How do you Perform a Vendor Risk Assessment?

How do you Perform a Vendor Risk Assessment?How do you Perform a Vendor Risk Assessment?
AvatarGuest Author asked 2 years ago
How do you Perform a Vendor Risk Assessment?
1 Answers
Rebecca KappelRebecca Kappel Staff answered 2 years ago
An entity or company that provides services for another company is referred to as a vendor. Vendors who are working under a contract are considered third-party vendors, but many consider any person or business who has access to your organization to provide their service or product to be a third party vendor. This includes accountants, designers, and email platform services. In the digital world, examples of vendors would be:

  • storage providers
  • cloud-based/SaaS software solutions
  • business partners
  • suppliers
  • Agencies

It is important to remember that third-party vendors have their own vendors, who are fourth-party vendors! All of these vendors create the vast supply chain most organizations associate with.

The Upside and Downside of Third-party Vendors

Third-party vendors provide an excellent way for companies to focus on their core goals. The responsibility of managing workloads, professional services, digital storage solutions, and IT infrastructure is delegated to companies that can efficiently accomplish the necessary tasks. This allows for tremendous prospects for business growth. But as with all opportunities for growth, third-party vendors carry substantial risks.

Why are Vendor Risk Assessments Important?

Vendor assessments mitigate third-party vendor risk. A vendor risk assessment identifies and calculates whether the benefits of partnering with a given vendor outweigh the inherent risk that the partnership bears. In reality, this calculation is a rather gray area and decisions vary significantly from business to business depending on their industry, risk appetite, and resources. The results will also be weighed against the criticality of the vendor. 

Companies evaluate a potential or existing vendor risk by performing a vendor risk assessment. The bulk of the assessment is usually in questionnaire form and is conducted during vendor onboarding. Subsequent assessments are conducted throughout the lifecycle of each vendor.

How to Perform a Vendor Risk Assessment

1. Do your Dues

Start your due diligence by collecting information about your vendor’s risk posture on questionnaires and from external sources. Develop assessment criteria unique to your business goals. High-risk vendors should be subject to greater scrutiny than vendors that don’t have access to sensitive company information.

2. Move on to vendor onboarding

If a vendor didn’t meet your risk standards, you can request additional assurances until you are satisfied with the information and practices provided. After a vendor is approved, start the contracting process. This is a written agreement that guarantees a certain level of security is upheld by your vendors and sets access and security controls across your system.

3. Continuously monitor and assess

After the initial onboarding, the job isn’t over. At quarterly and annual intervals (in addition to after cyber incidents), you need to perform continuous monitoring and upkeep of the controls you have set through regular assessments.

How to Facilitate Your Vendor Risk Assessment Process

A reliable solution like Centraleyes’ automated platform allows you to onboard new vendors in minutes and automate your assessments and reassessments. This is all while providing up-to-date threat intelligence and automatically detecting third-party vulnerabilities.

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