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Vendor Risk Assessment Template

Outsourcing to third-party vendors has become the rule rather than the exception for the majority of today’s organizations. These entities install and maintain software, protect networks and information in the cloud, furnish supplies and provide technical expertise for a price.

In order for vendors to benefit you with their services, they must be granted access rights to some or all of your systems and the data they contain. As a result, your company is placed at additional risk of cyber attack. Additional dangers can include financial and reputational damage, falling out of compliance and harm to your operations.

In order to safeguard the security and integrity of your information, it is crucial that your cyber protection team institute a comprehensive supplier management policy. As part of that process, you should present all contractors with a vendor risk assessment template.

What is a Vendor Risk Assessment?

Since relationships with third parties can pose some serious threats that counterbalance the benefits, you need to understand the level of risk your business may incur when working with third-party contractors. A vendor risk assessment is an effective tool that helps you to achieve this important goal. In general, this set of procedures should include the following:

  • Develop a comprehensive list of all vendors. Consult with management and various departmental resources to ensure that you obtain a complete picture of your vendor community since any of them might be the source of potential leaks or vulnerabilities.
  • Prioritize your vendors according to how much risk they may pose. Those that come into direct contact with sensitive digital information such as customer credit card numbers and staff payroll data must receive particular scrutiny. In order to help you in the classification process, ask yourself what each vendor does and which ones have direct contact with sensitive information or vital operational tasks.
  • Do your best to assess each supplier’s level of risk. This can be particularly challenging since they may not divulge less severe breaches and may be unaware of the nature of their own system vulnerabilities.
  • Decide how you want to treat each vendor. You can accept, reject, minimize or transfer the risk. If you choose to work with the contractor, protect your assets by setting controls such as firewalls, anti-virus software, encryption and authentication protocols. Ensure that vendors understand your requirements, and monitor them regularly for compliance.

Implementing a Vendor Risk Assessment Template

A supplier risk assessment template, also known as a vendor risk assessment questionnaire, is a dynamic document designed to help you clarify your practices, requirements and expectations pertaining to third-party entities and to provide them with a foundation of clear guidance. As you and your management team work to perfect this set of protocols, use the following suggestions as a guide:

  • Consult resources throughout your company to understand the full scope of your cyber security and compliance landscape;
  • Consider industry-specific regulatory requirements;
  • Compose a set of questions that touches on all relevant aspects of the various stakeholders. Also, make inquiries that will help you to determine how critical the vendor’s functions are to your company’s operations.
  • Develop an information security scorecard template that rates vendors with a score of low, medium or high-risk.
  • Building on this resource, you can develop customized assessments that will help you evaluate individual vendors that conduct specialized tasks.

Sample Third Party Risk Assessment Questionnaire

While questionnaires can never stand alone as the sole monitoring or compliance tool, they can be invaluable at giving management a snapshot of the security posture of third-party companies. What specific matters you choose to discover depends in part on your particular business and industry. You may wish to include some of the following:

  • Who handles cybersecurity?
  • What methods are used to prioritize company assets?
  • Have you ever experienced a breach? If so, how did you handle it?
  • What are your existing cybersecurity protocols?
  • Do you outsource any security tasks? If so, to whom, why and what access do they have?
  • Have you inventoried and securely configured all hardware and software?
  • How do you assess and monitor network, hardware and software security?
  • Do you have automated threat monitoring systems?
  • What access controls have you implemented?
  • What safeguards do you have in place to protect sensitive data?
  • What steps do you take to plan and monitor for a cyber security incident, and what would you do if one occurred?
  • Do you regularly test for weaknesses via vulnerability scans and penetration testing?
  • Describe how remote mobile access to your network is managed.
  • What communications protocols will you use to transmit information about a data breach should one occur?

As you develop your vendor security assessment questionnaire, remember that it is a flexible and customizable document. As the cybersecurity landscape or your corporate priorities shift, you can tweak the third party risk assessment template accordingly.

Far from being a meaningless exercise, investing time and resources into constructing an effective vendor risk assessment questionnaire document can pave the way for positive relationships with your vendors and enhanced security for your valuable digital assets.