As organizations look for solutions to address increasing risk across the digital supply chain, Vendor Risk Management (VRM) becomes critical, but it’s often overlooked or implemented unsuccessfully.
Traditionally, VRM programs rely on manual, time-consuming, and repetitive tasks that make them difficult to scale. In fact, 80% of legal and compliance leaders say that third-party risks were identified after initial onboarding and due diligence, suggesting traditional methods in vendor risk management fail to capture new and evolving risks.
So how can risk and security leaders improve their approach to vendor risk management?
The Problem With the Current Approach to VRM
The ultimate goal of a VRM program is to ensure that the use of third-party vendors does not compromise security or business continuity standards, by giving companies visibility into the vendors they work with and their security controls.
When implementing VRM practices, organizations often experience these common problems:
- Spending too much time and effort in emails and spreadsheets to conduct cybersecurity risk assessments and track requirements, sometimes weeks or months.
- Performing manual point-in-time assessments as opposed to continuous, ongoing risk monitoring.
- Sharing and storing critical security documents as email attachments or cloud-hosted links, often unencrypted.
- Relying on incomplete, outdated, or insufficient data to validate vendor responses and determine where the risks lie.
- Perceiving vendor risk assessments as a bottleneck, leading business units to engage with new vendors without involving security departments, and increasing the risk of Shadow IT.
This approach is difficult to scale as the business engages with more vendors, and fails to provide full visibility over the third-party risk landscape.
Four Benefits of Revisiting Your Vendor Risk Management Approach
High performing vendor risk management programs cover everything from due diligence, risk tiering, onboarding, risk monitoring, reassessments, and onboarding throughout the vendor lifecycle —all in a timely manner.
When rethinking your approach, consider that the ultimate purpose of VRM is to mitigate risk, not to perform assessments. The process should not only provide you with findings, but also allow you to take action on those findings.
These are the four key benefits that a better approach to VRM will bring to your organization:
1. Automating manual and repetitive tasks
Manual processes are typically resource-intensive for organizations and their vendors, involving one-off spreadsheets with questionnaires, multiple email follow-ups, and calendar reminders to conduct risk assessments and renewals.
69% of businesses rely on manual third-party risk management processes. (Forrester)
Business Units, IT, GRC, Security, Legal, Procurement, and other stakeholders often struggle with repetitive requests that feel like starting from scratch on every risk assessment, as questions and documentation requirements are similar across organizations. This approach is nearly impossible to scale, as it’s limited in scope, error prone, and has limited reporting capabilities.
A better approach to VRM means automating these tasks for faster, more strategic vendor assessments, where efforts can be focused on mitigating risk rather than collecting data.
2. Assessing and validating vendor security performance with confidence
Many programs base vendor risk assessments solely on questionnaires, asking about encryption, data retention, pentesting, and more. Because vendors are reporting on their own security posture, there is an opportunity for misinformation or inaccuracy in this approach. Vendors could easily misunderstand a question, mistakenly check the wrong box, or have a lack of knowledge about their controls, policies, and procedures.
The only way to effectively validate vendor responses is to complement them with objective data. Tools like Bitsight VRM provide a wide range of insights on vendors’ security controls that add another layer of verification to your vendor risk assessments, complementing security artifacts and questionnaires with objective findings.
In addition to triggering remediation requirements, these findings may give the vendor an opportunity to improve their security posture, ultimately fostering confidence across the supply chain.
