In this day and age, companies thrive by relying upon the help of others, whether they’re suppliers, partners, or third-party vendors. However, regardless of how important they are to your business, they can still bring some risks to you, which is mostly inevitable. The only way to deal with it is to reduce the probability of those risks or make arrangements to counter them. This is done through vendor risk management and assessment.
By mitigating the potential risks of your vendors, you are protecting your business from any costly consequences. This requires time and extreme care, so you better be prepared for it. This simple guide should give you an idea of what vendor risk assessment is and how you can proceed with it.
What are Vendor Risk Assessments?
Vendor risk assessment is the process of identifying and evaluating potential risks and hazards associated with a vendor’s operations and products. This also includes the potential impact those products have on your organisation. An assessment is done to see if a supplier or vendor is fit to become a business partner. This is especially important if your vendor is about to handle one or more core business functions and interact directly with your customers.
Why are Vendor Risk Assessments Important?
Before you can start managing your vendor, an assessment is needed to determine just how much risk a potential vendor may bring to your business. This is also a regulatory requirement for most industries. Australian regulators require companies to acknowledge that there is an inherent, additional risk associated with a third party vendor. These assessments should be done on each vendor as well as on every product or service they provide to give you a full view of all possible risks.
Risks can come in any form. They could be the vendor’s cybersecurity or disaster business continuity planning. Based on your assessment, if the vendor poses a significant risk in these areas, you need to talk to your vendor to see if they can take action to improve some of those areas.
What are the Benefits of Vendor Risk Assessments?
There are several benefits to assessing any third-party vendor. Aside from compliance with regulatory requirements, it also gives your company a layer of protection by making sure that you’re working with vendors that are professionals and will do anything to cause harm to your organisation. Some of the known benefits of risk assessments include:
- Giving you more time to focus on other core business functions
- Expands the availability of your services
- Creating better and more strategic partnerships
- Protecting your business from risks associated with your vendors and their products/services
- Cultivating a safer, more efficient, and productive work environment
- Increasing your operational and financial efficiency
- Improving vendor acquisition strategy
Being in partnership with a vendor can deliver great value to your business. However, it also has the potential to expose your company to all forms of risk. That’s why vendor risk assessments are important and necessary whenever you plan to work with a vendor. This guide just shows how vital it is to evaluate all those potential risks so you and your vendors can start a fruitful and risk-free partnership.
Rabbon is a leading cyber security consulting firm helping organisations become cyber resilient and protected from digital threats. With our enterprise solutions, cloud security services, and vendor risk assessment, you can finally have some peace of mind for your company and not worry about how you can bolster your defences against outside threats. Get the protection you need by speaking to one of our analysts today.
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Rabbon is a Cybersecurity company based with offices in Sydney and Melbourne. We lead a team of Cyber Security Consultants and GRC Consultants, who help organisations become cyber resilient by providing access to effective and affordable cybersecurity services. We believe that “Cybersecurity is for everyone“
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