Vendor Management Policy
Organizations need a proper vendor management policy if they want to survive through their dealings with third-party vendors. Those who have imposed such a policy are those who understood the risks these vendors bring to the table. Industry regulators also recognized how data leaks and breaches from third parties account for a significant amount of cybersecurity risk. This led to tighter regulations and increased scrutiny where managing vendor risk, information risk, and third-party risk are concerned.
Vendor Management Policy Defined
A vendor management policy helps organizations assess vendors and the risk they pose. It points to which vendors pose the most significant risk and identifies ways through which you can reduce the risk. These methods might include changing the terms of the contract, imposing an annual inspection, and more.
Why You Need Third Party Management Policy
There are four primary reasons why you should take the time to develop and implement a program on vendor management, including the following:
1. Most industries have legal requirements for managing third party risk. If you don’t have one, you could be violating these regulations and could face financial or legal penalties.
2. Third-party vendors usually gain access to some of your sensitive data or even your corporate network. This makes you even more vulnerable to data breaches because it gives hackers more targets to get to you.
3. Many organizations end up forging relationships with vendors only to remain clueless about the risks these third parties pose. They do not even have proper monitoring about the security clearances of these vendors, such as the specific people with access to sensitive data, the level of access granted, and more. This puts them at an even bigger risk because identifying vulnerable points is not possible in the first place.
4. The entire organization could collapse while losing a few thousands to millions in dollars due to data breaches. Take note of the biggest headlines about cyberattacks in the past few years, such as the ASUS Shadowhammer attack and the Facebook data leak. Even if you are a small organization, don’t take the risk of not monitoring your third party risk because cybercriminals often target organizations of your scale.
How to Create Vendor Management Policy
Before developing a policy, make a list of all the vendors you are transacting with. Your vendors could be any business or individual that you do business with. Knowing who they are will allow you to monitor them better.
After compiling the list of vendors, identify what their roles are. Determine who has access to personally identifiable information or sensitive data and corporate network as well as which vendors you rely on most for critical business activities.
You should focus on the vendors that fit the description above when you develop your vendor management policy. Learn more about these third parties, monitor them, and assist them with remediation. If any of these vendors get attacked, it could cause severe data breach for your organization.
What the Policy Should Include
A good vendor management policy should contain several important points, including the following:
• Service level agreements
• Acceptable vendor controls
• Vendor compliance standards
• Level of liability of the third party in a data breach
• Vendor monitoring (including site visits, SOC 2 report, and auditing checklist)
• Conditions of contract termination upon violation of security requirements
• Disaster recovery plan for critical business functions
While drafting your policy, assess whether a vendor’s level of access matches what they actually need to do their part of the business transaction.
How to Use the Policy to Evaluate Incoming Vendors
You can use your third-party management policy to assess both old and new vendors. In the case of the latter, you can use it to decide whether to do business with them in the first place.
To make your job easier while wielding the power of your policy, consider using a tool that will help you rate the potential vendor’s security measures against your criteria. That same tool should give a security rating that you can use to regularly monitor the vendor throughout your business dealings and against the industry benchmark.
Remember, vendor management does not stop with the initial assessment. You need to continually monitor the vendor’s security and ensure that they stay on track to keep both of you protected. Constant monitoring will also notify you of potential new risks and find ways to resolve such risks.
If you are looking for a reliable vendor management solution, choose Ultimate Technical Solutions Inc. We have a vast experience when it comes to strengthening your IT relationships and helping you make informed decisions when it comes to your infrastructure. For more information about our services, contact us at (504) 370-2102.