Vendor Risk Management in Projects

Most third-party risk teams I speak with face the same challenge: Small staff, large vendor portfolios. 💼 The data backs this up: - The average portfolio is ~286 vendors; most TPRM teams have fewer than 10 staff. - 94% of teams say they cannot assess all vendors due to a lack of time or resources. - Nearly 50% of companies admit they don’t even reassess all vendors periodically. - Assessment cycles average 37+ hours per week, with vendor responses dragging 12+ days and 84% needing follow-ups. So, how do you cover more risk without more people? Here are some simple recommendations: ✅ Tier ruthlessly – Auto-tier vendors into 4 levels; reserve full assessments + monitoring for Tier 1. ✅ Use what exists – Accept SOC 2, ISO, or SIG Lite when fresh instead of sending new questionnaires. ✅ Streamline questionnaires – Keep only two: Core and Lite, with “proof selector” options to reduce doc sprawl. ✅ Event-based reassessments – Trigger quick checks after major incidents or CVEs instead of annual reviews for all. ✅ Automate workflows – SLA boards, templates, and parallel legal/security reviews speed decisions. ✅ Blend capacity – In-house for critical vendors, managed services, or external reviewers for overflow. Six metrics to prove efficiency to your board: 1) Coverage – % of Tier 1–2 assessed & monitored 2) Cycle Time – intake → decision 3) Risk Impact – remediation in 30/60/90 days 4) Accepted Risk Backlog – trend line 5) Reviewer Hours – per completed assessment 6) Cost – per Tier 1 decision Bottom line: You don’t need to assess every vendor equally. Focus depth where it matters, streamline the rest, and measure results. #ThirdPartyRiskManagement #TPRM #VendorRisk #OperationalResilience #RiskManagement #CyberRisk #Governance #Compliance #Procurement #SupplyChainRisk

For most companies, third-party risk management means collecting SOC 2 reports, sending out security questionnaires, and checking a compliance box. But does any of that actually reduce risk? Not really. A vendor’s SOC 2 report won’t tell you if their misconfigured S3 bucket is exposing your data. Point-in-time reviews won’t catch real-world security failures. And if security is involved after the contract is signed, it’s already too late. 𝗥𝗲𝗮𝗹 𝘁𝗵𝗶𝗿𝗱-𝗽𝗮𝗿𝘁𝘆 𝗿𝗶𝘀𝗸 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝗺𝗲𝗮𝗻𝘀: - 𝗖𝗼𝗻𝘁𝗶𝗻𝘂𝗼𝘂𝘀 𝗺𝗼𝗻𝗶𝘁𝗼𝗿𝗶𝗻𝗴. Vendor security postures change. A vendor that was secure last quarter might now be leaking sensitive data due to a configuration mistake. Static reviews don’t cut it. - 𝗥𝗶𝘀𝗸-𝗯𝗮𝘀𝗲𝗱 𝗽𝗿𝗶𝗼𝗿𝗶𝘁𝗶𝘇𝗮𝘁𝗶𝗼𝗻. Not all vendors pose the same risk. The focus should be on who has access to sensitive data, critical infrastructure, or business operations—not just treating every vendor the same. - 𝗩𝗲𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻 𝗯𝗲𝘆𝗼𝗻𝗱 𝗽𝗮𝗽𝗲𝗿𝘄𝗼𝗿𝗸. Security reviews should go beyond compliance reports and validate actual security practices. If a vendor handles PHI or financial data, they need more than just a checkbox audit. - 𝗔𝗻 𝗲𝘅𝗶𝘁 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆. If a critical vendor suffers a breach, goes offline, or loses compliance standing, how fast can you pivot? Business continuity planning needs to factor in vendor failures. Third-party risk isn’t just a compliance issue—it’s an operational one. 𝗜𝗳 𝘆𝗼𝘂𝗿 𝘃𝗲𝗻𝗱𝗼𝗿 𝘀𝗲𝗰𝘂𝗿𝗶𝘁𝘆 𝗽𝗿𝗼𝗰𝗲𝘀𝘀 𝗶𝘀 𝗷𝘂𝘀𝘁 𝗰𝗼𝗹𝗹𝗲𝗰𝘁𝗶𝗻𝗴 𝗿𝗲𝗽𝗼𝗿𝘁𝘀, 𝘆𝗼𝘂’𝗿𝗲 𝗻𝗼𝘁 𝗺𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝗿𝗶𝘀𝗸—𝘆𝗼𝘂’𝗿𝗲 𝗷𝘂𝘀𝘁 𝗱𝗼𝗰𝘂𝗺𝗲𝗻𝘁𝗶𝗻𝗴 𝗶𝘁. #CyberSecurity #ThirdPartyRisk #CISO

