If your organization is like most, you utilize the services of third-party vendors to assist you with any number of critical tasks. A carefully vetted contractor is invaluable because of their expertise as well as their compliance to industry standards.

However, even the most reputable businesses can possess vulnerabilities that could ultimately affect your cybersecurity and the integrity and confidentiality of your data and infrastructure. For that reason, you need to create, implement and monitor an ongoing vendor management policy.

The Purpose of a Third Party Vendor Management Policy

Hackers will exploit any potential weaknesses in your system, and vendors pose a huge risk, partly because many information technology specialists underestimate or overlook the dangers they can pose. When you have an effective vendor management policy and procedures in place, you will be fully aware of all vendors that have relationships with your organization, which of those jeopardize your information systems and actionable measures you can take to reduce the chances that you will be vulnerable.

Best Practices For Creating A Vendor Risk Management Policy

Establishing clear protocols that all stakeholders understand is vital if you want to institute controls on third-party contractors that actually protect your network and software resources from potential attack. Your plan should include the following requirements:

Fully evaluate vendors. Writing up a vendor management policy template can help you to ensure that results are thorough. It should cover questions such as what the contractor will do if their products stop working or need patches, if they conduct an annual SOC 2 certification and penetration tests and how the services the vendor provides will fit into your organization’s goals and objectives.
Have a backup or failover plan. Should the worst happen and the vendor’s products break down, you should have a Plan B in place. This process requires that you understand exactly what the effects of the failure will be, plan for redundancies if your primary solutions go down, create a response strategy to be discussed with staff and set up a template that can be used to communicate service updates with customers during the crisis.
Delegate vendor management tasks either internally within your office or to an outsourced professional. Regardless of who performs this function, they should be responsible for evaluating business needs and selecting the vendors who are most likely to meet or exceed the company’s requirements.
Demand high standards from all third-party entities. Before signing a new contract or renewing an existing one, it is crucial that service providers are given clear and measurable security benchmarks that they are mandated to meet. If all standards, responsibilities and consequences of noncompliance are spelled out in the agreement, expectations will be clear, and you are more likely to receive the high-quality services that you and your customers require.

Elements in Vendor Management Policy Examples

Of course, the main players will be the ones to sign the contract, but your company’s vendor relationships have ramifications for all of your employees and departments, including security, legal support, procurement and risk management.

Development and implementation of a robust vendor management policy ensures that the lines of communication remain open among all of the affected entities so that expectations and related requirements are crystal clear to everyone.

To that end, your policy should contain the following:

Definitions of requirements in areas such as security of data, networks, systems and human resources;
Controls concerning who has access to specific systems; fourth-party vendor management (how your vendors manage their subcontractors); incident management; disaster mitigation and recovery; and compliance.
Perform classification and categorization of vendors according to their anticipated risk level. To do this, ask questions such as how critical their services are, what access do they have to your confidential public and private information/data, how much you spend to hire them, how long they have worked for you and if there are any personal relationships that might complicate the situation or add risks.
Spell out your vendor management process in writing, distributing it far and wide to all related parties. This includes your internal security team and other staff and any third-party service providers with whom you have contracts. Within the source documentation, specify how often a regular review will take place, what benchmarks it will cover, any relevant maintenance or training schedules, strategies for addressing breaches and other critical concerns.

Some of the most common types of security breaches happen because of third-party vendors. While no program, platform or management procedure is perfect, doing the work to construct and communicate your company’s vendor policies can go a long way toward minimizing your risk.