Why Vendor Risk Management Should Be an Executive Priority 

Vendor Risk Management Executive Meeting

As the severity and cost of data breaches continues to increase, Vendor Risk Management has never been more crucial for company health.

Poor vendor management and working with risky vendors increases the likelihood of a data breach, potentially hurting an organization’s revenue, reputation, and legal compliance—all of which can set a company back for a long time. In other words, vendor risk management can’t not be an executive priority.

Why Implement a Vendor Risk Management Program?

Only 52% of companies have security standards for third-parties, and an average of 89 vendors are accessing a company’s network every week.

Globalization has created a dependence on critical activities outsourced to an increasing number of partners and vendors; this in turn has fueled a dramatic rise in the third-party ecosystem. It’s highly likely that your company now outsources significant aspects of its business to outside providers.

Having a dependency on outsiders increases your company’s vendor-related risk. Oftentimes, your vendors are provided access to your intellectual property or to sensitive customer information. With significant security compromises making headlines, it’s no surprise that most organizations are now requiring vendors to abide by not only their internal standards, but also by industry and governmental regulations surrounding privacy and security.

A vendor risk management program is a formal way to evaluate, track and measure third-party risk; to assess its impact on all aspects of your business; and to develop compensating controls or other forms of mitigation to lessen the impact on your business if something should happen. A program of this nature gives you consistency for managing your vendors and a way to share information about them within your organization.

Managing vendor risk is an ongoing process. As your company embarks on or continues with this process, you want to get the most benefit from the program and ensure that the information you learn is used organization-wide to make better decisions.

Benefits of Vendor Risk Management Automation

Here’s the good news: by automating vendor onboarding and streamlining due diligence, organizations can save hundreds (or thousands) of hours for a long time to come.

Consider these benefits of implementing an intelligent, automated Vendor Risk Management tool:

  • Consistency. More often than not, there are five or more stakeholder groups involved in vendor onboarding. An automated tool keeps them all on track, in real time, with a predefined workflow.
  • Speed. If parts of a third-party risk management process currently take a week, automation can reduce it to under a day.
  • Scalability. When an organization grows, often does the number of vendors, too. Growth should feel rewarding, not punishing, and a tool will help to scale to more vendors without adding extra tasks to a risk manager’s plate.
  • Clean data. To protect the data shared with vendors, monitor threats, and keep track of records, risk managers need a way to keep this data clean and accessible.

How To Build A Business Case For Vendor Risk Management Automation

If you’re a vendor risk manager and you are sold on the value of VRM automation, but unsure about how to bring it to your executive team, here are the steps you can take to make it happen.

Step 1: Collect as Much Data As You Can

First, you need to understand your current state:

  • How many vendors do you currently work with, and need to asses?
  • How many contracts are involved?
  • How long does an assessment take you?
  • How many other tools are involved in putting together assessments and contracts?
  • How much time do you spend in admin work surrounding vendors?

Step 2: Have a High-Level Goal

For any tool to make sense, it needs to provide some return on investment. What will that be for you? For example, you may want to mitigate risk, eliminate surprises, reduce operating costs, or shorten your vendor onboarding process.

Step 3: Do the Math Behind Automating Your Vendor Risk Management Program

This step involves looking into the work hours, team members, and assessments completed for a defined time period. When you know the time and people involved in a single vendor risk assessment, you can multiply it by the number of vendors you assess annually.

When you consider the number of hours automating these processes could save, you’ll end up with something like this:

A company with 500 vendors can reduce vendor risk assessment time from 10,000 to 7,500 hours and their team size from 5 to 3 or 4. Another way to look at it is that investing into automation can free up an entire workday per week for each team member.

Step 4: Identify the Greater Business Benefit of These Scenarios

Ensuring that the initial vendor risk management processes (onboarding, due diligence and ongoing monitoring) are effective and efficient allows more time for risk teams to focus on the third-party risk management activities that can drive ROI for the company. From reduced contract spend to higher percentage of resolved (and prevented) issues, your entire company can benefit from this momentum of productivity. Make sure to outline those that apply to your unique case.

If you want to see how we got those numbers in third step and calculate savings based on your own numbers, download Building a Business Case for Third-Party Risk Management.

Make Your Job Easier with Vendor Risk Management Automation

As seen from statistics on data breaches and vendor vulnerability, the need for quality third-party risk management is on the rise, and it will likely keep growing. The growing complexities of third-party data and deep due diligence require better processes. The only way anyone can keep them in place in a scalable way is automation.

ProcessUnity can help. Learn how ProcessUnity Vendor Risk Management can streamline and automate all of your third-party risk activities while ensuring compliance and reducing costs. Schedule a Vendor Risk Management demo with an expert today.

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