What is vendor risk management

What is third-party risk management

Vendor risk management (VRM) helps companies control and monitor the risks associated with using third-party vendors and its services. As the business has become increasingly depending on outsourcing services and third-parties, the importance of managing such a risk become essential for most of the businesses. For example, if your the company contract an accountancy company to help with tax and compliance, the sensitive financial details will be held outside your company and usually accessible through the cloud-based software they provide. If the accountancy company becomes compromised, your company is at risk.

• Any individual or entity who supplies to you can present a potential risk
• This can mean accounting company, IT services, payroll processing, consultants, legal advisors, marketing teams, manufacturing suppliers, telephone carriers and so forth 
• Vendor risk management must be a part of any organisation’s risk management strategy.
• Mitigating vendor risk when managing vendor relationships is essential for businesses
• The essential the services are for your company, the more serious impacts, and damage is to your company
• Vendors risks can be avoided with proper practice and diligence.
• The vendor must also agree to and comply with any regulations that pertain to your industry or government

Types of vendor risks you address

• Vendor Reputational Risks
  
• Vendor Financial Risks
• Vendor Cyber Risk
  
• Vendor Legal Risks

What does implementing supplier risk management mean?

1. Adopt policies that mitigate the risks involved with reliance on vendors and its services, there should be clear guidelines.
2. Evaluate vendors during selection process - business partners, suppliers, or third-party vendors before a business relationship is established
3. Evaluate regularly already selected vendors and suppliers for the duration of your business contract
   
4. Include entire vendor life-cycle management process, even off-boarding.
5. Ensure that all these contract requirements are met, vendor performance must be audited and monitored on a continuous basis and proactively addressed.

Pay special attention to IT service providers and data processors

• For data processors any organization should know what data is being processed and who has access and control of sensitive information.
• Understand your vendor’s cybersecurity program
• Understand how well they’re going to be able to secure your data, both from a physical and cybersecurity perspective.

How Aptien helps manage third-party risks (TPRM)

• As part of risk management, you keep an overview of third-party service providers
• For each service, you manage service provider requirements