What is vendor risk management?

Vendor risk management refers to the systematic approach of identifying, assessing, and mitigating risks that arise from third-party service providers. This process is critical because organizations often rely on external vendors for various services, which can introduce a multitude of risks, including data breaches, compliance violations, and operational disruptions. By focusing on thorough assessments and implementing appropriate risk mitigation strategies, organizations can protect themselves from potential vulnerabilities that may arise due to the actions or failures of their vendors.

This approach encompasses a range of activities, including conducting due diligence before engaging with vendors, continuous monitoring of vendor activities, and developing contingency plans in case of a vendor-related incident. The overarching goal is to ensure that the risks introduced by third parties are understood and managed effectively, thus maintaining the integrity and security of the organization's operations and sensitive data.