Key Vendor Risk Management Assessment Practices to Keep in Mind
Many organisations today are now relying heavily on third parties for competitive advantage, decreased cost, improved profitability, and faster time to market. However, while party relationships come with unbeatable benefits, they also come with several risks including regulatory, reputational, strategic, financial and information security.
To ensure aforementioned risks are avoided, organisations need to make sure they have a good vendor risk management system in place. However, nowadays, conducting a risk management assessment alone is not enough. Aside from using beneficial tools like DPOinBox, organisations also need to keep in mind a few best practices. For starters:
Make sure you identify critical assets and data
Primarily, before creating a vendor risk management system, it is important for organisations to first understand their critical assets and data. For instance, many organisations have financial data, employee records, and corporate-sensitive data—all considered critical assets. Next, they need to classify those data from the most important to least.
However, this is only the starting point. It is also crucial for organisations to be aware of the security breaches and permutations that are likely to occur when working with third party vendors so they can safely and effectively guard against them.
Determine the impact of data loss
Organisations need to also know the possible impact of data loss. There are multiple scenarios that can cause data loss including vendors that are no longer available due to merger or bankruptcy, power outage at the data center, or unauthorised access by any third party employees.
Create a robust vendor risk management program
A strong vendor risk management program should take into account key components like risk tolerance, threat vectors, and data criticality. Organisations need to remember they are the owners of their data and are therefore responsible for ensuring it is protected through its life cycle, from creation through decommissioning.
In other words, while organisations can outsource some of their business functions, they cannot outsource their responsibility for protecting their data. In addition, ensuring you follow rules of behaviour and strict policies. This can include encryption keys and password changes when employees leave.
In addition, it is also wise to establish legal agreements that are congruent with your risk management strategies. Organisations should also be aware that data is governed by other standards in other countries for legal impact and compliance.
Get everyone involved
Everyone in the organisation should be involved in vendor risk management. However, it is important to establish an order when working and approaching vendors. In line with this, organisations need to develop a responsible, accountable, supportive, consulted plan to determine the role of everyone when it comes to the risk management program.
Involving everyone will entail leadership so everyone stays accountable for ensuring the program gets implemented and is compliant. So while greater accountability is assigned to top management in the organisation, the entire team should be aware.
Ensure basic security measures are in place
The following are some basic security measures that need to be in place to help strengthen a risk management program.
- Data stored in clouds should be encrypted
- When restricting access to authorised personnels, use multifactor authentication
- Utilise separate keys for encryption for primary and secondary backups to warrant secure recovery in the event of data-loss incidents
- When possible, use two different vendors to help minimise vendor lock-in
- Ensure you have a clear SLA with the vendors so you are aware what they are doing with the data. For instance, is the cloud provider moving the organisation’s data to another place as a backup location? Is the vendor outsourcing the risk to other vendors? As a general rule of thumb, the SLA should address possible scenarios and restrict any unauthorised access.