Across today’s interconnected business landscape, organizations are increasing their reliance on third-party vendors and service providers to streamline operations, reduce costs, and access specialized services and expertise. This increased dependency on third parties introduces significant organizational risks, including data privacy violations, operational disruptions, reputational damage, supply chain attacks, and devastating data breaches. In response to these risks, vendor risk management (VRM) has emerged as a critical foundation for managing these risks and monitoring the impact third-party partnerships have on the organization.
Despite this importance, VRM can be challenging to master, especially for organizations managing expansive vendor networks and information security teams troubled by staffing and resource restrictions. Automated vendor risk assessments reduce these burdens and leverage advanced technologies, such as artificial intelligence (AI) and machine learning (ML), to evaluate and monitor vendor risks in a fraction of the time associated with manual processes.
This article explores the importance of vendor risk assessments and how security teams can utilize AI and other automated tools to scale their vendor risk assessment process across their entire third-party ecosystem.
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The importance of vendor risk assessments in mitigating third-party breach impacts
Vendor risk assessments are formal and systematic evaluations that organizations conduct in their third-party relationships to identify risks that these partnerships may pose to their security posture. The primary purpose of these assessments is to ensure vendors adhere to an acceptable level of security controls and protocols and meet the requirements of industry regulations. These assessments help protect vendors and organizations from data breaches, compliance penalties, and additional security threats. Organizations can understand a vendor’s comprehensive risk profile by conducting thorough assessments and proactively identifying, mitigating, and managing risks across their third-party network.
Identifying, mitigating, and managing vendor risks
Vendor risk assessments are a critical strategy for identifying, mitigating, and managing risk associated with vendors and third-party service providers. Here’s how:
- Identifying risks: Vendor risk assessments empower security teams to uncover vulnerabilities in a vendor’s security regimen, assess their compliance with specific regulations, and determine the impact of any weaknesses. This identification process may include reviewing security policies, incident response plans, and the vendor’s security history.
- Mitigating risks: After a security team identifies risks, vendor assessments help gather information and develop risk mitigation strategies. Mitigation typically involves working alongside a vendor to implement additional security controls, negotiate compliance requirements, and present evidence to address specific vulnerabilities.
- Managing risks: VRM is an ongoing process throughout the entire vendor lifecycle. Regular risk assessments enable security teams to stay informed about changes in a vendor’s security practices or posture and promptly identify new risks before they impact the organization.
By incorporating vendor risk assessments into their overall VRM framework, organizations can develop robust protection from the potential impacts of vendor partnerships, including data breaches and other severe security incidents. These assessments also enhance business relationships with vendors.
The need for automation in vendor risk assessments
Manual vendor risk assessments create several challenges that make them less effective for security teams, especially those looking to scale their VRM program. One of the primary issues associated with manual or spreadsheet-based risk assessments is the significant time required to conduct these assessments. The risk assessment process involves collecting and analyzing vast amounts of vendor data, verifying compliance, and continuously monitoring vendors to track changes in security posture. This manual process requires extensive time and resources, delaying decision-making and grid-locking security teams for weeks, if not months.
Additionally, manual vendor risk assessments are susceptible to human error. No matter how careful a security professional is, they can easily overlook important details, analyze data incorrectly, or perform an incomplete assessment based on their expertise and personal judgment on a vendor’s security posture. This combination of extensive resources and potential for human error and oversight makes manual vendor risk assessments cumbersome, necessitating an effective and efficient alternative: automation.
Benefits of automation
Automated vendor risk assessments address the main challenges of manual processes by leveraging AI and other technologies to streamline the assessment process. The benefits of automated vendor risk assessments include:
- Speed: AI systems can collect, organize, and analyze large data sets from numerous vendors simultaneously, drastically reducing the time needed to perform vendor risk assessments. This increased speed improves an organization's ability to make informed decisions and frees up security teams to handle other tasks related to vendor relationships and security practices.
- Accuracy: AI and other automated technologies minimize the risk of human error, ensuring data is consistently transcribed and analyzed. Increased accuracy improves the precision of an organization’s risk assessment program.
- Consistency: Automated vendor risk assessments provide a standardized approach for evaluating vendor risk. This consistency ensures an organization’s security team assesses all vendors using the same criteria and metrics, resulting in objective risk profiles and uniform risk evaluation.
- Scalability: When an organization’s vendor network grows, automated systems can handle the increased workload without proportionally increasing resources or time. This scalability is one of the greatest benefits of automated risk assessments, especially for organizations that rely on an expansive network of vendors and third-party service providers.
Organizations can overcome the limitations of manual risk assessments by transitioning to automated processes and harnessing the power of AI. Automated technologies offer revolutionary benefits when conducting vendor risk assessments.
