Vendor risk management (VRM) continues to be a strategic initiative for organizations that engage with third party vendors. According to Gartner, 71% of organizations reported their network contains more third parties than it did three years before. This number is expected to grow even larger in the next few years.
With cloud-based services, the Internet of Things (IoT) and the globally extended digital supply chain increasing cybersecurity risks nearly as much as they open new doors for business operation; it has become imperative to create and maintain formal programs for vendor risk management in order to avoid being compromised through an external contractor.
Recent data breaches hit Kaseya and SolarWinds after their third party vendors neglected to protect access to their critical data. In a broader sense, this entitles for a third party risk management (TPRM) strategy to identify, analyze and control the risks presented to the organization, its data, operations and finances by any type of external third party vendor or contractor.
Implementing new technologies and relying on more third-party solutions and services is a must for any company that aims to keep up with the ever-evolving world. Partnerships offer the opportunity for greater agility, exceptional customer experiences and profitable growth.
According to Gartner, 60% of organizations are now working with more than 1,000 third-parties
That said, these technologies need to be secured and properly evaluated before fully entering the process and data ecosystem of an organization. Vendors will likely have access to sensitive data about technology, finances, inventory, shipping, licensing, media & advertising, recruiting, payroll, sales partners & distributors, among many other things.
Ideally, there should be a vendor risk assessment both before and after engaging with a third party. It’s only natural that business relationships evolve as time goes by. There can be changes in scope, goals, strategy, and staff over the course of a relationship with a third-party. Or even a global pandemic, forcing companies to work remotely and expanding the risk surfaces across the globe.
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This means the assessment is not over after the initial due diligence process. In fact, organizations need to implement ongoing monitoring strategies to detect compliance and risk issues in real time, as opposed to point-in-time assessments.
But let’s not get ahead of ourselves. Let’s start by 7 useful questions to ask during the assessment.
Now, these won’t cover the entire spectrum of vendor risk management or third party risk management, but they are a great starting point that will allow your company to make an informed decision when assessing a third party vendor.
Better yet, you could use these questions to develop a risk assessment workflow in a dedicated third party risk management tool as opposed to doing manual questionnaires via email and spreadsheets. Your team and your vendors will surely appreciate it.
What comes after assessing the risk a vendor might pose to your organization? Essentially, putting into place ongoing monitoring activities for periodic reassessment. A lot of things can happen after you sign the contract that impact the vendor’s risk profile, so you need to stay ahead.
Doing vendor risk management is not as hard as it sounds, as there are tools and new approaches to simplify the process. Our ThirdPartyTrust platform leverages the work of industry peers who have already reviewed common third parties, automating data gathering and communication between enterprises and third party vendors for a streamlined, automated outcome.
Another thing to consider is governance and accountability, as it can be hard to determine when there’s no people or department in charge of managing third-party risk. Sometimes it’s not even a matter of not having a designated resource, but a matter of compliance officers having too much on their plates – with responsibilities extending beyond their own companies and into the increasing map of service providers and supply chain partners.
Companies are realizing cybersecurity is a top-tier issue. Compliance programs are focused on third party risk more than ever before, but there’s still a gap in how and to what extent it is approached in practice.
No industry is exempt from the attention of cybersecurity risks. As the threat landscape constantly evolves, so does third party risk, with networks becoming larger and more complex. The time to check defenses is now!
Are you interested in learning more about our vendor and third party risk management platform?
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