Vendor risk isn’t just about the vendor... It’s also about the use case. You’re not assessing “the vendor” as a whole, you’re assessing the risk of that vendor AND the specific product or service you’re consuming. "Approving" a vendor ≠ approving ALL their products and services Just because a vendor "passed" your security review for one product or service doesn’t mean you can blindly adopt everything else they offer. Their CRM might be secure, but their AI analytics tool could be a compliance nightmare. Different use cases = different risk profiles A vendor handling marketing emails has much different security profiles than one storing sensitive customer data. Treating all services the same is a waste of time and money. Tier the vendors based on their access, location within your data flow, and criticality to your operations. I like 3 tiers. More on that in a future post. One assessment doesn’t last forever Risk isn’t static. If the vendor updates their product, expands their scope, is acquired, or moves to a new hosting provider, your original assessment is outdated. For bonus points, build this into your change management program. How to Fix It -Assess risk at the vendor + product/service level you're consuming, not just the vendor. -Define clear use case boundaries. What exactly are you using, where is the data flowing, what access do they have, and what’s the impact if something goes wrong? -Require reassessments for new services. Don’t assume past approvals cover new use cases. -Document compensating controls if security gaps exist and mitigate, don’t ignore. This saved my ass once. Stop treating vendor "approvals" like a golden ticket to consume everything they offer. Risk is contextual. Assess accordingly. #ciso #dpo #msp #riskmanagement

🛡️🏛️ The Hidden and Growing Risks of Third-Party AI Models 🏛️🛡️ ⚡Why Vendor's Model Validation is a Growing Concern? The Federal Reserve's SR 11-7 guidance mandates that financial institutions validate all models, whether built in-house or procured from 3rd party vendors. However, in practice, vendor model validation presents unique challenges for Model Risk Management (MRM) teams, particularly due to their "black box" nature. Many vendors restrict access to their AI models, citing intellectual property concerns. But is this truly about protecting proprietary technology, or is it an excuse to mask flaws and governance gaps? ⚠️ Lack of transparency leaves institutions unable to assess risks fully. ⚡The Growing Challenge with Generative AI (GenAI) Models GenAI models have exacerbated these challenges, with critical aspects often overlooked: 1️⃣ Assumptions & Limitations: Understanding foundational assumptions is crucial for assessing a model’s applicability and reliability. 2️⃣ Data Inputs & Parameters: Knowing input sources and parameter settings is key to evaluating robustness and relevance. 3️⃣ Explainability: Clear explanations of model design and analytics help stakeholders trust and effectively use the model. 👉 Open-source initiatives like Meta’s Llama 3 represent major steps toward transparency. By making model weights publicly available, Meta has enabled greater scrutiny, collaboration, and ultimately, more trustworthy AI. 💡 How Risk Teams Can Strengthen Vendor Model Validation? 🔹 Develop Specialized Expertise – AI model validation requires domain-specific knowledge. If in-house expertise is lacking, consider training teams or engaging third-party validators. 🔹 Enforce SR 11-7 Compliance in Vendor Contracts – Require transparency on model components, design, intended use, assumptions, and limitations to ensure alignment with risk policies. 🔹 Document Model Use – Maintain internal documentation covering inputs, outputs, key assumptions, and vendor-provided details to support audits and compliance. 🔹 Validate Independently – Review vendor testing results and conduct additional testing where feasible to verify performance and identify risks. 🔹 Assess Data Sources – Scrutinize input data quality, completeness, and appropriateness, particularly for LLMs, to mitigate data transparency and copyright concerns. 💡 Final Thoughts The financial industry is undergoing a transformative period with the rapid adoption of AI models, driven by promises of efficiency gains. However, this progression must align with robust governance standards. ⚠️ Major commercial vendors often prioritize performance, sometimes at the expense of transparency and comprehensive real-world testing. 👉 It is incumbent upon risk teams to implement appropriate guardrails and advocate for a more transparent and open approach to model validation, ensuring that innovation does not compromise integrity and reliability.

🚨 #DORA #Compliance & Third-Party Risk: Are You Ready? 🚨 Financial institutions are facing a new era of operational resilience with the Digital Operational Resilience Act (DORA) being effective since January. One of the biggest challenges? Managing third-party vendors in a way that aligns with these stringent requirements. 🔍 Why does this matter? DORA makes it clear: Your vendors are an extension of your operational risk and their failures can become yours. That means financial organizations must step up their Third-Party Risk Management (TPRM) game to ensure compliance. Here’s how to get ahead of the curve: 1️⃣ Centralize Vendor Risk Management – Map out all third-party relationships and continuously monitor their risk profiles. 2️⃣ Go Beyond Initial Due Diligence – Ongoing risk assessments are key. DORA mandates that vendors’ resilience capabilities be regularly tested and reviewed. 3️⃣ Establish Incident Reporting Protocols – Ensure third parties have clear procedures for reporting cyber incidents in real time to minimize damage. 4️⃣ Include DORA-Specific Clauses in Contracts – Ensure outsourcing agreements reflect the regulatory obligations placed on your organization. 5️⃣ Stress Test Your Vendors – Don’t just take their word for it - run simulations to assess their operational resilience in real-world scenarios. 🚀 Proactive compliance is the best compliance. Now is the time to strengthen your vendor risk management framework and ensure resilience across your entire digital supply chain.

