Are your vendors a potential weak link in your cybersecurity strategy? How confident are you that your third-party partners are protecting your sensitive data? In today’s interconnected world, the risks from vendors are more critical than ever. A robust Vendor Risk Management program isn’t just a nice-to-have—it's a must for enhancing your overall enterprise security program. The following are some best practices when it comes to crafting your vendor risk management program.

1. Identify and Classify Your Vendors

Start by listing all the vendors your business works with and categorize them based on their risk level:

• High Risk: Vendors who handle sensitive data or have access to your critical systems.
• Medium Risk: Vendors with some indirect impact on your business.
• Low Risk: Vendors with minimal or no access to your critical systems or data.

As you can gather from the above, your Vendor Classification exercise should be consistent with your Data Classification process.

2. Set Up a Risk Assessment Process

Before working with any vendor, assess their cybersecurity practices:

• Do they protect sensitive data?
• Are they compliant with relevant regulations (like GDPR or HIPAA)?
• What certifications do they have (e.g., SOC 2, ISO 27001)?
• Are they financially stable?

3. Onboard Vendors with Strong Security Policies

Create a clear process for onboarding vendors:

• Include a risk assessment step before finalizing any contracts.
• Make sure contracts outline data protection measures, breach notification requirements, and compliance obligations.

Note: many automated purchasing systems have a vendor compliance component as part of the workflow process. This often includes GRC and Information Security personnel as part of the approval process.

4. Monitor Vendor Performance and Compliance

Regularly monitor your vendors to ensure they follow your security guidelines:

• Perform annual reviews for high-risk vendors.
• Use automated tools to track vendors’ cybersecurity practices.
• Make sure your vendors know how to report and handle security incidents.
• Schedule meetings on a regular cadence with critical vendors and their account representatives

5. Define Roles and Responsibilities

Assign someone within your organization to manage vendor risks, and make sure each vendor has a contact point for risk-related issues. Collaboration between your IT, legal, and procurement teams will ensure effective management.

6. Use Technology to Streamline the Process

To make the management process easier, consider using vendor risk management software. These tools can automate risk assessments, track vendor compliance, and help with reporting.

7. Train Your Team

Make sure your employees understand how to spot vendor risks and what to do if they suspect an issue. Regular training will help everyone stay aware and ready to act.

8. Stay Compliant

Ensure that your Vendor Risk Management (“VRM”) process aligns with relevant laws and regulations, like GDPR or PCI DSS. Keeping documentation up-to-date is key for compliance audits.

9. Review and Improve

A VRM program should be a living process. Regularly review and update your program to keep up with new risks, changing technologies, and evolving regulations.

By setting up a strong VRM program, you can minimize cybersecurity threats and protect your business from potential data breaches or financial losses. Ready to implement an VRM program for your enterprise? We can help.