Vendor Risk Management is extremely important as we are in an environment where third-party relationships are becoming more complex, supply chains are expanding not just across territories of countries but also across the entire globe.
Managing risks of all kinds is an important part of building and maintaining a successful business and in today’s world, organisations must be extremely conscientious about their vendors. Developing a risk management process to minimise risk involves addressing areas as varied as cyber-security, regulatory compliance, vendor relationship management and careful third-party risk assessment.
If done properly, vendor risk management is built on a comprehensive and clear set of policies and processes that support the removal of excess additional risk and mitigation of any that already exist. Because of these variations and policy considerations, processes often need intensive temporary resources. Organisations spend a large amount on human and financial resources in completing IT security, compliance and other important risk reviews of their vendors. Resource constraints in the face of higher risk management costs represent one of the largest vendor risk management challenges for organisations.
To counter these costs and simplify the process, your company can use automated software which has a solid foundation built on a set of established best practices and international standards. This shared understanding can reduce labour costs significantly. The goal of VRM programmes is simple: to monitor, manage and reduce risk exposure created by relationships with third-party vendors and service providers across all risk categories. Ideally, your business will develop policies which provide general guidance and goals, a programme which provides a framework and outline useful practices for identifying risk and procedures detailing specific daily tasks, responsibilities and workflows. Creating a vendor risk management program and processes that are dynamic allow organisations to have current, updated views of both qualitative and quantitative assessments. To further reduce your expenditure, your company should carry out assurance and validation responsibility mapping between the roles of first, second and third lines of defence, as well as end to end processes mapping and identifying opportunities for efficiency and cost saving. It is also recommended that your company employees undergo security and compliance awareness training. Ongoing assessment, validation and adjustment of the programme is needed for an effective and efficient alignment of the organisations goals and strategy. The scale and efficiency of the programme will save your company time.
By developing a comprehensive vendor risk management program, you can enjoy more collaborative supplier relationships, better compliance, and the responsiveness you need to anticipate and mitigate risk before it causes serious damage to your profits, operations or public reputation. Assessments that are ‘live’ will give you far greater situational awareness of vulnerabilities in your vendor relationships