In today’s corporate world, third-party vendors play a major role, with around 60% of organizations working with more than 1000 third parties, according to a study conducted in 2019 by Gartner. 

However, vendors represent a cybersecurity threat as well due to them having access to a plethora of information and sensitive data across the supply chain. As a result of this threat, the organization can be at risk, and so there is an urgent need for every company to implement a robust third-party cyber risk management framework.

What is a vendor cyber risk management framework?

A vendor cyber risk management framework outlines the processes and procedures that have to be followed to manage and mitigate cyber risk from third-party vendors.

A framework is developed before any vendor risk management (VRM) technologies or tools are put in place.

Below are some of the best methods and resources required to implement a framework that best suits your organization:

1. Leverage existing third-party cyber risk management frameworks

Fortunately, there are a variety of public resources that can help develop your cybersecurity framework, such as: 

• Deloitte’s capability maturity model, which provides a valuable roadmap for your program.
• The National Institute of Standards and Technology (NIST)’s Cybersecurity Framework, which laid the groundwork for cybersecurity regulations.
• The ISO 27001 certification. The international standard used to validate a cybersecurity program.
• The Fair Institute Methodology provides a model which uses simple and easy-to-understand ways to assess risk. 

With such a wealth of framework options at your disposal, it becomes unnecessary to create your own.

2. Factor compliance into your framework

There is also an element of compliance that must be factored into your framework as some sectors are subject to strict regulations involving third-party cybersecurity risk management.

Certain exceptions must also be identified for industries that classify vendors by the level of risks, such as high, medium, and low-risk third parties. In this case, separate policies and procedures must be incorporated into the framework to address the parties according to their risk.

3. Take an iterative approach 

Your framework should consider the changeable nature of third-party relationships.

Usually, frameworks focus on a certain time period, for example, a pre-contract due diligence phase. This approach fails to account for risks that arise due to changes in scope, personnel, or strategy.

To avoid this issue, policies and processes should be in place which allow for a seamless way to observe and manage risk over the course of the vendor relationship. A data-driven methodology is recommended by Gartner to identify risks for factors such as due diligence by using aspects like security ratings.

4. Don’t go framework crazy

Frameworks provide valuable insight into the various cyber risks you seek to address; however, it is important not to overuse them. Having too many layers in your framework will render them difficult to administer and implement, especially if your business is decentralized and depends on multiple teams to operate them.

A well-structured vendor cyber risk management framework is sure to provide a crucial starting point that integrates both security and risk management in your vendor relationships. By having a guiding framework, you will become aware of your greatest security risks and take protective measures to mitigate those risks for the long-term.