Creating and distributing vendor risk assessments is a key part of any third-party risk management program. As organizations utilize third-party services to expand their capabilities, they also inherit risks from these relationships. For many organizations, third-party risk is now as important as first-party risk.
Vendor risk assessments – when done right – provide an overview of the vendor’s security posture, their own risk management program and any concerns specific to the relationship. Unfortunately, many organizations struggle to implement a process that provides a complete picture of vendor risk.
Below are a few examples of common mistakes organizations make in their vendor risk assessment process. We’ll review best practices for addressing these challenges and ultimately improve your third-party risk management program.
Optimizing Vendor Risk Assessments
Vendor assessments can be difficult for both the administrator and the third party. Depending on the specificities of the relationship, a single questionnaire can cover topics from regulatory compliance to operational resilience. Vendor responses received during these assessments should inform key stages of the vendor lifecycle, such as ongoing monitoring and due diligence.
However, organizations often struggle to get the information they need to mitigate vendor risk effectively. Common mistakes made by vendor risk management programs often include:
Distributing a one-size-fits-all assessment: An organization might distribute the same due diligence form or questionnaire to each vendor, regardless of their service type. This practice often results in vendor fatigue and decreases the likelihood of receiving actionable insights.
The fix: Organizations should take special care to scope vendor assessments to the specific relationship they apply to. By addressing the risk factors appropriate to the relationship, teams can zero in on problems likely to pose a real liability. Additionally, the third parties can feel more engaged in the risk assessment process as they will be addressing domains of risk particular to their relationship.
Analyzing vendor responses without context: Once an organization has received a completed vendor risk assessment, they have a set of information to analyze. This data needs to be considered in the context of the organization’s risk tolerance levels to be truly actionable.
The fix: Third-party risk management teams should develop a series of preferred assessment responses to help score vendors and develop risk profiles. Teams can actively track key metrics most important to specific vendors or their overall strategy. Conversely, teams can also track answers that adversely affect the overall risk level of a vendor, allowing them to address concerns proactively. Preferred responses can also help the organization to score and tier vendors based on their risk criticality.
Failing to integrate vendor responses into reporting: Organizations often take a point-in-time approach to vendor assessments, which can invertedly halt their program maturity by limiting their view into a vendor’s risk over time. Valuable information collected during a vendor risk assessment should be tracked over time in dynamic reports to stay ahead of issues before they arise.
The fix: Vendor responses can be compiled into highly descriptive reports on the organization’s third-party risk exposure. These reports can help determine the cadence of future risk assessments, how emerging issues are addressed, and how executives are informed on the organization’s risk levels. Reports can also help track issues over time.
Automate Vendor Risk Assessments with ProcessUnity Vendor Risk Management
The most effective step in optimizing vendor risk assessments is implementing an automated third-party risk management solution. ProcessUnity Vendor Risk Management provides organizations with an automated assessment engine to distribute tailored vendor assessments. Organizations can develop a standardized process for mitigating third-party risk with automatic assessment scoping and preferred responses. To schedule a ProcessUnity Vendor Risk Management demo, visit www.processunity.com/request-vendor-risk-management-demo