3 Ways to Conduct an Efficient Vendor Risk Assessment

Third-Party Vendor Risk Management for Financial Institutions

Data breaches that originate in the supply chain are more commonplace than many organizations think. According to the 2022 Verizon Data Breach Investigations Report, 62% of system intrusions came through an organization’s partner.

These third parties are essential to helping your business grow and remain competitive. If you’re a security professional or risk manager, you must keep up with the needs of the business and move fast to onboard new vendors. At the same time, you can’t risk a vendor’s security posture lapsing during the life of the relationship. It’s a tricky balance.

Let’s look at the three steps involved in conducting a comprehensive vendor risk assessment in the most efficient way.

1. Identify a risk threshold for each vendor

First, it's important to identify the level of risk you’re willing to accept for a given vendor. For instance, a vendor who handles highly sensitive company data and operations – such as a payroll provider or cloud service provider – may need to be held to a higher cybersecurity (and risk evaluation) standard.

One way to establish the risk you're willing to take with your vendors in a consistent and uniform way is through a security rating. Bitsight Security Ratings provide a data-backed view of a vendor’s cyber performance. Ratings range from 250 to 900 and are updated daily to provide unprecedented visibility into a vendor’s security posture.

Use these insights to establish acceptable risk thresholds for vendors in each tier and develop language, such as cybersecurity SLAs, to ensure they meet these thresholds. For instance, those with lower ratings may require more stringent controls to ensure that they meet pre-agreed risk thresholds throughout the life of the relationship.

You can refine and expedite this process by tiering your vendors into groups based on their risk and criticality to the business. Instead of a one-size-fits-all approach to the vendor cyber risk assessment process, tiering helps you determine if a vendor needs a more in-depth evaluation. For example, a payroll provider who has access to sensitive data will likely be riskier than a food service vendor. By prioritizing certain vendors for more attention, you can focus resources where they’re needed most.

2. Evaluate your vendors based on industry-standard questions

There are numerous questions to ask during a vendor risk assessment, but some are more critical than others. To help you develop a baseline set of questions, we’ve compiled a list of the 40 Questions You Should Have in Your Vendor Security Assessment.

The guide is based on NIST and CIS Critical Security Controls. It touches on key governance and structural issues such as how each vendor protects customer information, if they outsource any IT or security functions, and how cyber incidents are reported.

The guide also includes suggested questions that probe a vendor’s security controls and technology, such as how they monitor remote connections, manage access privileges, and prevent the exfiltration of sensitive customer data.

3. Trust, but validate

Although risk assessment questionnaires are a best practice, they only represent a point-in-time view into cyber risk and don’t account for the shifting risk landscape. Self-assessments are also limited by their subjectivity. 

Instead of taking vendors at their word, use Bitsight Security Ratings to quickly validate each response. Bitsight uses externally observable information to provide a clear, up-to-the-minute picture of third-party risk. You can also dig deeper into risky spots in your vendors’ digital infrastructure, such as vulnerabilities, malware infections, or even a history of cyber incidents.

Once the contract is signed, use Bitsight to continuously monitor each vendor for emerging risk. You’ll receive near real-time alerts when a vulnerability or issue is discovered. You can also share Bitsight’s findings with your vendors so that you can work together to reduce risk.

Remove inefficiencies in your vendor risk assessment program

Vendor risk assessment is a top priority for your organization. But are there parts of your program that you are having a hard time adjusting to meet new needs? Are you following processes the way you are because they’re proven to be the best, or because that’s just how they’ve always been done? Download our guide to learn about three ways in which you can increase third-party risk management efficiency.

3 Ways to Make Your Vendor Lifecycle More Efficient

Learn to retarget your efforts and master program efficiency in three main areas of your third-party risk management system.