Vendor Risk Management (VRM) involves deliberate efforts by businesses to mitigate potential negative impacts on performance or disruptions caused by service providers and IT suppliers. These efforts include identifying, managing, and continuously monitoring ongoing risks associated with vendors throughout their lifecycle, often facilitated by vendor risk software.
Organizations that implement vendor risk management programs protect their data and are less susceptible to operational disruptions, reputational damage, and financial losses. This is because they maintain constant awareness of the vendors they work with, the level of access each vendor has to their sensitive data, and the security controls in place to manage these associations.
How to Implement a Vendor Risk Management Program
Below are the most important steps in conducting a vendor risk management program.
Define Your Organization’s Objectives
If you want to design a vendor risk management program, you should ensure that your objectives are clear and that the program will meet the unique needs of your organization.
Create an Internal Vendor Risk Management Team
With your objectives in place, you need a team that will ensure that the vendor risk management program achieves these objectives. To guarantee that level of efficiency, you should hire experienced risk managers or at least train existing employees on vendor risk management practices.
Design the Process of Assessing Vendors
The next step in implementing vendor risk controls is to use a well-designed vendor assessment process as its foundation. That foundation ensures that all vendors are assessed properly and consistently before the organization engages with them in any way.
Create a Detailed List of all Vendors
By the time you create a list of all vendors, you are well through the process of creating a vendor risk management program. The fourth step marks the start of the implementation process, and it starts with identifying all the vendors your organization works with and using that list as the vendor inventory. The list also provides a list of vendors by priority according to the threat that each vendor poses to the organization.
Identify the Different Risks Posed by the Listed Vendors
In this step, you should identify the types of risk you will face if you were to enter into a business agreement with each vendor. Consider each vendor’s level of access to your internal data and if you can function without the vendor for a given period of time.
Streamline Your Process with Vendor Risk Management Software
Vendor risk management is a complex and detailed process. ComplyAssistant is ready to support your organization with our cloud-based vendor risk management software designed to efficiently audit and manage your third-party business associates.