How to Automate Vendor Risk Assessment

87% of organizations have had a disruptive incident with a third-party vendor in the last 36 months. Nearly 1 in 3 faced a major disruption.

This is happening for two reasons. First, organizations are working with more vendors. Second, vendors are involved in more processes, systems, and data. This exposes organizations to more risk than before.

With this in mind, it’s important to assess vendor risks; automatically, where possible. This helps prevent risks at scale, even with complex vendor relationships and growing security threats.

To help you, this page offers a comprehensive guide to automating vendor risk assessment. We’ll cover the benefits of automated vendor risk assessment, how you can automate vendor risk assessment, and more.

Key Takeaways

In vendor risk assessment, automation reduces manual efforts and increases security
Advanced analytics in automated solutions allow for more informed decision-making and risk mitigation
Real-time monitoring and analysis with automation can help protect your organization against threats
Automated security questionnaires are a powerful line of defence against cyber security threats

What is Automated Vendor Risk Assessment

An important part of your cybersecurity risk management strategy is managing third-party vendors. Automated Vendor Risk Assessment (AVRA) is the use of technology and data-driven processes to limit the risks associated with them.

With AVRA, you can reduce the time and effort needed to evaluate your vendors. Automations and AI can collect relevant data, analyze it, and present the results in a simple format. This way, AVRA allows you to make informed decisions about the risks associated with each vendor.

The most accessible way to automate is with automated security questionnaires like the one we offer at Securequest.io. With our software, vendors can use AI to automatically answer questions that reveal risk exposure, security posture, and more.

This helps speed up sales cycles and keeps businesses safe. We believe it is so important that we made it easy to use our software for free!

Other tools and algorithms can help you identify and prioritize potential risks in different ways. They can also help you continuously monitor vendor performance. This approach offers several benefits over traditional manual methods, including:

Increased Accuracy: Automated risk assessments provide more accurate results by reducing the potential for human errors and biases.
Scalability: Automation allows you to handle an increasing number of vendors without losing quality or accuracy.
Faster Decision-making: Real-time data analytics allow you to make quicker, informed decisions based on live information.

AVRA lets you find more risks while focusing on strategic risk management activities. Examples of the latter include developing risk mitigation plans and engaging in vendor due diligence. This can make your vendor management more effective.

Benefits of Automated Vendor Risk Assessments

There are several main benefits to automating the vendor risk assessment process.

First, it can streamline workflows. Second, it can make assessments more accurate. Third, it makes human mistakes less likely. Automation can save time for businesses and protect you from security issues, such as data breaches.

Take In More Information

An automated vendor risk assessment helps your business collect and analyze information at scale. This will help your organization assess more information from more vendors faster. By automating this process, you can still see individual vendor risk profiles without manually collecting data.

Streamlining Manual Processes

By automating vendor risk assessments, you can make your workflows more efficient. AVRA eliminates manual, time-consuming tasks and reduces human errors. As a result, your organization can focus more on improving overall performance with strategic initiatives.

Improved Security Posture and Compliance Requirements

An AVRA solution continuously monitors your vendors' security posture. This ensures they stick to relevant compliance requirements (such as ISO and NIST frameworks). By doing so, you can identify and address potential security risks. You can also improve your organization's information security and simplify audit and governance processes.

Reduced Reputational Risks

Using AVRA safeguards your company’s reputation by preventing data breaches linked to third-party vendors. You can continuously monitor security ratings, privacy protocols, and cybersecurity risk profiles. This lets your customers and partners have more confidence in your company.

Better Risk Mitigation and Control Practices

Using automation enables you to mitigate risks and control practices in your organization. It will also help you identify, assess, and monitor your vendors’ risks. This means improved overall security for you.

6 Steps to an Automated Vendor Risk Management Program

Below, we delve into the core steps of an automated vendor risk management program. As you continue reading, you'll gain insights into creating a scalable risk assessment workflow, the importance of validating vendor responses, and the value of centralizing collaboration between vendors and internal stakeholders. Let's navigate these crucial elements together to bolster your organization's risk management strategy. Read on.

Develop a Scalable, Efficient Risk Assessment Workflow

An effective vendor risk management program will need to be scalable and efficient. Start by identifying the various stages of the vendor lifecycle. This includes vendor onboarding, ongoing monitoring, and termination.

Then, design processes to streamline each stage. Incorporate automation wherever possible to create an efficient, risk-free operation.

Next, determine criteria to assess the risks that vendors pose to your organization. Focus on factors such as business continuity, financial health, and security controls. Prioritize the most significant threats so you can direct resources towards high-risk vendors.

A common example of this step in practice is as follows. Most organizations find that questionnaires are a simple-but-efficient way to discover and assess vendor risks. Using in-house code or a solution like Securequest helps automate responses to the same.

This means that vendors can answer questionnaires quickly - and their partners can get intel just as quickly.

Validate Vendor Responses to Security Questionnaires

It is critical to verify how accurate vendor responses to security questionnaires are. Use a centralized platform to collect responses to security questionnaires and vendor assessment questionnaires.

Afterwards, analyze responses, identify gaps or inconsistencies, and flag risks that need investigation. This will help you maintain a robust risk management strategy.

Use standardized questionnaires so vendor responses align with your security requirements. Additionally, customize questionnaires to encompass unique business concerns or industry-specific risks.

Once you have gotten good at validating vendor responses, automate validation. You can start with basic automations using tools like Zapier and Make, and eventually consider a tailor-made app for internal use.