Key opportunities for automation in vendor risk assessments
Organizations can utilize automation to streamline and enhance their vendor risk assessment process in several ways. From due diligence to cybersecurity reporting and vendor collaboration, automation unlocks various opportunities for security teams to eliminate manual processes and address frustrations.
Vendor due diligence
The vendor due diligence process is critically important to the overall success of an organization’s vendor risk management program. Still, the process can be frustrating, mainly when repetitive questionnaires and information-gathering processes debilitate security teams and cause delays. Overall, due diligence and security questionnaires can be painful for everyone involved. They’re manual, time-consuming, and an endless shuffle of paperwork. Nobody wants to be the one holding up a large deal because their team is struggling with the workload.
Automated tools, like UpGuard’s Trust Exchange, ease the burden due diligence and security questionnaires place on security teams by using powerful automation, AI, and intuitive workflows to eliminate manual work. Trust Exchange helps users store and share vital security information, build trust with vendors and customers, and gain new insights into first and third-party security practices.
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Risk assessment workflows
Many organizations rely on vendors more than ever, increasing the burden and time associated with risk assessment workflows and robust VRM. Automation can ease this burden and streamline every step in the risk assessment process, from scheduling to completion tracking and compliance management and reporting.
Comprehensive vendor risk management solutions, like UpGuard Vendor Risk, offer a complete vendor risk assessment workflow. Vendor Risk empowers security teams to utilize automation to classify vendors based on risk tiers, prioritize critical vendors within their assessment schedule, and perform comprehensive vendor risk assessments mapped to industry regulations and frameworks, including GDPR, ISO 27001, HIPAA, PCI DSS, DORA, and more, all in a fraction of the time manual assessments require.
Organizations looking to outsource more heavy lifting associated with VRM and the vendor risk assessment process can also utilize UpGuard’s Managed Vendor Risk Assessments service. For organizations with limited vendor risk management tools, managed vendor risk services are often the most cost-effective way to handle vendor vulnerabilities and increase real-time risk visibility.
Watch the video below to learn more about UpGuard’s revolutionary Managed Vendor Risk Assessments service.
Cybersecurity reporting
Cybersecurity reporting allows security teams to efficiently communicate risks and vendor security issues to key stakeholders and board members. Automation significantly improves the efficiency and accuracy of cybersecurity reporting through standardized templates. These templates ensure all necessary vendor information is reviewed consistently, reducing human error. Automated systems can populate these templates with relevant vendor data from various sources, ensuring reports are current and accurate. This standardized approach to cybersecurity reporting saves time and ensures stakeholders receive uniform reports, making it easier to compare findings and identify data trends across reporting periods.
Another crucial benefit of automation in cybersecurity reporting is automated scheduling. With automated scheduling, governance, risk, and compliance (GRC) teams can generate and distribute reports regularly without increasing manual effort. Security professionals can set automated scheduling to align with regulatory requirements or internal review cycles, ensuring compliance with industry frameworks and organizational VRM policies.
Vendor collaboration
Automating the vendor risk assessment process improves collaboration between organizations and third-party vendors, streamlining assessment stages and completion. For many organizations utilizing manual risk assessments, the most difficult aspect of VRM is not identifying risks; it’s working with third parties to remediate security issues.
Getting vendors to remediate issues efficiently can be challenging, especially when partnering with small companies with limited resources. Using data and evidence to drive the conversation with vendors is essential to getting new vendors on the same page and developing a remediation plan to prioritize fixing the most severe issues first.
UpGuard Vendor Risk provides users with advanced data and evidence and automated workflows to improve vendor collaboration and streamline remediation.
UpGuard’s AI ToolKit includes an assortment of automated features and capabilities, helping vendors and users speed up the questionnaire process and increase the efficiency of vendor collaboration.
- AI Autofill: Enables vendors to auto-populate security questionnaires from a repository of past answers and enables users to receive completed responses in record time
- AI Enhance: Improves vendor response quality, eliminating typos, refining answers, and minimizing human error
[Video: https://upguard.wistia.com/medias/3d2l1xr5je]
Top vendor risk assessment automation solutions
The best vendor risk assessment automation solutions will include features designed to streamline and enhance the efficiency of vendor risk management. These platforms typically offer automated risk assessments, continuous monitoring, and comprehensive compliance tracking with industry standards. They provide tailored risk profiles and detailed analytics, enabling organizations to prioritize remediation tasks effectively. By leveraging SaaS platforms and advanced tools, organizations can achieve more accurate, data-driven insights into vendor risk scores, ultimately improving their overall risk assessment performance and efficiency.
