessment matrix to visually represent the risk landscape of each vendor against your predetermined criteria and tolerance levels.
Risk matrices can give you a clear, high-level overview of vendor risks, enabling you to compare each vendor's relative risk profile. The end goal is to quantify and score vendor risks using a repeatable and predictable process.
Creating the matrix is an analytical task. You’ll have to read through security questionnaires with your team, assign numerical values to each risk based on its likelihood and impact, and then multiply the two to get the final composite risk score. Then, you can define risk ranges and color-code them for easy visual interpretation. Here’s a third-party vendor risk assessment example range to follow:
- Low; green: 1–7
- Moderate; yellow: 8–13
- High; orange: 14–21
- Extremely high; red: 22–25
Risk scoring can be laborious if done manually. The good news is that there are risk management tools that can help automate the process of scoring vendors and creating corresponding risk matrices.
Step 4: Profile and categorize vendors according to risk levels
After you’ve analyzed the questionnaire (with or without a matrix), it’s time to turn the data into actionable insights and fine-tune your VRM strategy. Your top priority should be vendor risk rating, which ranks vendors according to their risk levels. If you’re using risk assessment matrices, it would be easier to do a visual scan and segregate vendors into critical-, high-, moderate-, and low-risk tiers.
However, even without risk matrices, you can still categorize vendors on a basic level according to your appetite. In other words, you’ll examine the access and/or data you provide to the vendor and see if any unacceptable risks are associated with them and what you can do about them. For critical risks, you can think of mitigation or remediation strategies before you partner with the vendor. If that’s not doable, you’ll most likely decline their proposal.
Step 5: Report risk assessments and develop an action plan
Once you move past the analytical work, the focus shifts toward intent-based reporting to procurement officers and vendor managers, among other relevant members of your risk team. The aim is to have a crisp summary of the assessment not only to support procurement outcomes but also to establish a document trail for future reference.
Typically, the report’s contents will depend on the decision-making scope and whether you are:
- Doing vendor onboarding with a new company
- Conducting quality control
- Reconsidering current partnerships
In any case, the report should inform the right course of action depending on the vendor’s risk level and specific threats. It’s worth noting that no vendor is ever 100% risk-free, so it’s wise to develop contingency plans for prominent risk events. For example, if a vendor has access to your systems, you likely want to have a two-factor authentication process to protect your sensitive information from breaches and unauthorized access.
Step 6: Set up continuous monitoring
A vendor’s risk profile continues to evolve, even after onboarding. As a result, there will be several situations in which you’ll want to revisit the initial assessment. It’s best to do so regularly, with the exact cadence, depending on the vendor’s risk tier.
Due to the many complexities of risk assessments, continuous monitoring of vendors might seem daunting and time-consuming. A simpler alternative is to use a risk management solution that eliminates the need for manual processes.
The right software should automate repetitive tasks, such as:
- Risk data analysis
- Real-time risk scoring
- Vendor categorization
You may also want to review your VRA workflows periodically to acknowledge any lessons learned or modify current practices.
{{cta_withimage20="/cta-blocks"}} | Vendor Risk Assessment Checklist
Vendor risk assessment best practices to follow
Besides the steps above, a few habits keep an assessment program healthy as your vendor list grows.
Maintain a centralized vendor inventory
Keep every vendor and its latest assessment in one place your team can query, rather than in spreadsheets scattered across departments. A central inventory is what lets you sort vendors by data access, track attestation expiry dates, and see which reviews are overdue at a glance. Without it, the tiering and monitoring cadence this guide describes have nowhere to live.
Document your assessment workflow
Write down how the process runs, from who assigns the tier to what evidence each tier requires and who signs off. Documentation formalizes the process so it survives staff turnover, and it gives cross-functional teams a shared reference instead of tribal knowledge. It also hands an auditor a clear artifact when they ask how you evaluate vendors.
Review the standards and regulations that apply to you
Your risk appetite should answer to the frameworks you're bound by, not only your internal goals. The rules that apply to you depend on the kind of data you handle, and many of them set their own minimum expectations for how closely you vet and monitor vendors. Mapping each vendor to the regulations it touches tells you which assessments carry legal weight and which are discretionary.
