In this guide, we’re going to explore vendor coverage and how, through tools such as vendor risk management software, organisations can best identify third-party vendors with a high-risk level.

Vendor coverage is something that all organisations think about; in fact, in 2021, 51% of businesses reported third-party risk incidents. However, with finite resources, it’s difficult to optimise your vendor portfolio through the rigorous assessment of every single supplier – but it can be done. 

To help you set up sustainable, realistic processes, we’ll talk you through a series of tips and best practices.

Where to Start

With a well-organised, efficient vendor risk management process, you can mitigate risks without adding strain to your security team. Achieving this is possible with proper guidance and tools, and the results are undeniable: 

27% of businesses that didn’t have a third-party risk management programme in place suffered high-impact incidents, compared to only 2% of businesses that did.

So how can we achieve these results?

First, you should address whether you have a clear picture of your vendors within your business. If the answer is “no,” this is a great place to start. 

Before any progress can be made in the vendor assessment process, you need to be aware of what suppliers are working with your company and what goods and services they provide you. Without this data, you won’t know what you should be assessing. 

To address this, you should collect a list of your known vendors from procurement and add them to your vendor register. Key information should be recorded, such as the goods and services vendors provide and contact.

Now you have your list; we should address the elephant in the room. 

You won’t be able to assess all your vendors every year without a huge team. Therefore, you should simply aim to get as close to 100% understanding of your vendors while remaining realistic. Often, businesses assess the top 25% of vendors by financial status; this is because the highest risk is usually with the vendors you spend the most money with – as such, we consider that a key factor. 

Although there are different angles to consider, we suggest organisations develop a simple and repeatable strategy to categorise vendors quickly to help with this. This strategy is often called a tiering assessment, which guides us neatly into our Tiering 101.

Why are Tiering Assessments Important?

A fit-for-purpose tiering assessment should remove any reliance on “gut feeling,” be consistent and ensure a focus on what matters to the business. 

Your tiering assessment should focus on risk factors that you have identified as having the most potentially critical impact on your business. These factors might include things like:

• Type and sensitivity level of the data the vendors handle
• Contract value
• Level of access to your data, premises, or customers
• Compliance certifications
• Any reputational impact they carry

One way to approach the assessment is by using simple scores weighted against your choosing tiering factors, enabling you to rank vendors with increasing trust levels successfully. These levels can be something like Informal, Trusted, Partner, or Strategic. This will allow your third-party risk team to understand and prioritise their efforts to establish and assure trust.

The Key Takeaway: Vendor Risk Management Software

While 100% assessment of vendors is unrealistic, it is possible to safely manage your list of vendors to minimise risk. One of the fastest, simplest, and most efficient ways to tailor your vendor risk assessment, and stay ahead of assessment schedules, is through vendor risk management software. Automatic follow-ups, easy-to-access dashboards, and intuitive vendor questionnaire building tools make your third-party risk management a smoother operation. Take a look at SureCloud’s solution for more features.