UpGuard
UpGuard uses automation to remove inefficiencies throughout the entire vendor risk management process, including streamlining evidence gathering, security questionnaires, remediation workflows, and compliance management. Here’s how UpGuard helps with each stage of the assessment process:
Evidence gathering
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UpGuard uses automated vendor scans, security ratings, and continuous security monitoring to empower security teams with complete visibility of vendor security posture. This automated evidence-gathering allows organizations to prioritize risk assessments for critical vendors efficiently.
Security questionnaires
UpGuard’s AI ToolKit revolutionizes the security questionnaire process for organizations of all sizes. AI Autofill enables users to auto-populate responses based on previous questionnaire answers. AI Enhance enables vendors to expand bulleted responses into comprehensive answers.
Remediation workflows
UpGuard features an integrated risk remediation workflow that promptly addresses risks identified in assessments and questionnaires. To aid security teams in prioritizing tasks with the most significant impact on the organization's security posture, UpGuard estimates the potential improvements from selected remediation actions.
Compliance management
UpGuard’s Vendor Risk Management (VRM) solution monitors each vendor's compliance with popular regulations through security questionnaire responses.
These questionnaires are aligned with standards such as HIPAA, PCI DSS, and NIST 800-53, allowing UpGuard to identify compliance risks based on the responses. This capability provides a competitive edge for VRM and Third-Party Risk Management (TPRM) programs by streamlining compliance management, even during crucial vendor relationship phases like onboarding and offboarding.
Watch this video for an overview of how UpGuard’s compliance tracking feature monitors alignment with cybersecurity framework standards.
Related Reading: 11 Best Vendor Risk Management Software Solutions (2024 Edition)
SecurityScorecard
SecurityScorecard offers a Vendor Risk Assessment workflow through Atlas, a platform for exchanging vendor questionnaires and evidence to build vendor risk profiles. However, because the vendor risk monitoring and questionnaire automation modules are licensed separately, more streamlined data sharing between different stages of the vendor risk assessment process is needed. This fragmentation can compromise the accuracy of comprehensive vendor risk evaluations.
Inconsistent data sharing across risk assessment modules hampers the ability to fully understand a vendor's overall risk, which diminishes the effectiveness of a VRM tool in optimizing your Vendor Risk Management program.
Related Reading: SecurityScorecard VS. UpGuard: 2024 Comparison
Bitsight
Compared to SecurityScorecard, Bitsight offers a more complete vendor risk assessment workflow. Bitsight has introduced a vendor risk assessment module designed to adapt to the specific risk profiles of individual vendors. This tailored approach provides a more accurate assessment of vendor risks compared to the generic, one-size-fits-all strategies of less effective platforms.
Related Reading: Bitsight VS. UpGuard: 2024 Comparison
Best practices for automated vendor risk assessments
Implementing best practices for automated vendor risk assessments is crucial for maintaining a robust security posture. Here are three key strategies to ensure your program's effectiveness:
- Comprehensive framework: A comprehensive risk assessment framework is the cornerstone of effective vendor risk management. This framework should outline the criteria and processes for evaluating vendor risks, ensuring consistency and thoroughness.
- Vendor tiering: It is essential to update regularly and tier vendors based on their criticality to your operations. By categorizing vendors into tiers, you can prioritize assessments and allocate resources more effectively, focusing on those that pose the greatest risk.
- Automation and personnel: Utilizing a mix of automated tools and human oversight is crucial to balance efficiency and depth in your assessments. Automated tools can quickly analyze vast amounts of data and flag potential risks, while human expertise is needed to interpret complex issues and make informed decisions.
Combining these approaches allows for a more nuanced understanding of vendor risk exposure and vendor security posture, enhancing the overall effectiveness of an automated vendor risk assessment program.
Case studies and success stories
UpGuard has helped many organizations enhance their vendor risk management program through automated vendor risk assessment workflows and comprehensive solutions. Here’s what some UpGuard customers have said about the platform:
- Built Technologies: “UpGuard is phenomenal. We’re required to do an annual internal review of all third-party vendors. We have an ongoing continuous review with UpGuard through its automated scanning and security scoring system.”
- Tech Mahindra: “It becomes easy to monitor hundreds of vendors on the UpGuard platform with instant email notifications if the vendor’s score drops below the threshold set based on risk or business.”
- Open Xchange: “The management report from the UpGuard platform has been very useful during my quarterly reporting to the Executive team. They see it as a good external validation of how our organization is going and how we rank against our competitors.”
Start automating your vendor risk assessment program with UpGuard Trust Exchange
UpGuard Trust Exchange makes it easy for organizations to automate their vendor risk assessment program. Using Trust Exchange, your security team can answer security questionnaires in minutes, not weeks. Pricing: Entirely free.
