In a post-pandemic world, most businesses are online, and companies of different sizes assume more risk than ever. Any task completed in a virtual environment is vulnerable to a cyberattack.
Risk management refers to the process of identifying, assessing and managing threats to organisational capital and profit. These risks come from legal liabilities, technology issues, accidents, natural disasters, and more. A successful risk management programme allows a company to consider the full scope of risks it may experience. Furthermore, it examines the relationship between risks and the significant impact on a company’s strategic goals.
Risk is encountered within an organisation and extends to any other company providing products or services. The risk that can come from interacting online with manufacturers, suppliers, contractors and other vendors is actual and needs to be identified, followed and reduced continuously. This process is called Vendor Risk Management (VRM) or Third-Party Risk Management (TPRM) and has become essential to business operation.
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What is Vendor Risk Management (VRM)?
Vendor Risk Management (VRM) is a risk management discipline that ensures the use of service providers and Information Technology (IT) suppliers does not create the potential for business disruption or negatively impact its performance. It pinpoints and reduces risks associated with vendors and provides the organisation visibility into the vendors they work with, how they work with them, and have implemented adequate security measures.
VRM is rapidly evolving. Companies experience new security, privacy, compliance and business continuity challenges related to their vendors. In the current work-from-home climate, digital transformation is increasing dependence on vendors, making VRM a constant, board-level issue.
Why is VRM important?
Companies are outsourcing critical tasks to their vendors rapidly, bringing both risks and benefits with it. Working with a third party is often cost-effective and increases operational efficiency, but the organisation can be left vulnerable. Recent events – the most memorable being the COVID-19 pandemic – have highlighted vendor-related risks.
Here are some reasons why VRM is important:
- Hold vendors accountable to contracts
- Reduce spend
- Comply with global regulations and industry standards
- Understand data flow and accessibility
- Follow security controls and initiate efforts to reduce risk
- Offboard vendors and maintain compliance records
There is no one-size-fits-all approach to managing and mitigating risk – every organisation is different. Regardless of the type of VRM programme you have or do not have, XGRC Software can help you review your online vulnerabilities and begin planning for your future in which more data breaches from remote work can occur.