Focus resources on your highest-risk vendors
Concentrate your reviewer hours, your monitoring, and your incident response planning on the vendors in your top tier. The vendors that can reach production data or regulated records need the most scrutiny, and everything below that tier can run on lighter, faster checks. This is the same access-driven logic that should set your tiers in the first place.
Bring the right people into the process
Involve the relevant stakeholders at each stage, from defining risk criteria through outlining response plans. Security owns the risk judgment, procurement owns the commercial terms, and the teams that use the vendor know what access it really needs. For your highest-tier vendors, external experts such as your auditor or outside counsel may be worth pulling in.
{{cta_withimage5="/cta-blocks"}} | How to minimize third-party risk
How to assess AI vendors
AI vendors introduce questions a standard security review doesn't ask, so the assessment needs additional questions rather than a separate process.
Start with data handling, because it's where the exposure differs most. Ask what happens to prompts and outputs, whether your data trains or fine-tunes their models, how long inference data is retained, and whether that retention period differs for enterprise plans versus the default terms your team may have clicked through.
Then follow the dependency chain. Most AI vendors sit on top of a foundation model provider, which makes that provider a fourth party with access to whatever flows through the application. Ask who it is, whether it can change without notice, and what contractual protection carries through.
Certifications give you a signal here, though a young one. ISO/IEC 42001 covers AI management programs and the NIST AI Risk Management Framework gives you a structure to ask against even when the vendor hasn't certified. Neither is a substitute for the data handling answers.
One structural warning. AI vendors frequently belong a tier above what their integration footprint suggests, because the data flowing to them is broader than the contract implies. A support summarization tool with a narrow-looking integration may be reading every customer conversation you have. Tier on what moves through the vendor, not on what the procurement record says they do.
Your inventory is also probably incomplete. Employee adoption of AI tools outpaces procurement almost everywhere, so discovery matters more in this category than in any other.
Where vendor risk assessments break down
The failure modes are operational rather than conceptual, and each has a specific fix.
Reviewer inconsistency
Two people assess the same vendor and reach different conclusions, which makes the whole register untrustworthy. Fix it with written scoring criteria and a quarterly calibration session where reviewers score the same vendor independently and compare.
Questionnaire fatigue
Vendors receiving 150-question sets answer the first thirty carefully and the rest with boilerplate. Fix it by tiering, which cuts most questionnaires down to the gaps that the evidence left open.
Assessments that finish after the contract is signed
By then the assessment is theater, since nobody unwinds a signed contract over a moderate finding. Fix it by moving the tier decision into procurement intake so the review starts when the vendor enters the pipeline.
Attestation reports that expire unnoticed
A vendor assessed as low-risk on the strength of a SOC 2 report is not low-risk once that report lapses. Fix it with automated expiry tracking rather than a spreadsheet reminder column.
Inventory drift
You can't assess a vendor you don't know about, and shadow IT means most inventories understate the vendor count. Fix it with discovery that reads from your identity provider, expense data, and network telemetry rather than from a form people are supposed to fill out.
Streamline vendor risk assessments with Vanta
Vanta is a compliance and trust management software solution that brings together numerous features to give you a comprehensive solution for vendor onboarding, evaluation, and monitoring. Its Vendor Risk Management solution can streamline many of your VRM workflows, including risk assessments.
Here are some features that you can leverage to streamline your VRA processes:
- Auto-scoring: Vanta auto-scores inherent vendor risks with predefined (and customizable) parameters. It also creates color-coded risk assessment matrices, which can inform your vendor selection processes.
- Centralized vendor inventory: Manage all vendors through a unified hub, which enables a bird’s-eye overview of key threats at all times.
- Comprehensive dashboard: You can monitor useful vendor data (category, status, etc.) through a robust dashboard to avoid hunting for information across disparate systems.
- Shadow IT discovery: Vanta automatically detects unaccounted-for third-party software used by your organization to help you uncover shadow IT effortlessly.
You can learn more about these features and see them in action by watching our free webinar. For a hands-on experience, schedule a custom demo today.
