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Vendor Risk Management Explained: Plan for Action

Oct 25, 2021 BY DATAPRISE

Vendor Risk Management Explained: Plan for Action

What is your organization doing to protect business information against the potential threat vendors present? Setting your organization up to take a tailored approach to vendor risk management and mitigation can make your processes more efficient, allowing your business to focus on what it does best.

Today, we aim to break down the particular of vendor risk management and make better sense of why your organization should have an approach planned.

 

What are Vendors?

A vendor is a term that refers to a general group of individuals that provide tangible things to your organization. Watch the clip below explaining different terms that vendors are known as across different industries. ⬇️

Vendors are susceptible to breaches like any organization, and by extension that could harm your critical business information.

 

What is Vendor Risk Management?

Put simply, vendor risk management (VRM) is the process of assessing and understanding the risks associated with the vendors that you use and rely on to deliver their goods and services to your end customers.

Watch our expert, Stephen Jones, further explain how the landscape is changing. ⬇️

 

Why is Vendor Risk Management Critical?

Most modern businesses outsource at the minimum some components or parts of their service to 3rd party vendors.

Because of this, your organization needs to understand the risks that all of the vendors and other 3rd parties pose to your business. 2021 has shown supply chain failures can cause significant impacts to your business, dependent on what they provide to your organization. Here’s a clip looking at what it’s like to not have a VRM program. ⬇️

 

How Do You Develop Your Vendor Risk Methodology?

Let's have our experts break it down. ⬇️

In addition, integrate your VRM process into your daily business with automation and other triggers. As your business takes on additional vendors, we need to ensure we are integrating this VRM process each time any of those groups established a new 3rd party relationship.

Vendors can introduce 4 different types of risks into your organization.

  • Financial -  a risk introduced that hinders your ability to deliver a service.
  • Legal/Compliance – a risk introduced that impacts any compliances your organization needs to follow.
  • Operational – a risk introduced that directly impacts the way your business can operate.
  • Reputational – a risk introduced that directly impacts the reputation of your business.

 

The VRM Approach

The VRM Approach

 

 

 

Designing the VRM Program

  • Understanding your business needs
  • Regulatory and contracts review
  • Data flow analysis & vendor risk tiering
  • Questionnaire selection
  • Define vendor risk scoring

 

Plan Your Approach

  • Inventory, categorize & risk tier your vendors
  • Test program design
  • Create vendor profiles
  • Ensure vendor access to selected tools

 

Execute the Plan

  • Distribute questionnaires, analyze, follow up
  • Address issues as they arise
  • Analyze, score & verify responses
  • Report results to stakeholders

 

Remediate

  • Issues will arise with critical vendors
  • Work with vendors and stakeholders to develop a remediation strategy
  • Track the issue through its lifecycle

 

Conclusion

If you’re engaging in strategic partnerships with 3rd party organizations it’s important to put both time and effort into understanding how those relationships could potentially impact your business. Interested in exploring it in more detail? Watch our full webinar below  ⬇️


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