Most companies rely on numerous cloud-based technology providers to manage their day-to-day business operations. These services can help you streamline and automate your business, but they can also bring vulnerabilities that hackers will happily exploit at your expense. To protect your company and prioritize your customers’ sensitive data, you’ll need to incorporate your information technology (IT) vendors into your overall cybersecurity and risk management programs.
Understanding IT Vendor Risk Management
To understand the risk management process, you should first consider the variety of ways that a company might engage with IT providers. Not all of these will apply to your company, but it’s a good idea to familiarize yourself with the terminology:
- Supplier. The first step in the supply chain. Vendors give your company the materials you need to create your product, usually in bulk. A supplier usually deals in B2B relationships.
- Distributors and resellers. The last step in your supply chain. Distributors and resellers take the end product from a company and distribute it to customers and consumers; they can work in both the B2B and B2C markets.
- Third party. This refers to any company that supplies goods or services to your company or to your clients on your behalf.
- Service provider. A company that provides an IT service for customers or companies, such as data storage or web hosting.
Managing risk throughout these different relationships is necessary to keep your network secure and to provide quality service for your clients and customers. IT vendor relationships are complex, which is why companies are increasingly turning to vendor risk management software solutions to track and prevent risk throughout their organizations.
These management tools can be instrumental in helping you maintain control over the risks you and your vendors face, especially as your company grows and expands. It is technically possible to manage your security risk with analog methods, but the convenience and transparency provided by VRM software will save you time and money in the long run.
Why Do Organizations Need IT Vendor Risk Management?
IT risk management may not be at the forefront of your mind, but it’s crucial that you factor your third-party suppliers into your own risk program. The security risks that threaten your vendors apply to your company as well, especially relating to regulatory compliance obligations. A breach affecting one of your IT vendors can quickly spread through your business and onward to your own customers, causing service delays and reputational damage.
There are innumerable benefits to tracking risk throughout your IT vendors, including:
While your vendors undoubtedly have their own risk management programs in place, tracking your own risks regarding your suppliers will only make your own systems safer and more secure. For example, vendors may not be compelled to notify you in the case of a breach; vendor risk management can help to assure that you both agree to appropriate IT security in advance.
Data breaches and cyberattacks have the potential to devastate your supply chain and bring your operations to a halt. Monitoring your risk can help you catch issues before they become serious problems; that makes business continuity easier. This will give your stakeholders confidence in your efforts and help you efficiently allocate your resources towards meeting your business objectives.
The safety and consistency provided by an effective risk management program is the best possible advertisement for your company’s services. A reputation for reliable service and data security can help you maintain your current customers and acquire new business over time.
How to Implement an IT Vendor Risk Management Plan
Every IT vendor risk management plan will be different, depending on your company’s information security needs as well as the scope of your contractors. Here are some considerations to keep in mind that can help create a successful risk management program:
Understand Your Risk Management Needs
Before you take on an IT vendor or service provider, first perform a risk assessment to determine your risks. This includes defining your risk appetite, or the acceptable level of risk your company is willing to take on when partnering with a vendor or provider. Your risk analysis should also consider any regulatory guidelines which are applicable to your company, as those same compliance requirements will apply to your vendors as well.
Risk management programs differ from one company to the next, and your potential vendors may not all approach the discipline as carefully as they should. Appropriately vetting your IT vendors will save you time and money in the long run, and IT security should factor heavily into your decision-making. Before entering into a contract, make sure you thoroughly understand the risk mitigation initiatives of your vendor, and make sure their approach will meet your needs.
Include Risk Management In Your Contracts
Third-party risk management is easier when the terms are clear for both parties. You and your vendor should outline the details of your IT risk management strategies in your contract before beginning your relationship. Agreeing to these terms in advance will let each party know who owns what potential risks, and what measures should be taken in the event of a breach.
Monitor and Reassess
Mitigating risk is an ongoing process, and your relationships with your vendors should be monitored and evaluated over time. New cyber threats surface daily, and your identified risks will change over time. Your security controls should be updated regularly to keep up with these changes. Integrating third-party vendors into your long-term enterprise risk management (ERM) program will assure that your data will remain secure as time goes on.
Manage Vendor Risk With ZenGRC
Your vendor risk management efforts will become more complex as your company grows and advances. It’s in your best interest to create a compliance and risk management program early, to grow with you and help you stay organized as new risks emerge and new partnerships are made.
ZenGRC is a risk and compliance solution that can provide transparency throughout your entire organization, including your third-party vendors. Automated questionnaires take the guesswork out of vendor compliance and allow you to compare your partners with ease, while advanced reporting keeps everyone on the same page.
Schedule a demo today to learn how ZenGRC can create a streamlined risk management program at your company.