The number of cyberattacks and data breaches through third-party vendors is increasing and intensifying, therefore superior cybersecurity measures are needed. As businesses all around the world increase their use of outsourcing, vendor risk management (VRM) is key to managing and monitoring third-party vendors and suppliers of IT products and services.
VRM and third-party management are now the most important parts of any risk management framework. Ensuring third-parties are managing their data security, information security and cyber security is key to mitigating risk.
While outsourcing has its benefits – mainly cost cutting – if vendors lack strong security measures, your organisation is exposed to operational, regulatory, financial and reputational risk. VRM is focused on identifying and mitigating these risks.
Vendor Risk Management RiskXchange is leading the fight against cybercrime at home and abroad. Its VRM framework is able to identify and mitigate third-party risk factors, business uncertainties, legal liabilities and reputational damage.
Many organisations conduct due diligence into their third-party vendors, but what most are unaware of is that in order to maintain strong security controls these vendors must be audited and continuously monitored.
RiskXchange knows that successful audits begin by establishing an audit trail. The operating model includes vendor categorization and concentration based on a risk assessment. Organisations must also supply vendor report reviews showing ongoing governance throughout the third-party vendor life cycle in order to pinpoint and avoid the risks.
Managing and Mitigating Risk VRM involves a comprehensive plan for the identification and mitigation of potential business uncertainties as well as legal liabilities.
According to Techopedia, VRM has now become more important than ever because of the prevalence of outsourcing. Because many organisations entrust some of their workflows to third parties, they lose control of those workflows and have to trust the third party to do their job well. But you shouldn’t rely solely on third-party security measures, it’s important to incorporate your own.
Third-party vendor risk management includes five main categories: qualifying, engagement, managing delivery, managing finances and relationship termination. Reviewing information security is the sixth and final element which is key to fighting ongoing data breaches. Due diligence during the qualification stage incorporates information security management. However, as threats continuously evolve, reviewing information security must be updated over the entire life cycle, not just in the initial qualification stage. Before formulating a log of third-party activities, organisations must plan their supplier relationship management process from start to finish.
The VRM framework addresses each step in the life cycle:
- Due diligence - Reviewing information security - Review process for staff training and licensing - Benchmarks for evaluating IT products and services - Benchmarks for reviewing financials - Process for obtaining business license documentation, insurance and bonding
Engagement - Reviewing information security - Contracts to include a statement of work, delivery date and payment schedule
Reviewing Information Security
- Continuous information security management throughout entire life cycle - Baseline identity access management within third-party vendor - Baseline privileged access management for third-party vendor
- Scheduling deliverables, timelines and timeframes - Scheduling receivables, timelines and timeframes - Reviewing information security - Establishing and defining physical and system access requirements - Organisation defines stakeholders responsible for working with third-party vendor
- Establishing an invoice schedule - Establishing a payment mechanism - Reviewing information security
- Revoking physical access of/to the third-party vendor - Revoking system access of/to the third-party vendor - Reviewing information security - Definitions of causes for contract and/or relationship termination
Risk Assessment Before considering third-party vendors or choosing an operating model, companies must establish a clear VRM framework and methodology for categorising their business partners. This process aligns business objectives with vendor services and articulates the underlying logic to senior management.
When reviewing risk assessments, documentation proving the evaluative process as well as Board oversight is needed. Review of the vendor categorisation and concentration will also take place as part of the risk assessment methodology.
RiskXchange is your gateway to third-party compliance, providing a solution for businesses who rely on third-party vendors and IT products and services. Its VRM framework is able to quickly identify and mitigate third-party risk factors, business uncertainties, legal liabilities and reputational damage.
There’s no better way to manage multiple vendors, tools and services than with RiskXchange. Its suite of compliance and risk management products are specifically designed for organisations that work with third-party vendors across different geographical locations and jurisdictions.
From the initial screenings in the qualifying stage right through to relationship termination, RiskXchange manages every stage of the process to ensure increased security and mitigated risk.
About RiskXchange RiskXchange is an information security technology company, that helps companies of all sizes fight the threat of cyber threats by providing instant risk ratings for any company across the globe. RiskXchange was founded and is led by recognised experts within the security industry, who have held leading roles within companies such as IBM Security.