{{cta_simple5="/cta-blocks"}} | VRM product page
Vendor risk assessment
Vendor risk assessment: A practical guide to clear and consistent evaluations
Vendor risk assessment
Looking to save up to 50% of time with AI-powered security reviews?
According to Vanta’s State of Trust Report, almost half of all organizations said their vendor had experienced a data breach since the beginning of their relationship. A vendor's weaknesses don't stay on the vendor's side of the contract. Every provider you grant access to production data, customer records, or internal tooling becomes part of the risk profile your customers, auditors, and regulators will hold you to, which is why vendor risk assessments have moved from a procurement formality to a security control in their own right.
Most teams already run some version of a vendor review, so the harder question is whether that review holds up. Consistency is usually where programs break down. Two reviewers read the same questionnaire and land on different ratings, tiering happens by instinct instead of by data access, and the SOC 2 report behind a low-risk rating quietly expires without anyone noticing. Each of those gaps has a specific fix, and all of them start with writing the process down.
This guide covers how to run vendor risk assessments that stay consistent as your vendor list grows, whether you're building a process for the first time or tightening one that's drifted. Here's what you'll learn.
- What a vendor risk assessment is and how it fits into a wider vendor risk management program
- Why vendor risk assessments matter for your security posture and regulatory obligations
- How often to run them, and which events should trigger a review outside the normal schedule
- A six-step process for conducting vendor risk assessments end to end
- Best practices, how to assess AI vendors, and the failure modes that undermine assessment programs
What is a vendor risk assessment?
A vendor risk assessment (VRA) is the systemized process of identifying, scoring, prioritizing, and monitoring risks associated with third-party vendors (e.g., suppliers, agents, or software providers). VRA is integrated into your procurement, outsourcing, and security workflows and is typically conducted as part of a vendor risk management (VRM) program.
A typical vendor assessment process closely examines various aspects of a vendor’s business, such as:
- Security information
- Operational data
- Financial performance
- Relationships with their third parties
If performed well, a vendor management risk assessment lets you proactively identify the threats your vendor might bring and remediate them before they turn into incidents.
Why is a vendor risk assessment important?
Effective VRAs protect your organization from diverse and potentially complex third-party risks that build onto its risk profile. They ensure that the benefits of a potential relationship outweigh the threats and help minimize the impact of those threats.
Additional benefits of an effective vendor assessment program include:
- Better visibility of vendor risks: As you expand your vendor network, you need a standardized mechanism to understand vendor-related issues. Comprehensive VRAs provide visibility to such threats and can prevent them from going unnoticed.
- Proactive incident response planning: Vendor risks can emerge in different contexts, each requiring unique remediation strategies. Timely risk assessments let you come up with incident response plans tailored to a risk event.
- Reduced regulatory risks: Many regulatory frameworks and standards require VRAs, so conducting them becomes part of regulatory compliance.
- Enhanced stakeholder trust: In many industries, avoiding VRAs can lead to reputational damage. A demonstrable understanding of your risk landscape makes stakeholders like customers and investors more confident about your operations.
When should vendor risk assessments be conducted?
Vendor risk assessments should be conducted at least annually so you stay on top of your vendors' changing risk profiles. If the initial assessment reveals notable threats, you might also want to reassess more frequently based on the specific risks.
Besides ongoing risk reviews, three scenarios call for their own assessment.
During the request for proposal (RFP) process
A risk assessment for vendor qualification should be conducted as part of regular due diligence once a vendor responds to your RFP. It lets you immediately disqualify a vendor carrying an unacceptable level of risk.
Throughout the vendor lifecycle
A vendor's initial risk profile will change with time, so you'll need to perform ongoing reassessments after the initial vendor risk identification to stay on top of new threats.
Whenever a risk event occurs
You need to assess a vendor's risk profile following an undesirable or imminent incident. For example, if a vendor has been involved in a security incident, you'll want to evaluate the incident's impact on your organization, as well as the security measures the vendor has in place to prevent its occurrence in the future.
How often should vendor risk assessments be conducted?