So you’re part of the #GRC team at a mid-sized financial services company. One morning, you’re alerted that a key third-party vendor handling customer payment data has experienced a cyberattack. The vendor notifies your organization that an unauthorized individual accessed their systems, potentially exposing customer data. You need to step in immediately.. • Your first step is activating your Third-Party Incident Response Plan. Contact the vendor to get detailed information about the breach—when it occurred, what data was accessed, and whether the breach has been contained. This is where clear contractual agreements, including breach notification requirements, pay off. • Assess the Impact— Collaborate with internal teams to assess how this breach affects your organization. Did the vendor handle sensitive customer data? Were encryption or access controls in place? Document the details and escalate to leadership. • Stakeholder Communication— Work with legal and PR teams to prepare internal and external communication. Internally, brief senior management and customer support teams. Externally, notify regulators and customers if necessary, as required by laws like GDPR, CCPA, or PCI DSS. • Mitigation Efforts— Partner with IT and risk teams to prevent further exposure. This may include temporarily suspending vendor access, conducting enhanced monitoring, or requiring immediate remediation steps from the vendor. • Once the situation is contained, conduct a full review of the vendor relationship. Did they meet the agreed-upon security standards? Were there gaps in their controls? Use this as an opportunity to update your Third-Party Risk Management process. Key— 1. Always have a Third-Party Incident Response Plan ready. 2. Ensure vendor contracts include clear breach notification and remediation requirements. 3. Regularly audit vendor compliance with security frameworks like ISO 27001 or SOC 2. Read about Third-Party Risk Management: https://lnkd.in/emBzCRMW

Third-Party Risk: The Hidden Cybersecurity Battlefield in Modern Supply Chains In our interconnected digital ecosystem, your security posture is only as strong as your weakest vendor. Modern enterprises rely on 100s of third-party vendors, creating an exponentially expanding attack surface. Supply chain attacks have become the preferred vector for sophisticated threat actors. Instead of targeting well-defended enterprises directly, attackers exploit vulnerabilities in trusted vendors to simultaneously breach hundreds of downstream organizations. Game-Changing Examples SolarWinds (2020): Compromised software updates affected 18,000+ customers including Fortune 500 companies and government agencies, demonstrating how a single vendor breach cascades across entire sectors. MOVEit (2023): A single vulnerability led to data breaches affecting over 600 organizations globally, showcasing the massive scale of modern supply chain impacts. Why Third-Party Risk Monitoring is Critical Continuous Visibility: Traditional annual assessments are insufficient. Organizations need real-time monitoring of vendor security posture, breach notifications, and compliance status changes. Risk Amplification: When attackers target managed service providers or software vendors, the impact multiplies across all their clients. One compromised vendor can expose thousands of organizations simultaneously. Regulatory Liability: With GDPR, CCPA, and emerging supply chain regulations, organizations face increasing liability for third-party security failures. Proactive monitoring demonstrates due diligence. Building Effective Defense Continuous Assessment: Implement real-time vendor risk scoring across your entire ecosystem Zero Trust Extension: Apply least-privilege access controls to all third-party connections Incident Response Integration: Ensure your IR plans account for vendor breaches with clear communication protocols Contractual Protection: Update vendor agreements with security requirements and liability provisions The Bottom Line Organizations can no longer treat vendor risk as procurement afterthought. The question isn't whether your supply chain will be targeted — it's whether you'll detect and respond effectively when it happens. The strongest security programs extend beyond organizational boundaries to create defensible ecosystems, not just defensible enterprises. #ThirdPartyRisk #TRPM #SupplyChainAttack #CyberSecurity

A cybersecurity program should be well rounded and needs strong components, one of which is a Third-Party Vendor Cyber Risk Assessment program. I believe there will be regulatory push for this moving forward so adopting this practice is beneficial sooner rather than later. Organizations within critical infrastructure—such as energy, healthcare, finance, and transportation—are increasingly vulnerable to cyber threats due to the interconnected nature of modern supply chains. Third-party vendors often have direct access to sensitive data and critical systems, making them a significant cybersecurity risk. A single breach through a compromised vendor can lead to operational disruptions, data theft, regulatory penalties, and even national security threats. To mitigate these risks, organizations must implement rigorous third-party vendor cyber risk assessments as part of their cybersecurity strategy. These assessments help ensure compliance with regulatory frameworks (such as NIST, ISO 27001, CIS and CISA guidelines), protect sensitive data, and strengthen operational resilience against supply chain attacks. Key components of a robust vendor risk assessment include: Vendor Risk Profiling: Identifying vendors with access to critical systems. Security Policy & Compliance Review: Ensuring adherence to cybersecurity standards. Access Controls & Data Protection: Enforcing least privilege access and encryption. Incident Response & Recovery Readiness: Evaluating vendors’ breach response capabilities. Continuous Monitoring & Penetration Testing: Regularly assessing vulnerabilities and security posture. Contractual Security Requirements: Embedding cybersecurity obligations in vendor agreements. To strengthen third-party risk management, organizations should adopt a risk-based approach, enforce Zero Trust principles, require real-time security monitoring, and conduct regular cybersecurity exercises. Cyber threats are escalating, and organizations can no longer afford to overlook vendor risks. A proactive cybersecurity strategy that includes thorough third-party risk assessments is essential for safeguarding critical infrastructure, ensuring regulatory compliance, and maintaining national security.