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January 2, 2021

Vendor Risk Management - FAQs

Want to know more about VRM? Check out some frequently asked questions below.

What is Vendor Risk Management?

Vendor risk management (VRM) is a process that allows organizations to identify, assess, and manage the risks associated with vendor relationships. VRM gives companies visibility into the vendors they work with, how they work with them, and which vendors have implemented sufficient security controls.

Why is Vendor Risk Management Important?

Some of the most pressing reasons include:


  1. The number of cyber attacks has made companies aware of the importance of protecting their networks & data.
  2. Organizations are relying on third parties more which increases the vendor risk.
  3. The number of vendor relationships an organization has & the associated vendor risks can be overwhelming.

What is a Vendor Risk Management Program?

A vendor risk management program is a formalized process that allows organizations to identify, assess, and manage the risks associated with vendor relationships. This process is constantly evolving as new security threats and vulnerabilities are discovered. VRM helps organizations keep up with these changes and implement the necessary security controls to protect their networks and data.


Who Needs Vendor Risk Management?

Any organization that works with vendor partners needs vendor risk management. This includes not only large companies but also small and medium-sized businesses, as they are often targets of cyber attacks due to their perceived lack of security controls. VRM is also needed within any organization that uses third parties or cloud providers.

How to Create a Vendor Risk Management Process?

A vendor risk management process is a formalized program that allows organizations to identify, assess, and manage the risks associated with vendor relationships. Here's how to create VRM Process:


  1. Define what constitutes a vendor relationship
  2. Identify and assess procedures for all vendors
  3. Implement risk mitigation and management procedures
  4. Periodically review vendor relationships
  5. Coordinate with vendors


What is a Vendor Risk Management Framework?

A vendor risk management framework is a set of guidelines that organizations can use to develop their own vendor risk management program. The VRM framework should include:


  1. A definition of what constitutes a vendor relationship
  2. Identification and assessment procedures for all vendors
  3. Procedures for mitigating and managing vendor risk
  4. Periodic review of vendor relationships


What is a vendor questionnaire?

A vendor questionnaire is a tool that organizations can use to assess the risk of working with a vendor. The questionnaire includes:


  1. Identification information for the vendor
  2. Details about the vendor's business and products/services
  3. Information about the organization's relationship with the vendor
  4. A list of questions about the security of the vendor's products and services


What is a vendor management policy?

A vendor management policy is a set of rules that organizations can use to manage the risks associated with vendor relationships. The policy should include:


  1. Identification information for all vendors
  2. Details about the vendor's business and ​products/services
  3. Information about the organization's relationship with the vendor
  4. Questions about the security of the vendor's products and services

What is a vendor SOC report?

A vendor SOC report is a tool that organizations can use to assess the risk of working with a vendor. This covers:


  1. Identification information for all vendors
  2. Details about the vendor's business and products/services
  3. Information about the organization's relationship with the vendor
  4. A list of questions about the security of the vendor's products and services

What is an SLA?

A service level agreement is a contract between an organization and a vendor that outlines the expectations for the delivery of products or services. This includes:


  1. Identification information for all vendors
  2. Details about the vendor's business and products/services
  3. Information about the organization's relationship with the vendor
  4. Questions about the security of the vendor's products/services

What Should Be Included In A Vendor Risk Assessment?

When assessing the risk of working with a vendor, organizations should consider the following factors:

- The vendor's business and products/services

- The organization's relationship with the vendor

- The security of the vendor's products and services

- How critical the vendor's products or services are to the organization

- The organization's ability to terminate the vendor relationship

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