Vendor Risk Assessment

What is a vendor risk assessment?

A vendor risk assessment is an evaluation of the cyber risk associated with or posed by an organization’s relationship with a vendor, supplier, service provider, or partner.

What are the benefits of vendor risk assessments?

As the business world grapples with seismic changes and digital transformation in IT environments and how employees work, companies must pay close attention to how they manage third-party risk. Businesses are bringing on vendors faster than ever before, yet third-party risk management (TPRM) teams are under tremendous pressure to do more with less. Streamlining vendor risk assessments can help onboard third parties more efficiently while continuing to monitor and mitigate risk.

Assessing risk associated with individual vendors is an essential part of managing risk within the vendor portfolio and strengthening an organization’s security posture. By understanding the level of risk that each potential vendor represents, organizations can more easily mitigate risk when selecting and onboarding new vendors. Risk assessments also enable risk teams to identify which vendors require help to remediate cyber risk, and which vendors should be assessed more frequently.

How to conduct an efficient vendor risk assessment

Your IT vendor risk management program must balance two competing priorities: the need to onboard new vendors quickly and the need to protect your organization from risk originating in third parties. A more efficient and effective vendor risk assessment process can help to achieve both objectives. Here’s how to accomplish this in three essential steps.

1. Identify a risk threshold

Begin by identifying the level of risk you’re willing to accept for each vendor.For instance, a vendor who handles highly sensitive company data and operations – such as a payroll provider or cloud service provider – may need to be held to a higher cybersecurity (and risk evaluation) standard, requiring a more extensive or more frequent risk evaluation. One of the most effective ways of determining risk thresholds is with Bitsight Security Ratings, which provide a trusted, data-driven view of a vendor’s security performance. Ratings range from 250 to 900 and are updated daily to provide unprecedented visibility into a vendor’s security posture.

Use these insights to establish acceptable risk thresholds for vendors in each tier and develop language, such as cybersecurity SLAs, to ensure they meet these thresholds. By tiering vendors into groups based on their risk and criticality to your business, you can perform more efficient vendor risk assessments and focus resources where they’re needed most.

2. Ask the right questions

During a vendor risk assessment, some questions are more critical than others. Your baseline set of questions should ideally be based on industry-standard security assessment methodologies such as the NIST Framework and the CIS Critical Security Controls. The most important questions should touch on key governance and structural issues, such as how each vendor protects customer information, whether they outsource IT or security functions, and how cyber incidents are reported. Other critical questions should provide insight into a vendor’s cybersecurity controls and technology, such as how they manage access privileges, how they monitor remote connections, and how they prevent data exfiltration of sensitive customer information.

To help you develop a baseline set of questions, we’ve compiled a list of the 40 Questions You Should Have in Your Vendor Security Assessment.

3. Trust, but validate

Although risk assessment questionnaires are a best practice in vendor risk assessment, they represent a point-in-time understanding of cyber risk and can’t quickly reveal changes in security posture. They also rely on the vendor’s self-reporting cybersecurity updates, which can sometimes be inaccurate or unclear.

Rather than taking vendors at their word, your risk teams can use transparent Bitsight Security Ratings to quickly validate each response in a vendor questionnaire, as well as gain historical context into responses. Bitsight cybersecurity data can also help your teams investigate risky areas of your vendor’s digital infrastructure, such as malware infections or their history of cyber incidents. You can also share Bitsight’s findings with your vendors so that you can work together to reduce risk.

Remove inefficiencies in your vendor risk assessment program

Vendor risk assessment is a top priority for your organization. But are there parts of your program that you are having a hard time adjusting to meet new needs? Are you following processes the way you are because they’re proven to be the best, or because that’s just how they’ve always been done? Download our guide to learn about three ways in which you can increase third-party risk management efficiency.

Bitsight for Third-Party Risk Management

Built on Bitsight’s industry-leading cybersecurity data and analytics, Bitsight for Third-Party Risk Management (TPRM) simplifies and facilitates vendor risk assessments to better align third-party security controls with risk tolerance and organizational objectives.

Validate vendor security performance

Whether you’re assessing a new or existing vendor, Bitsight for TPRM lets you quickly and confidently ensure that vendors are within your organization’s risk tolerance. Bitsight’s cybersecurity data makes it easy to compare the level of inherent risk with a third party’s security rating to best prioritize assessments and mitigation efforts. Vendor risk managers can utilize objective data aligned to standard and custom questionnaires to quickly identify red flags indicative of cyber risk.

Monitor third parties continuously

Bitsight enables you to continuously monitor the security posture of vendors to track changes, prioritize responses, and drive more effective risk reduction through proactive, evidence-based collaboration. Bitsight also enables greater visibility of fourth-party networks with tools for automatic discovery for your entire expansive attack surface.

Communicate risk effectively

With Bitsight, you can deliver compelling reports that demonstrate the effectiveness of your vendor risk assessment process. Using the industry’s most extensive security domain coverage, you can share a historical perspective of the performance of third-party controls as well as a predictive view of the likelihood of a breach. Easy-to-use data analytics and cybersecurity reporting reveal vendor performance and trends across your portfolio, instilling confidence in your TPRM program among stakeholders and board members.

How Bitsight Ratings improve vendor risk assessment

Bitsight Security Ratings offer a comprehensive, outside-in view of a vendor’s overall cybersecurity posture. Security ratings range from 250 to 900, with higher ratings correlating to better overall security performance.

Rather than relying on traditional techniques like penetration testing, on-site visits, or vendor risk management questionnaires, Bitsight Security Ratings are derived from objective, externally verifiable information and require no input or participation from rated entities.

To develop ratings, Bitsight leverages cybersecurity analytics data from 120 sources around the world, mapping data points to individual organizations. The data on which ratings are based falls into four categories: evidence of compromised systems, security diligence, user behavior, and public disclosures of data breaches. Bitsight weights this data according to the risk it presents and uses a proprietary algorithm to calculate a rating.

Research shows that Bitsight Security Ratings correlate to data breaches and offer insight into the vulnerabilities within an organization and its third-party vendors. For example, the likelihood of a cybersecurity attack in companies with a Bitsight Security Rating of 500 or lower is nearly 5 times greater than in companies with a rating of 700 or higher.

Bitsight ratings offer an instant evaluation of an organization’s cybersecurity performance management programs. When used for vendor risk assessment, Bitsight ratings provide a tool to continuously monitor the security posture of vendors and make it easier to track a company’s performance over time.

Why trust Bitsight?

Bitsight is trusted by some of the world’s largest organizations to deliver visibility into their security performance and the security posture of their vendors. Founded in 2011, Bitsight pioneered the security ratings industry and is the most widely adopted data and analytics platform in the world. Bitsight’s 2,500 customers include 20% of the Fortune 500 companies, 120 governmental organizations in 30 countries, and all 4 of the Big 4 accounting firms.

Bitsight’s proprietary method of collecting data from 120+ sources provides customers with unprecedented visibility into key risk factors, many of which are completely unique to Bitsight. Bitsight offers the ability to view 12+ months of historical data on security performance, enabling security and risk leaders to identify trends and gain greater insight into risks and vulnerabilities. Bitsight also owns the largest botnet sinkholing infrastructure, delivering greater visibility into compromised systems – a risk that has been highly correlated to data breaches.