Best Practices for Your Vendor Management Program

By Phoebe Fasulo

Posted on Oct 7, 2019

Security breaches can happen, no matter how much you do to prevent them, and your data could be compromised through no fault of your own. It is undeniable that dealing with vendors comes with both benefits and risks—that is why you should have a vendor risk management (VRM) program in place in order to keep track of who is doing what.

Vendor management programs exist to alleviate any confusion and stress created by a third-party provider. If their cybersecurity plan fails, for whatever reason, you have to be able to control the damage somehow. Knowing how your vendors work, inside and out, could help you better protect yourself and your private information in the long run—minimizing any harm that might be done as well as reducing the risk of running into a tricky situation to begin with. Here are the three best practices that VRM programs should cover.

Know your current vendors

There is no way you could call your VRM program successful if you do not perform checks on the vendors you currently do business with. Before you can think about enlisting new vendors, you must know where your current partners stand. However, despite this, only around 46% of companies perform compliance audits on the vendors that handle their sensitive, personal data.

You must also keep in mind that your third-party providers may not have the same level of cybersecurity in place that you do. In 2016, companies spent $10 million on average trying to make up for breaches of security that occurred through trusted vendors. A security breach with your vendor could mean a security breach for your company too, with your private, trusted information potentially leaked too—and that is why you need to get to know your current vendors, inside and out. 

Knowing how your vendors resolve security issues can help you in the long run. By learning that information, you will come to understand how they operate and how often big (or even little) problems arise, as well as how they deal with them. Additionally, you should know what it is that your vendor can offer you—ideally, they should have something unique about them that cannot be replicated by any other business you work with. Evaluate what your current vendors are bringing to the table, and make certain that there are more benefits than drawbacks to working with them.

Create a potential vendor checklist

Instead of shooting in the dark and hoping a potential third-party provider hits the target, you can create a checklist. If you want to minimize the risks that future vendors might bring to your business, vetting out the ones that do not match your preferences is a good place to start. Think of it like a “pros and cons” checklist that is often used to help someone make both life-changing and trivial decisions. With 29% of company records lost or harmed through cyberattacks in 2017, you cannot afford to enlist a vendor who is lax about their cybersecurity.

Do some brainstorming and come up with a few traits that you would love to see in a vendor. Create a list that represents your ideal vendor if everything was to go right with no drawbacks whatsoever. Though the perfect vendor may not exist, the closer you can get to your ideal business partner, the more satisfied you will be with your experience.

These potential vendors should meet most of the criteria you have created for the ensuring the mutually-beneficial relationship you would prefer to have. If a vendor does not meet every requirement, fear not: the main purpose of this checklist is to help you realize what you want out of a vendor as well as to help keep you free of any bias. When choosing your vendors, remember that around 88% of incidents could be traced back to third-party providers. Therefore, you want someone you can trust handling your sensitive information, which is why having third-party risk management is vital. Searching for the right vendor is not a task to be taken lightly when your privacy can be put at risk.

Form a dedicated committee

One of the best practices you can implement with your VRM program is to create a team dedicated to checking up on and searching out new vendors to bring into your ranks. This committee should be specially handpicked to deal with all potential vendors as well as to look into your existing vendors.

Working as a team yields more productive results than working alone. If you create a team to specifically handle the process of checking on your current third-party providers, you will likely be able to handle the assessment time more efficiently and accomplish more as everyone works together to investigate a vendor. Delegating tasks to different members of the team can improve efficiency too.

Minimizing risks means benefits for all 

You can anticipate a whole host of benefits if you take extra care in selecting the vendors you want to work with. In addition, regular communication with your vendors will improve your relationship, and if an incident ever does occur, you will be able to perform damage control quicker and smoother than if your relationship is rocky. A mutually-beneficial relationship with your vendors will likely increase profits and efficiency too— so everybody wins. 

SecurityScorecard can save you precious time when it comes to analyzing potential vendors. Get to know the extent of their cybersecurity and make the right choice when it comes to your third-party relationships.

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