Your business is only as secure as the weakest link in your supply chain. A single lapse by a third-party can lead to an operational disruption, cyberattack, or compliance violation. How can you be certain that your vendors and partners are keeping up with the latest regulatory mandates, industry best practices, cybersecurity measures, and your own corporate standards?
Vendor Risk Management Should Be a Top Priority
In these days of high-profile data breaches and intensifying regulatory requirements, supply chain risk management has become a critical priority for every organization. Such programs typically encompass policies, standards, governance, and risk assessment. Vendor risk management falls under the last of these—and it’s the cornerstone of effective supply chain risk management.
Develop a Vendor Risk Policy with Teeth
Nothing gets the attention of a vendor like a withheld payment. To set the expectation that risk policy compliance is a requirement, not an option, let vendors know that no money will be released until the right boxes have been checked.
Document and Track
A supply chain risk register is essential to keep track of your vendors and their risk. Your database should provide a single source of information on which vendors have been approved and when, as well as their current risk assessment rating.
Stay Engaged During Procurement
Don’t wait until the final review of a master services agreement (MSA) to get involved. Build a strong collaborative relationship with the procurement team so you can be notified promptly when a business function submits a procurement request, and stay engaged during vendor sourcing. By getting in front of the process, you can avoid being labeled as a roadblock or deal-breaker.
Maintain, Scale, and Repeat Your Program
Running an effective vendor risk management program and managing supply chain risk in general is all about scaling and repeating. To uphold your policy and standards, be diligent and strict about annual security assessment and verification, and perform site inspections as needed depending on the severity of risks posed by a given vendor.
‘Trust But Verify’
From the earliest stages of the procurement process through onboarding, service provision, and offboarding, expectation-setting and verification should be woven through each vendor relationship. Even the most secure organizations can encounter challenges, and the best-run programs can break down—assume nothing, check everything.
Read more at How To Avoid a Third-Party Break in Your Supply Chain
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