How Dynamic Scoping Can Improve Your Vendor Risk Assessment Process

Vendor Risk Assessments Dynamic Scoping

Vendor risk assessments help third-party risk management (TPRM) teams understand the risk their third parties, vendors and suppliers bring to the business. Teams need to collect information that can help them to make effective decisions about third-party risks and controls. Unfortunately, obtaining this data isn’t always clear-cut – teams struggle with designing questionnaires that provide vendor or service-specific information. 

Where do TPRM teams go wrong in creating vendor risk assessments? To start, many programs are taking a “one-size-fits-all” approach to vendor questionnaires with manual processes. This blog will review how TPRM teams can improve their vendor risk assessment process by dynamically scoping their questionnaires to avoid vendor fatigue and assessment backlogs. 

Vendor Assessment Questionnaires: Manual Scoping vs. Dynamic Scoping

Third-party risk management teams use vendor risk assessments to calculate risk levels during pre-contract due diligence and ongoing monitoring. Vendor risk management programs create vendor risk assessments with two sets of informationthe vendor profile and the assessment questionnaire master. Teams may juggle multiple assessment templates based on their program scope. In a manual process, teams use judgment to determine the assessment scope by aggregating data from the vendor profile and the assessment type. What should be an objective process becomes subjective with too much room for human interpretation or error. 

As a result, the vendor questionnaire ends up being over or under scoped. Over scoping increases vendor fatigue because third parties are asked to complete question sets that are irrelevant to them. Under scoping fails to provide the proper amount of information needed from a vendor to understand their total risk profile. 

Teams can dynamically scope vendor risk assessments using an automated TPRM tool such as ProcessUnity Vendor Risk Management. The solution takes information directly from the vendor master and ties it to the questionnaire through conditional properties. This automatically determines the scope of an assessment by creating a questionnaire based on the vendor data.  

Teams can set questionnaire sections and select vendor data fields to drive the scope of assessment. The TPRM tool feeds vendor data directly to the questionnaire to create a tailored assessment based on set vendor criteria: inherent risk rating, service type, data access level, etc. Questions can also be tied to regulations and standards based on vendor compliance requirements. For example, if PII is involved in the vendor service and the vendor deals with EMEA data, then GDPR questions get scoped in. 

Benefits of Dynamically Scoping Vendor Risk Assessments

Aside from enforcing objectivity, dynamic scoping improves the vendor risk assessment in several ways: 

  • Reduced Vendor Fatigue: Distributing tailored vendor questionnaires decreases vendor fatigue. This improves the quality of your assessment responses, providing you with better visibility into third-party risk. Additionally, it can help ensure that vendors complete assessments on schedule. 
  • Increased Program Efficiencies: By reducing vendor fatigue and assessment completion time, your program can keep activities running efficiently. Your team has fewer responses to sort through and can focus on the questions that matter. The assessment backlog is reduced, allowing you to identify vendor issue areas and prioritize tasks faster. 
  • Faster, In-Depth Reports: Dynamic scoping allows you to map vendor data to specific questionnaire topic areas. Reporting becomes a powerful tool that shows a direct correlation between third-party risks, controls and vendor data. 

Best Practices for Dynamically Scoping Vendor Risk Assessments

Optimize your vendor risk assessment process even further with the following third-party risk management best practices. 

  • Define Key Scoping Criteria: Prior to creating and distributing vendor risk assessments, your team should understand vendor key risk indicators. Scoping parameters will need to be set based on the vendor criteria, so it’s important to align on the definition of these criteria. Which vendors have the highest inherent risk scores? What level of attention should be paid to each risk tier? Questions such as these should be considered before the scoping conditions are set.  
  • Create Questionnaire Sections: Dynamic scoping works best at the section level, so you’ll need to break your questionnaire master into sections. This allows you to directly tie specific vendor criteria to a set of questions relating to a particular risk domain. Breaking the questionnaire up will also help your team to digest vendor responses during assessment analysis. Common topic sections include information security, industry and government specific regulations and internal security policies. 
  • Get Organizational Buy-In on Scoping Criteria & Question Sets: It’s important to secure executive-level buy-in on the vendor scoping criteria and questionnaire to identify any issues prior to assessment distribution. Your third-party risk management team should reach an agreement on the depth of due diligence based on your organization’s risk appetite. This will help vendor risk assessments go smoothly come time for distribution. 

Dynamically Scope Your Vendor Risk Assessments with ProcessUnity Vendor Risk Management

ProcessUnity Vendor Risk Management automates vendor risk assessments to help third-party risk management teams create and distribute effective questionnaires. Automatic scoping, tracking of preferred responses and scheduled alerts combine to drive program efficiency and eliminate assessment backlogs. With ProcessUnity Vendor Risk Management, TPRM teams can move away from error-prone manual processes and gain increased visibility into vendor risk. Download ProcessUnity’s Whitepaper, Building Better Vendor Risk Assessments, to learn more about increasing the quality and efficiency of your third-party risk management program.