You most likely depend on third-party vendors to efficiently run your routine operations if you own a business or an organization. Nevertheless, vendor management process workflow can present risks with serious financial, legal, and operational repercussions making vendor risk management a critical process.
But how do you manage tens or hundreds of vendors if you have different suppliers? Well, it all starts with a vendor management plan. Below we discuss four key points that are critical in managing your suppliers. These practices represent the four keys for vendor risk management and are included in the vendor risk management workflow.
Map Vendors According to Inherent Risks
The first step of the vendor risk assessment is to have a comprehensive list of all vendors who supply products or services to your organization. Then, profile each vendor, grouping them according to the vendor. List what services the vendors provide, the importance and criticality of those services, the type of data they handle, and whether they handle sensitive data. This information will help you determine what questionnaires to send to your suppliers according to their requirements and risk appetite.
Submit Questionnaires and Obtain Responses
Creating, providing, and completing security questionnaires is a time-consuming and tedious process involving multiple team members. It’s not uncommon for your suppliers to have questions and seek clarifications about your questionnaires. So, it’s advisable to expect some back-and-forth engagement between you and the vendors during this process.
The vendor is required to respond by providing relevant evidence that corresponds to the questionnaire’s controls. It’s advisable to give a timeline for completing and returning to create room for a timely assessment. Remember that your organization’s regulatory compliance and its security posture are both dependent on the vendors’ security.
Examining Your Vendor’s Attack Surface
Always assess your vendor’s front-facing digital footprint to unveil cyber gaps. Examining the vendor’s attack surface can also serve as a means of verifying the questionnaires.
An attack surface examination must look at three primary areas:
- Network and IT. These refer to parameters involving SSL protocols, DNS servers, and more.
- Applications. Parameters involve domain hijacking, web applications, hacking, and more.
- Humans. These are parameters involving a dedicated security team and social posture.
Looking at these parameters will help you see and understand your vendors’ security posture and security infrastructure.
Hackers are leveraging new tools and advanced methodologies to exploit vulnerable networks and gain unauthorized access to protected systems. What’s risky is that suppliers often add new software and update their existing applications. Suppliers also update their internal policies resulting in cyber security gaps.
As a result, it’s critical to monitor vendors throughout the business relationship to detect suspicious activity, uncover issues, and stay updated about security protocols. Most importantly, having a comprehensive understanding of a vendors’ security architecture provides surety about business continuity processes.
Benefits of Vendor Risk Management
Vendor risk management (VRM) concerns primarily the steps taken to ensure the use of service providers doesn’t create risk or business disruption. The goal of vendor risk management is to identify and eliminate risks throughout the supplier management process.
The key benefits of vendor management process workflow include:
- Reduced cost and time. A vendor risk assessment program that’s built and coordinated so that different information is accessible by all members and not just those managing the organization. The vendor risk management program saves time and effort by coordinating access to vendor information.
- Reduced risk and improved business continuity. You get a great snapshot of where vendors are in your organization once you implement vendor risk management. All vendors should be classified as high, medium, or low risk. So, the vendor risk manager can begin focusing on medium and high-risk vendors.
- Regulatory compliance. Enterprises in regulated sectors need to remain fully compliant. As vendor and third-party breaches continue to rise, regulators are cracking the whip on businesses that don’t manage their third parties. Essentially, regulators classify suppliers as an extension of the company’s ecosystem. Therefore, both the organization and the vendor could be penalized during a breach.
- Reporting. Many CEOs and Board of Directors began taking notice of vendor security after the legendary third-party breach by Target Store. As a result, most business leaders are asking for security reports and assessing the security posture of their vendors. Many regulators and business leaders are asking for risk reports, and without having this information, it may be difficult to land lucrative supply contracts.
- Security. Vendor risk management processes are there to identify and avert risk. Being fully protected is at the top of every CEO’s mind, and since no company is ever one-hundred percent secure, it’s critical to develop your organization’s defensibility. Once damage or breach occurs, regulators, customers, lawyers, and stakeholders will come after your business for retribution. So, a vendor risk management plan provides the much-needed defense against unprecedented, costly attacks.
ProcurePort – Redefining Vendor Management Process Workflow
Vendor risk management is a critical process but not a simple one. It can be lengthy, time-consuming, and tedious when working with tens of thousands if not hundreds of vendors. You can streamline your procurement and achieve an efficient vendor risk management process with automated solutions. ProcurePort has been designing automated procurement solutions for teams, enterprises, and organizations. ProcurePort’s many years of research and innovation enable the software to achieve service excellence in multiple supply chain fronts.
Contact ProcurePort to streamline your vendor risk management processes.