Vendor risk management (VRM) has become a critical component of business continuity, especially given today’s cybersecurity threat landscape. That said, VRM is challenging. Collaborating with vendors involves the sharing of sensitive information and presents difficult tasks. In particular, assessing a vendor’s role in an organization’s business operations is crucial to mitigate supply chain risks.
Still, VRM also brings many benefits. Moreover, modern data privacy regulations require organizations to take a more structured approach to vendor risk management. This is where an end-to-end VRM platform can save the day – automating workflows, ensuring compliance with data privacy regulations, and enabling organizations to manage risks more effectively.
In this article, you’ll learn about vendor risk management software and its top five benefits.
What Is Vendor Risk Management Software?
Vendor risk management software is a tool that helps organizations to perform due diligence on vendors and then to monitor the vendors on an ongoing basis after vetting. VRM software automates and streamlines various aspects of the VRM process, including onboarding, due diligence, vendor risk assessment and analysis, risk monitoring, reporting, and incident management.
VRM software also collects information about the vendor’s business, financial health, compliance status, and security posture to evaluate the risks posed by the vendor. It provides ongoing monitoring to detect changes in risk, as well as reporting and analytics to help organizations understand their overall vendor risk exposure.
Overall, VRM software enables organizations to manage vendor-related risks more effectively and efficiently. That reduces the likelihood of costly incidents and improves overall risk posture, including remediation.
What Is Third-Party Risk Management (TPRM) Software?
Third-party risk management software helps organizations to identify, assess, monitor, and mitigate risks associated with third-party relationships.
TPRM software enables organizations to manage risks associated with third-party relationships, including vendors, suppliers, contractors, service providers, and even customers. It automates and streamlines various aspects of the TPRM process, including onboarding, due diligence, risk assessment and analysis, monitoring, reporting, and incident management.
From small startups to multinational corporations, organizations of all kinds depend on third-party providers for products and services that keep those organizations running efficiently. For this reason, vendor risk management is a highly important topic that firms should consider in security initiatives.
How Do TPRM and VRM Differ?
TPRM and VRM are conceptually similar, in that both are about managing risks associated with external relationships. Still, they have some critical differences.
- Scope. TPRM software typically covers a broader range of third-party relationships beyond just vendors, such as suppliers, contractors, service providers, and even customers. On the other hand, VRM software is more focused on managing the risks associated specifically with vendors.
- Complexity. Third-party relationships can be more complex than vendor relationships, especially when multiple tiers of third-party relationships are involved. TPRM software needs to be able to handle this complexity by providing advanced analytics and monitoring capabilities.
- Regulatory compliance. Compliance requirements can differ significantly between vendor relationships and third-party relationships. TPRM software needs to handle these differences and ensure compliance across all types of third-party relationships.
TPRM is often built upon VRM. Organizations initially invest in a VRM platform, which serves as a foundation for TPRM. As organizations expand and evolve, they recognize the necessity of managing the distinct and varied risks associated with an ever-growing list of third-party vendors.
Top 5 Benefits of Vendor Risk Management Software
1. Increased efficiency
Vendor risk management software automates collecting, assessing, and monitoring vendor information. This allows organizations to manage many vendors with minimal effort. The increased efficiency enables organizations to identify and mitigate risks more quickly.
2. Improved risk management
Vendor risk management software provides a structured framework for assessing and managing vendor risks and vulnerabilities, assuring that all new vendors are evaluated and monitored consistently. This helps organizations identify potential risks and take steps to mitigate those risks before they turn into serious issues.
3. Enhanced compliance
Organizations can employ software designed to evaluate and monitor their vendors’ performance as well as ensure regulatory compliance with standards such as GDPR, CCPA, and HIPAA. By actively managing vendor risk, organizations can mitigate the potential for security breaches and reduce the risk of legal liabilities resulting from non-compliance with regulations.
4. Better decision-making
Organizations can make strategic decisions about their vendors by using vendor risk management software that provides real-time data and analytics. By identifying high-risk vendors, organizations can prioritize their risk mitigation efforts and reduce the potential for negative impacts on their operations.
5. Increased transparency
With vendor risk management software, stakeholders gain increased visibility into an organization’s vendor management process, which includes vendor selection, vendor assessment process, and monitoring. This improved transparency fosters trust between organizations and stakeholders, allowing for more effective collaboration and better decision-making.
Reduce Your Vendor Risk with ROAR
The RiskOptics ROAR Platform is a cybersecurity risk management software tool that takes the stress out of your vendor risk management program by providing continuous monitoring features and automating supplier risk management.
Using our software enables your team to focus on other critical tasks while providing a single source of truth for compliance management. With revision-controlled policies and procedures, automated reminders, and insightful reporting, ROAR offers a wiser, more holistic approach to risk management.
Sign up for a free demo and see how ROAR improves your vendor risk management processes.