Collaborate with Vendors and Internal Stakeholders - In One Place

Collaborate closely with your organization's internal stakeholders and vendor partners. Communicate and document information in a single, centralized platform. This will streamline the exchange of information and foster transparency.

By establishing a collaboration space, all parties can monitor progress and address concerns. This will enhance the efficiency of risk assessment processes and ensure that your enterprise can mitigate vendor-related risks.

When NOT to Automate Vendor Risk Assessment

Automated Vendor Risk Assessment (AVRA) revolutionizes risk management by streamlining processes and enhancing accuracy. At the same time, it's crucial to acknowledge its limitations.

There are instances when human intuition, expertise, and judgment surpass automated tools. Here's when you might consider a more hands-on approach:

Unique Vendor Relationships

Automation excels in standard scenarios. However, for vendors with intricate arrangements or non-standard agreements, consider a personalized review. This helps you grasp the full scope of the relationship using tests you don’t need to automate at scale.

In instances like these, automated questionnaires are useful. Fully automated validation and evaluation of vendors is likely not.

Nuanced Judgments

Automation is data-driven, but some situations demand context and interpretation only humans can provide. When nuanced judgments are required, human communication can uncover insights about vendor's intent, commitment, and future plans.

Rapidly Changing Environments

In volatile sectors or circumstances, vendor landscapes shift frequently. Continuous human monitoring might offer more agile responses.

In Summary…

Automated Vendor Risk Assessment (AVRA) serves as a cornerstone in modern cybersecurity risk management. It’s especially key when handling third-party vendors.

By leveraging technology, AVRA reduces the time and manpower traditionally needed. It helps keep companies safe with increased accuracy, scalability, and speed.

While the automation of risk assessments can streamline workflows and improve security, it isn't a panacea. There are nuanced scenarios, such as complex vendor relationships and rapidly changing environments. Here, human judgment and direct interaction prove irreplaceable.

Remember the value of a balanced, hybrid approach. It's not about choosing between automation and manual oversight. It’s about integrating them for a comprehensive, adaptable vendor risk management strategy.

Automate Your VRM with Securequest's Automated Questionnaires

If you’re a buyer, you need a comprehensive and systematic approach to managing vendor risk. And if you’re a vendor, you need a quick way to answer questionnaires during the sales process.

Enter Securequest. We help automate security questionnaires to streamline assessments. We help gather essential information related to vendors’ security posture. This helps reveal potential risks and areas of improvement quickly and easily. It also helps understand if a vendor is qualified to work with a buyer or not.

Perhaps most importantly, Securequest helps vendors shave off hours and days off their workflows. It also delivers automated reports, offers valuable analytics and insights, and comes with a suite of integrations.

Book a free demo to learn more and start automating vendor risk assessment today!

Frequently Asked Questions

What are the key steps to automating third-party risk management?

To automate third-party risk management, follow these key steps:

Define your criteria: Establish the key risk factors you want to assess. Then choose the desired level of automation that makes sense to you.
Select an appropriate tool: Choose a reliable platform that fits your needs and budget.
Integrate with existing systems: Ensure the tool integrates with your current IT infrastructure. Confirm it facilitates seamless data exchange and collaboration.
Customize assessments: Configure the tool to reflect your specific risk assessment criteria and processes.
Monitor and adjust: Continuously monitor vendor risk data and adjust your automated workflows as needed to improve efficiency and effectiveness.

How can automation improve the efficiency of vendor risk assessments?

Automation can lead to significant improvements in vendor risk assessment efficiency by:

Streamlining data collection and eliminating manual processes.
Standardizing risk assessments, ensuring consistent application of evaluation criteria.
Facilitating real-time monitoring and analysis of vendor risk data.
Automating risk scoring and prioritization, allowing for faster decision-making.
Reducing the time and resources required for manual risk assessment and mitigation activities.

What are the challenges in automating vendor risk assessments?

Despite the benefits, automating vendor risk assessments can present challenges, such as:

Integration difficulties with existing systems, requiring considerable time and resources to synchronize tools and platforms.
Resistance from stakeholders who are familiar with manual processes and reluctant to embrace change.
Over-reliance on automated systems, leading to complacency in risk management practices.
Maintaining data privacy and security when sharing information with third-party tools and platforms.
Ensuring the selected tools and solutions continually adapt to evolving regulatory requirements and best practices.

How to integrate automation in existing vendor risk management processes?

To integrate automation in your existing vendor risk management processes:

Identify the specific areas within your processes where automation can provide the greatest improvements.
Choose a suitable vendor risk assessment tool that aligns with your organization's requirements and can integrate with your existing systems.
Work closely with your IT team and tool provider to ensure a smooth implementation and seamless data exchange.
Train your staff to effectively use the new tool and incorporate it into their existing workflow.
Continuously monitor the performance of the automated solution, making adjustments and improvements as necessary.

Which metrics and indicators should be considered in automated vendor risk assessments?

Consider including the following metrics and indicators in your automated vendor risk assessments:

Financial stability: Financial metrics such as revenue, net income, and credit ratings can help determine a vendor's financial health.
Operational performance: Indicators like delivery time, product quality, and service level agreements provide insight into a vendor's ability to meet your expectations.
Compliance with standards and regulations: Assess the vendor's adherence to relevant industry standards, data protection regulations, and other compliance requirements.
Security posture: Evaluate the vendor's cybersecurity measures, incident management processes, and vulnerability management practices.
Reputational risk: Assess the vendor's reputation in the market, including any customer reviews, reported incidents, or negative news articles.