How a Vendor Risk Management Program Can Strengthen Your Cybersecurity

In 2024, the rise in supply chain attacks led to numerous global companies experiencing cyber-attacks. These attacks exposed vulnerabilities in the interconnected networks of global companies, making it clear that third-party vendors can be a significant source of risk if not properly managed.

A Vendor Risk Management (VRM) program can help organizations identify, assess and mitigate security risks associated with third-party vendors or suppliers. It helps ensure that your vendors uphold robust cybersecurity practices to protect sensitive data and prevent potential breaches.

Outlined below are three emerging risks a VRM program can help address, the necessary steps to establish a VRM program and suggestions on how you can track metrics and key performance indicators (KPIs) to communicate success.

Top Cybersecurity Risks Related to Third-Party Vendors

1. Expansion of Attack Surfaces: As Internet of Things (IoT) devices continue to be adopted at scale, increasing digital interconnectivity, our collective attack surface expands significantly. Each vendor you engage with introduces potential vulnerabilities that need to be managed. For instance, compromised IoT devices that aren’t segmented from your corporate network and are accessible via the internet can be an initial access point for cybercriminals. These criminals can quickly and often undetected scan to gather data, identify additional assets to exploit, and deploy ransomware.
2. Increased Vendor Risks and Vulnerabilities: As organizations continue to outsource critical business functions, the sophistication of supply chain attacks is escalating. These attacks serve as a stark reminder of how a single vendor breach can have widespread repercussions on your data and system availability, integrity and confidentiality.
3. Automation and Real-Time Risk Assessment: Leveraging machine learning (ML) and artificial intelligence (AI) for automated risk assessments is quickly being adopted. These tools provide real-time insights into potential cyber risks, enabling you to act swiftly to mitigate those risks before they escalate. Additionally, this technology enables you to more closely monitor high-risk vendors, creating additional layers of defense around their platforms, and tailor your incident response plans to account for catastrophic vendor scenarios.

Five Steps for Establishing a Vendor Risk Management Program

1. Assessment and Planning:
   • Conduct a comprehensive risk assessment to identify current, high-risk vendors that are heavily relied upon for daily operations.
   • Develop a strategic plan outlining the scope, objectives, and KPIs for the VRM program.
2. Policy and Framework Development:
   • Establish a robust VRM policy that includes vendor selection criteria, risk assessment procedures, and compliance requirements (e.g., HIPAA, GLBA, CCPA).
   • Develop a framework for review that includes legal, procurement, and compliance teams to ensure due diligence is conducted during the purchasing process. This allows appropriate risk management to be implemented both technically and contractually.
3. Implementation of Software Solutions:
   • Remove local admin privileges from all employee devices.
   • Invest in automated risk assessment tools, like SecurityScorecard (SSC), that utilize AI and ML to provide real-time insights, establish alerting rules, and categorize your vendors based on their cyber risk to your organization.
   • Integrate SSC with your existing security infrastructure to maximize risk visibility across your environment. Additionally, aligning SSC results with security questionnaires like the Standard Information Gathering (SIG) assessment through Shared Assessments can create actionable insights for additional security implementation.
4. Training and Awareness:
   • Outline roles and responsibilities for internal or external stakeholders that play a part in the VRM process. Training them on this new process and reinforcing why it’s important leads to greater success. These stakeholders can champion the new process for other employees.
   • Promote a culture of security awareness across the organization.
   • Educate non-stakeholders about this process so that they understand who to approach when necessary to implement new technologies or purchase new services.
5. Continuous Monitoring and Improvement:
   • Implement continuous monitoring mechanisms to track vendor performance and compliance.
   • Regularly review and update the VRM program to address emerging threats and incorporate best practices.

Tracking Success of Your Vendor Relationship Management Program

To measure the success of the VRM program, you can track the following metrics:

1. Reduction in Vendor-Related Incidents: Monitor the number and severity of security incidents reported that originate from vendor relationships. A decrease in such incidents will indicate the effectiveness of our VRM efforts.
2. Compliance and Audit Results: Track the compliance of your vendors by identifying how many are in scope of regulations and laws, the completion rate of risk assessments sent, and the average time between assessments being completed. Positive audit results will demonstrate adherence to organizational policy and regulations.
3. Vendor Risk Scores: Utilize risk assessment tools to assign risk scores to vendors. Continuously review the security rating of your vendors through SecurityScorecard and prioritize your vendors by risk.
4. Cost Savings and Efficiency Gains: Measure the cost savings achieved through a VRM program by determining the cost avoidance and savings. Cost avoidance means savings from preventing future loss, and cost efficiency being overall operational cost decrease. Some formulas to build off of are:
   • Cost reduction = cost before minus cost after VRM
   • ROI = (Cost Reduction – Cost of Implementation) / Cost of Implementation