How to Conduct a Vendor Security Assessment to Identify High-Risk Vendors

If your organization uses third-party tools to manage critical data, then it’s just as important to monitor their cybersecurity risk as it is your own. Implementing efficient systems from the start allows you to stay on top of your vendors’ cybersecurity risk and frees up time to be spent on business initiatives that will impact your bottom line.

What is a vendor security assessment?

A vendor security assessment helps your organization understand the risk associated with using a certain third or fourth-party vendor’s product or service. It can help protect the data that you trust your vendors with while giving you a complete scope of your vendors’ security posture.

Why is a vendor security assessment important?

Monitoring your organization’s internal cybersecurity posture is a given, but companies often make the mistake of overlooking their vendors’ cybersecurity procedures. It’s important to identify your vendors’ potential vulnerabilities as your own. Failure to look into how your vendors handle sensitive data can result in costly data breaches, a lack of public trust in your organization, and even a risk of falling out of compliance with federal entities.

What is included in a vendor security risk assessment?

Vendor security risk assessments include an overview and evaluation of risks and common vulnerabilities present with a vendor. This can include threats to compliance, confidentiality, data sensitivity, and how up-to-date the systems the vendor uses are. After the risks are evaluated, they are given a criteria score and categorized by severity and how easily these issues can be resolved.

How to assess a vendor’s security rating

Vendor security ratings are an important tool in analyzing vendor risk in your organization. Here are the steps to assessing your vendor’s security rating:

• Review existing vendors

• Assign each vendor with a security rating

• Respond to security risks and define vendor performance metrics

• Continuously monitoring your vendors

One of the most important points to remember when monitoring your vendors’ cybersecurity is consistency. Continuous maintenance is key to addressing threats effectively and in real-time, which is important since your organization’s cybersecurity is only as good as the weakest link across your chain of vendors.

How to identify high-risk vendors

The simplest way to identify high-risk vendors is to do your due diligence before providing them with any of your organization’s sensitive data. Thoroughly evaluate each vendor before rushing into any contracts by researching the controls they currently have in place to understand how they respond to and defend against attacks. Then, determine the full complexity of the relationship your organization will have with the vendor so you can begin to identify any possible vulnerabilities. A detailed analysis of every current and potential vendor is the first line of defense against threats.

What information should you aim to get from a vendor security risk assessment?

One method of assessing your vendor’s security rating is a due diligence questionnaire, which will provide you with a view of every vendor’s systems, so you can fully comprehend the vendor’s current cybersecurity efforts. When evaluating vendor risk, your goal should be to answer the following questions:

• Are there any formal security programs in place?
• How is data protected when in transit from the vendor to the client, end-user, etc.?
• What are they actively doing to prevent breaches and how often do they check for vulnerabilities?

How to conduct a vendor security assessment

To successfully conduct a vendor security assessment, you will need to do the following:

Review existing vendors

The first step is to take an inventory of all of your existing vendors. Classify each based on who has the most access to customer data, and prioritize from highest to lowest risk based on their access as well as their systems and networks.

Assign each vendor with a security rating

Just as you would internally, conduct a cybersecurity risk assessment for each vendor. Assigning each with a security rating will help you further prioritize your vendor risk monitoring strategies as well as highlight where your efforts would be best spent on first.

Respond to security risks and define vendor performance metrics

Clearly define your expectations by setting risk management metrics that allow you to easily monitor vendor performance on a regular basis. Keep these key performance indicators (KPIs) in mind when creating vendor contracts so you can ensure all organizations are up to standard.

Continuously monitor the cybersecurity posture of your vendors

The best way to maintain a strong cybersecurity posture across your ecosystem is to regularly monitor all third-party vendors and ensure efforts are still in place to protect important client and user data.

Vendor security assessments with SecurityScorecard

Vendor security assessments are an important process that should not be overlooked or pushed aside. It can be challenging enough to maintain your organization’s cybersecurity posture, and the ability to easily monitor your complete chain of systems and vendors has only recently become possible. This is due to efficient and intelligent cybersecurity vendor risk management solutions.

SecurityScorecard provides you with full visibility across your entire ecosystem, making it easy to prioritize your third and fourth-party vendors from high to low-risk by instantly determining an organization’s cybersecurity posture and cyber risk rating across 10 groups of risk factors. With a clear line of communication and an efficient method to track running efforts, you’re able to easily establish a line of communication between vendors and oversee the total IT infrastructure of your organization.

Vendor security assessment FAQs

What is in a vendor security assessment?

A vendor security assessment helps identify profiled, inherent, and residual risks associated with working with third- and fourth parties. These security assessments include processes that help identify the types of vendor risk, their risk criteria, categorize vendors by risk level, and devise a risk management plan.

How often should I conduct a vendor security assessment?

The frequency of these assessments is usually determined by the risk level associated with each vendor. Most financial institutions review high-risk vendors on an annual basis. But depending on the level of risk your organization faces, you could choose to conduct a vendor security assessment more often.

What role does a vendor risk questionnaire play in vendor security?

A vendor risk questionnaire can help your organization gain insight into how your third-party vendors are managing sensitive data. This is a great tool for analyzing vendors and their risk levels before working with vendors.

How do you perform a risk assessment on a vendor?

Risk assessments for vendors follow similar steps to a typical internal risk assessment. However, in the case of a vendor risk assessment, only the aspects relating to points of contact with a vendor, the vendor’s current systems, and what is shared with a vendor are measured within this assessment.

What are the steps of security risk assessment?

A vendor risk assessment first looks at a vendor to see what their risk levels look like. Including how much data this vendor has access to, and the level of confidentiality the data is subject to. After analyzing each vendor’s risk levels, an organization then devises a score by which to measure how urgent these issues are, and what needs to be addressed first. After that, top-priority issues and vendors are addressed, and organizations should continue to monitor for threats.

How do you perform a vendor security assessment?

SecurityScorecard offers a third-party risk management solution that allows organizations to have a complete overview of a vendor’s threat landscape. Specific risks and vulnerabilities are brought to an organization’s attention to prompt discussions with supply chain leaders to help prevent a breach.