Assessment frequency should follow the vendor tier rather than a single calendar rule applied to everyone. Critical vendors warrant a full annual review with continuous monitoring in between, standard vendors warrant an annual attestation refresh, and low-risk vendors can be reconfirmed at renewal. The logic is that a vendor's review cadence should track its exposure, so the vendors that can reach production data or regulated records get reviewed most often. An annual baseline lines up with what SOC 2, ISO 27001, and PCI DSS programs typically expect, which makes it a reasonable floor for anything holding sensitive access.
Those intervals are only the baseline, since a fixed calendar can't anticipate the moments when a vendor's risk changes. Certain events override the schedule entirely, including a vendor breach disclosure, a change in data or access scope, a subprocessor change, or the expiry of an attestation report. A vendor that adds a new integration to your production environment has changed its risk profile that day, not at the next annual review. Writing these trigger conditions into the assessment record at the outset is what turns a point-in-time review into an ongoing control.
How to perform vendor risk assessments in 6 steps
To ensure comprehensive risk coverage and streamlined VRA workflows, follow these expert-vetted steps:
Step 1: Understand different risk types and define risk criteria
Action follows awareness—so start by listing the different types of vendor risks that should be on your radar. Some of the most common categories are broken down in the following table:
After you’ve outlined the scope of risks, define your risk criteria and tolerance levels depending on how strict you want your vendor assessments to be.
“
Organizations should have repeatable risk criteria that reflect their risk appetite based on impact and likelihood.”
For example, if your vendor provides AI solutions, your risk criteria can be a 99.9% platform uptime and compliance with ISO 42001.
It’s good practice to keep your risk criteria standardized and applicable to all vendors in a specific industry. Whether you’re performing a third-party vendor security assessment or a more comprehensive review, you can leverage tools like VRM software to ensure your risk team uses the same criteria and assessment processes.
Step 2: Create a vendor risk assessment questionnaire
Vendor risk assessment questionnaires are widely accepted as an effective method of collecting the data you need to assess vendor risks. They let you examine a vendor’s general risk posture with great accuracy, as well as understand their measures to defend against and respond to various threats.
When it comes to structuring the questionnaire, you should develop a vendor risk assessment form that helps you collect information on the key risk drivers you outlined in Step 1. Typically, vendor risk assessment questions will address the following:
- Data security policies
- Internal controls
- Compliance posture
- Financial reports
- Business continuity plans
If your vendor uses subcontractors (who are not contractually obligated to you), you may also want to collect data on the fourth (or nth) parties in the transaction. In such cases, your questionnaire should assess the vendor’s approach to third-party risk management (TPRM), so you have the awareness necessary to minimize your potential attack surface. It’s also recommended that organizations formalize fourth-party risk management requirements in their master service agreements (MSAs) or statements of work (SOWs). This allows you to set expectations for how vendors must evaluate and manage their own third parties.
While you’re free to create questionnaires from scratch, you can also use established ones like the Shared Assessments SIG questionnaire, or pull from recognized frameworks like the NIST Cybersecurity Framework. These questionnaires are drafted by security experts and incorporate regulatory guidelines and standards for a wide range of industries.
Step 3: Analyze questionnaire responses using risk assessment matrices
Once you have your vendor security questionnaires answered, the next step is to analyze the responses on a tactical level. Although not mandatory, the best practice here is to create a risk assessment matrix to visually represent the risk landscape of each vendor against your predetermined criteria and tolerance levels.
Risk matrices can give you a clear, high-level overview of vendor risks, enabling you to compare each vendor's relative risk profile. The end goal is to quantify and score vendor risks using a repeatable and predictable process.
Creating the matrix is an analytical task. You’ll have to read through security questionnaires with your team, assign numerical values to each risk based on its likelihood and impact, and then multiply the two to get the final composite risk score. Then, you can define risk ranges and color-code them for easy visual interpretation. Here’s a third-party vendor risk assessment example range to follow:
- Low; green: 1–7
- Moderate; yellow: 8–13
- High; orange: 14–21
- Extremely high; red: 22–25
Risk scoring can be laborious if done manually. The good news is that there are risk management tools that can help automate the process of scoring vendors and creating corresponding risk matrices.
