What is a Vendor Risk Assessment?
A vendor risk assessment is the process of screening and evaluating third party suppliers as potential business partners. It aims to identify risks and hazards associated with the vendor’s processes and products and determine if they are fit and qualified with the requirements set by the organization.
What is a Vendor Risk Assessment Checklist?
A vendor risk assessment checklist is a tool used by procurement officers to assure vendor compliance with regulatory requirements such as data privacy, due diligence and security risks. It is a crucial process in vendor management which helps to scrutinize product cost, service delivery, and software demonstrations.
This article briefly discusses: (1) crucial elements to check during vendor risk assessment, (2) technology for conducting vendor risk assessments, and (3) digital vendor risk assessment templates you can use for free.
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Top 3 Crucial Elements to Check During Vendor Risk Assessments
A vendor risk assessment is vital in the process of choosing appropriate partners that adhere to organizational needs. It helps evaluate a vendor’s portfolio and identify red flags, their likelihood, and risk level.
Failure to conduct vendor risk assessments can damage the organization’s reputation and cause other adverse effects such as regulatory sanctions, financial losses, and business closures. These incidents can be avoided by checking the following crucial elements when performing vendor risk assessments:
It is important to conduct a background check to ensure vendors can produce and maintain a high-quality standard without causing any risk to both the company and its customers. A vendor’s reliability and accuracy to produce the expected output should be gauged to avoid financial loss and hindrances to business operations. It is also helpful to check feedback, reviews, and press releases from vendor’s previous clients to determine vendor credibility.
Security and Privacy
This will determine how a vendor handles confidential information and asset management and what security controls they have in place in case of threats, vulnerabilities, and other security breaches that put data at risk. Evaluate effectiveness of incident, environmental, organizational and human resource security to check vendor’s compliance with the organization’s policies and other relevant regulations.
Data Handling and Disaster Recovery
This evaluates how a vendor manages data documentation and disaster plans throughout the project cycle. This will identify vendor’s preparation and remediation plans in case of unexpected incidents such as accidents, disasters, and data loss. Functionality of retrieval processes, access controls, and backup plans is expected as part of the overall recovery plan.
Technology for Conducting Vendor Risk Assessments
Continuous vendor review is necessary to ensure a safe and secure organization. Conducting vendor risk assessments with pen and paper is time consuming and requires duplicate work to re-enter gathered data for report creation, not to mention the extra task of handing these reports over to supervisors or project managers.
Using a mobile inspection app like iAuditor can help you streamline your vendor risk assessment process. Generate vendor risk assessment reports instantly on your handheld device and easily access them online. Save time on paperwork so you can spend more time analyzing vendors compliance with risk management and due diligence protocols.
Try iAuditor Vendor Risk Assessment App for Free
The Best Vendor Risk Assessment Templates
This vendor risk assessment template is used to compare and evaluate different vendors. It is categorized according to predefined set of organizational criteria but it is highly customizable to fit your business needs. This template is used by officer in charge to perform the following:
- Identify the vendor to be assessed;
- Evaluate the vendor based on credibility, security, data handling, and disaster recovery;
- Identify the overall risk assessment;
- Document observations and recommendations; and
- Sign off with recommended vendor and digital signature to validate the inspection.
✓ You can also upgrade to premium subscription for easy analysis through analytics dashboard.
This basic vendor risk assessment form is used by competent person to identify, assess and control risk/ hazards in the workplace. Add the organizational standards and evaluate the risk rating. We have provided a risk matrix guide as your reference to define the level of risk by considering the category of likelihood against consequences.