Understanding Vendor Risk

Now that you are getting results back from assessments, let's talk about a risk-based approach to vendor management.

How do you identify and mitigate the potential threats and vulnerabilities that arise from working with third-party suppliers or service providers? How do you assess the level of risk that each vendor poses to your organization? How do you apply appropriate controls and monitoring activities to ensure vendor compliance and security?

Some of the steps involved in a risk-based approach to vendor management include:

• Establishing a vendor risk management framework that defines the scope, objectives, roles, and responsibilities of the process.
• Developing a vendor risk assessment methodology that evaluates the inherent and residual risks of each vendor based on factors such as the type, nature, and criticality of the service or product they provide, the regulatory and contractual requirements they must adhere to, and the security and privacy controls they have implemented.
• Performing due diligence on potential and existing vendors to verify their credentials, capabilities, and performance, and to identify any red flags or gaps in their risk management practices.
• Classifying vendors into different risk tiers based on the results of the risk assessment, and assigning corresponding levels of oversight and review.
• Implementing risk mitigation strategies and controls to address the identified risks, such as contractual clauses, service level agreements, audits, testing, reporting, and remediation.
• Monitoring and reviewing vendor performance and compliance on a regular basis, and updating the risk assessment and mitigation plans as needed.
• Documenting and reporting vendor risk management activities and outcomes, and communicating them to the relevant stakeholders.

A risk-based approach to vendor management can help your organization reduce the likelihood and impact of vendor-related incidents, such as data breaches, service disruptions, regulatory fines, reputational damage, and legal liabilities. It can also help optimize the vendor relationship and ensure the quality and efficiency of the service or product they deliver.

Also keep in mind that if you do experience a breach, your organization will be subject to intense scrutiny and you will need to justify your approach to vendor management. 

Sounds scary, but the CORL Portal contains tools to help you out.  

The Program Metrics dashboards provide several dashboards that provide both a high-level overview of your vendor risk management program and detailed tracking of each individual assessment. Navigate to Assessments > Program Metrics and explore each of the dashboards. For more information, see Program Metrics dashboards.

The Dynamic Vendor Roster dashboards provide a high level overview of your vendor portfolio and allows you to make risk-based decisions on where to focus risk remediation efforts. Navigate to Vendors > Dynamic Vendor Roster and view the dashboards. For more information, see Introduction to the Dynamic Vendor Roster Dashboard

This concludes our quick tour of the assessment lifecycle. Before we leave you, let's talk about ongoing activities.