Step 4: Profile and categorize vendors according to risk levels
After you’ve analyzed the questionnaire (with or without a matrix), it’s time to turn the data into actionable insights and fine-tune your VRM strategy. Your top priority should be vendor risk rating, which ranks vendors according to their risk levels. If you’re using risk assessment matrices, it would be easier to do a visual scan and segregate vendors into critical-, high-, moderate-, and low-risk tiers.
However, even without risk matrices, you can still categorize vendors on a basic level according to your appetite. In other words, you’ll examine the access and/or data you provide to the vendor and see if any unacceptable risks are associated with them and what you can do about them. For critical risks, you can think of mitigation or remediation strategies before you partner with the vendor. If that’s not doable, you’ll most likely decline their proposal.
Step 5: Report risk assessments and develop an action plan
Once you move past the analytical work, the focus shifts toward intent-based reporting to procurement officers and vendor managers, among other relevant members of your risk team. The aim is to have a crisp summary of the assessment not only to support procurement outcomes but also to establish a document trail for future reference.
Typically, the report’s contents will depend on the decision-making scope and whether you are:
- Doing vendor onboarding with a new company
- Conducting quality control
- Reconsidering current partnerships
In any case, the report should inform the right course of action depending on the vendor’s risk level and specific threats. It’s worth noting that no vendor is ever 100% risk-free, so it’s wise to develop contingency plans for prominent risk events. For example, if a vendor has access to your systems, you likely want to have a two-factor authentication process to protect your sensitive information from breaches and unauthorized access.
Step 6: Set up continuous monitoring
A vendor’s risk profile continues to evolve, even after onboarding. As a result, there will be several situations in which you’ll want to revisit the initial assessment. It’s best to do so regularly, with the exact cadence, depending on the vendor’s risk tier.
Due to the many complexities of risk assessments, continuous monitoring of vendors might seem daunting and time-consuming. A simpler alternative is to use a risk management solution that eliminates the need for manual processes.
The right software should automate repetitive tasks, such as:
- Risk data analysis
- Real-time risk scoring
- Vendor categorization
You may also want to review your VRA workflows periodically to acknowledge any lessons learned or modify current practices.
{{cta_withimage20="/cta-blocks"}} | Vendor Risk Assessment Checklist
Vendor risk assessment best practices to follow
Besides the steps above, a few habits keep an assessment program healthy as your vendor list grows.
Maintain a centralized vendor inventory
Keep every vendor and its latest assessment in one place your team can query, rather than in spreadsheets scattered across departments. A central inventory is what lets you sort vendors by data access, track attestation expiry dates, and see which reviews are overdue at a glance. Without it, the tiering and monitoring cadence this guide describes have nowhere to live.
Document your assessment workflow
Write down how the process runs, from who assigns the tier to what evidence each tier requires and who signs off. Documentation formalizes the process so it survives staff turnover, and it gives cross-functional teams a shared reference instead of tribal knowledge. It also hands an auditor a clear artifact when they ask how you evaluate vendors.
Review the standards and regulations that apply to you
Your risk appetite should answer to the frameworks you're bound by, not only your internal goals. The rules that apply to you depend on the kind of data you handle, and many of them set their own minimum expectations for how closely you vet and monitor vendors. Mapping each vendor to the regulations it touches tells you which assessments carry legal weight and which are discretionary.
Focus resources on your highest-risk vendors
Concentrate your reviewer hours, your monitoring, and your incident response planning on the vendors in your top tier. The vendors that can reach production data or regulated records need the most scrutiny, and everything below that tier can run on lighter, faster checks. This is the same access-driven logic that should set your tiers in the first place.
Bring the right people into the process
Involve the relevant stakeholders at each stage, from defining risk criteria through outlining response plans. Security owns the risk judgment, procurement owns the commercial terms, and the teams that use the vendor know what access it really needs. For your highest-tier vendors, external experts such as your auditor or outside counsel may be worth pulling in.
