Vendor Risk Management – Why it is crucial for your business?  

Author: Sarah Shannon
Category:
Date:  November 23, 2022

In today’s business environment, it is not uncommon for a growing company to focus on its core proposition and outsource activity to third-party vendors. This often leads to an increase in the number of vendors and, as a result, an increase in risk. These risks can include data breaches, data exposure, and non-compliance with regulations such as GDPR.  

If a company does not have Vendor Risk Management in place, it is likely that it has a high level of unmanaged risk leaking out through their suppliers. 

Asking the following questions can help you determine if your company is at risk:  

  • Does your company perform vendor management? If so, what information is collected and analysed? How is it used/stored?  
  • Who are your key vendors? How do you determine/identify/classify them?  
  • Do they store/host sensitive data on their IT systems?  
  • Have they access to data that could harm financial or brand reputation if stolen?  
  • If the vendor suffers a data breach, will that require reporting?  
  • If the vendor suffers a significant outage, would your business need to activate its continuity plan?  

The Importance of Vendor Risk Management (VRM) 

VRM is crucially important because it helps companies to identify, assess, and mitigate risks associated with third-party relationships. By understanding the risks involved with using third-party vendors, companies can take vital steps to safeguard the organisation from potential disasters.  

There are several benefits of vendor risk management, including:  

  • Reduced costs: By identifying and assessing risks early on, companies can avoid costly disasters down the road.  
  • Improved decision making: VRM programs provide companies with the information they need to make informed decisions about which vendors to use.  
  • Enhanced security: By taking steps to mitigate risks associated with third-party vendors, companies can improve their overall security.  
  • Compliance with regulations: Implementing a vendor risk management program can help companies comply with various regulations, such as finance regulations.  

By taking the correct steps to mitigate these risks, businesses can improve their overall security and compliance with regulations. Implementing a vendor risk management program can also help businesses save money by avoiding costly disasters down the road. 

Talk to Pulse Market about Vendor Risk Management for your business.

Find our more about about Vendor Risk Management on Pulse Market

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