The ability to assess threats from vendors and other third parties across the supply chain helps to protect against data breaches and builds trust by keeping customer data safe. Thorough assessments also make it possible for your business to make confident investments in the resources you need to thrive.

For many organizations, though, third-party risk management (TPRM) is a challenge. There are many reasons this might be the case: over-reliance on manual tasks that slow down response times, silos and varied communication channels that lead to inefficiencies, or simply ineffective processes.

Successful third-party risk management should:

Engage key stakeholders across the business, from Procurement to InfoSec
Help to define risk tolerance and inform strategic decisions
Guide security posture and help to allocate InfoSec resources
Create efficiencies through a foundation of clear, consistent process

Today, we’re going to take a look at the five essential aspects of a strong TPRM program. Whether you’re just getting started or merely looking to make a few tweaks, these foundational steps will help you create an effective, sustainable approach to TPRM.

1. Create Vendor Profiles

Vendor profiles collect and centralize all the information you need to evaluate risk for a given vendor or third-party. Having a strong vendor profile is a necessary first step in the TPRM process because it impacts the way you categorize risk and other downstream business processes.

It’s important to clearly define an intake process for vendors so profiles reliably include the kinds of information you need to conduct security assessments. Your specific needs may very, but robust profiles include:

Necessary security documentation related to that vendor, like SOC reports or certifications
Contracts related to the vendor
Documentation related to any current or potential issues to monitor
The amount you spend with a vendor

2. Build a Vendor Inventory

A vendor inventory is a catalog of each third party your organization works with; it should go hand-in-hand with the intake process you create for your vendor profiles. We discuss them separately here because many organizations track vendors across multiple locations and systems, and this can lead to incomplete information.

Your vendor inventory should be a central source of truth for your internal teams that includes the full list of vendors you work with as well as all the information you’ve collected for their profiles.

3. Risk Rank Your Vendors

Risk ranking uses a straightforward methodology to classify the levels of inherent risk that come from working with a given vendor. Your ranking criteria must account for:

The kinds of data vendors or third parties will have access to (PII, intellectual property, financial records, etc.)
The volumes of data you’ll be sharing with the third party
The systems and networks your vendors will have access to
The services your vendor provides to support any regulatory or compliance requirements
How critical the vendor is to your business operations
Any specific factors that impact your unique risk profile

Once you’ve determined the elements that influence risk, create your classification system for ranking. We recommend keeping your classification tiers simple (e.g. “High Risk”, “Medium Risk”, and “Low Risk”). The information you’ve collected in your vendor profiles can help you organize your existing vendors into the right categories.

You need to develop a formula for risk that accurately defines your tolerance and weighs it against your needs. It’s important to properly calibrate your ranking system in this way to ensure you allocate security resources and time effectively. If your system over-indexes for high risk, you may spend more on management than is necessary, while underestimating risk levels can lead to vulnerabilities.

4. Conduct Security Assessments

Risk ranking helps you to understand levels of risk based on access to your company’s data and systems. Security assessments help you analyze vulnerabilities that may originate with the vendor. Security assessments determine third-party security posture, identify potential issues, and evaluate operational readiness like business continuity or disaster recovery plans.

There are many types of assessments that you can conduct, so be sure to lean on your risk ranking to determine the right questionnaires to require of your third parties. Risk categories will also give you a sense for the kinds of certifications and documentation that are most essential and how often to conduct regular reassessments.

5. Develop a Remediation Plan

Once you’ve defined your risk criteria and assess your vendor’s security posture, it’s critical to develop a management plan that allows you to properly remediate risks. Your remediation program should include:

Proper allocation of InfoSec resources aligned to risk ranking and assessment results
Processes for reassessment of your vendors on a regular cadence
Collaboration among business units and stakeholders to maintain visibility into your third-party landscape and reduce shadow IT
Clear procedures for incident response

Make Sure You’re Getting the Most from Your TPRM Program

These fundamentals can help your business effectively evaluate risk tolerance, assess the security posture of your vendors, and dedicate the right balance of resources to manage risk.

But these steps also help your organization make huge leaps in efficiency and time savings by moving away from disparate systems of record and manual processes. TPRM software, like the Whistic Platform, allows your organization to:

Centralize all vendor profiles, inventory, and security documentation in a single system
Automate vendor intake, risk ranking, assessment management, and reassessments
Integrate with existing systems to improve communication and collaboration among stakeholders

Whistic has built the largest network of vendors in the world, allowing you to proactively share and assess security posture at the touch of a button, saving you valuable time without additional risk. To find out more about how Whistic can help turbocharge your TPRM program, contact us to set up a customized demo today.