{{cta_withimage5="/cta-blocks"}} | How to minimize third-party risk
How to assess AI vendors
AI vendors introduce questions a standard security review doesn't ask, so the assessment needs additional questions rather than a separate process.
Start with data handling, because it's where the exposure differs most. Ask what happens to prompts and outputs, whether your data trains or fine-tunes their models, how long inference data is retained, and whether that retention period differs for enterprise plans versus the default terms your team may have clicked through.
Then follow the dependency chain. Most AI vendors sit on top of a foundation model provider, which makes that provider a fourth party with access to whatever flows through the application. Ask who it is, whether it can change without notice, and what contractual protection carries through.
Certifications give you a signal here, though a young one. ISO/IEC 42001 covers AI management programs and the NIST AI Risk Management Framework gives you a structure to ask against even when the vendor hasn't certified. Neither is a substitute for the data handling answers.
One structural warning. AI vendors frequently belong a tier above what their integration footprint suggests, because the data flowing to them is broader than the contract implies. A support summarization tool with a narrow-looking integration may be reading every customer conversation you have. Tier on what moves through the vendor, not on what the procurement record says they do.
Your inventory is also probably incomplete. Employee adoption of AI tools outpaces procurement almost everywhere, so discovery matters more in this category than in any other.
Where vendor risk assessments break down
The failure modes are operational rather than conceptual, and each has a specific fix.
Reviewer inconsistency
Two people assess the same vendor and reach different conclusions, which makes the whole register untrustworthy. Fix it with written scoring criteria and a quarterly calibration session where reviewers score the same vendor independently and compare.
Questionnaire fatigue
Vendors receiving 150-question sets answer the first thirty carefully and the rest with boilerplate. Fix it by tiering, which cuts most questionnaires down to the gaps that the evidence left open.
Assessments that finish after the contract is signed
By then the assessment is theater, since nobody unwinds a signed contract over a moderate finding. Fix it by moving the tier decision into procurement intake so the review starts when the vendor enters the pipeline.
Attestation reports that expire unnoticed
A vendor assessed as low-risk on the strength of a SOC 2 report is not low-risk once that report lapses. Fix it with automated expiry tracking rather than a spreadsheet reminder column.
Inventory drift
You can't assess a vendor you don't know about, and shadow IT means most inventories understate the vendor count. Fix it with discovery that reads from your identity provider, expense data, and network telemetry rather than from a form people are supposed to fill out.
Streamline vendor risk assessments with Vanta
Vanta is a compliance and trust management software solution that brings together numerous features to give you a comprehensive solution for vendor onboarding, evaluation, and monitoring. Its Vendor Risk Management solution can streamline many of your VRM workflows, including risk assessments.
Here are some features that you can leverage to streamline your VRA processes:
- Auto-scoring: Vanta auto-scores inherent vendor risks with predefined (and customizable) parameters. It also creates color-coded risk assessment matrices, which can inform your vendor selection processes.
- Centralized vendor inventory: Manage all vendors through a unified hub, which enables a bird’s-eye overview of key threats at all times.
- Comprehensive dashboard: You can monitor useful vendor data (category, status, etc.) through a robust dashboard to avoid hunting for information across disparate systems.
- Shadow IT discovery: Vanta automatically detects unaccounted-for third-party software used by your organization to help you uncover shadow IT effortlessly.
You can learn more about these features and see them in action by watching our free webinar. For a hands-on experience, schedule a custom demo today.
{{cta_simple5="/cta-blocks"}} | VRM product page
Explore more TPRM articles
Introduction to TPRM
Vendor lifecycle management
Vendor risk assessment
Running a VRM program
Regulatory compliance and industry standards
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How to minimize third-party risk with vendor management
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Vanta in Action: Vendor Risk Management
Vendor security reviews can be manual and time-consuming, draining security teams of precious hours. Vanta’s Vendor Risk Management solution changes that, automating and streamlining security reviews so that you can spend less time on repetitive work and more time strengthening your security posture. Curious to see what it looks like?
10 important questions to add to your security questionnaire [with examples]
Use these 10 vendor security questionnaire questions to assess compliance, uncover risks, and evaluate third-party vendors before onboarding.
