Question 1

What is vendor risk management (VRM)?

Accepted Answer

Vendor Risk Management is systematic assessment and monitoring of third-party security, privacy, and compliance risks. VRM evaluates vendors before engagement and continuously during relationship. Key areas include security controls, data protection practices, compliance certifications, incident response capabilities, and business continuity. Effective VRM prevents supply chain breaches and ensures vendors meet your security standards.

Question 2

What should vendor security assessments evaluate?

Accepted Answer

Assess: information security policies and procedures, access control mechanisms, data encryption practices, network security architecture, vulnerability and patch management, employee security training, incident response capabilities, business continuity and disaster recovery, compliance certifications (SOC 2, ISO 27001), insurance coverage, subcontractor management, and data handling practices. Risk level determines assessment depth—critical vendors require comprehensive evaluation.

Question 3

What are vendor risk tiers and how are they used?

Accepted Answer

Tier 1 (Critical): Access to sensitive data or critical systems—require comprehensive assessment, annual reviews, continuous monitoring. Tier 2 (High): Moderate data access—detailed assessment, biannual reviews. Tier 3 (Medium): Limited access—standard questionnaire, annual reviews. Tier 4 (Low): No data access—basic screening. Tiering focuses resources on highest-risk relationships.

Question 4

What compliance certifications should vendors have?

Accepted Answer

Key certifications include SOC 2 Type II (security controls audit), ISO 27001 (information security management), PCI-DSS (payment card data), HIPAA compliance (healthcare data), FedRAMP (government cloud), and industry-specific standards. Certifications provide third-party validation of controls but don't eliminate risk—review actual reports and test results. Certifications should be current (within 12 months).

Question 5

How do you manage vendor security questionnaires?

Accepted Answer

Develop standardized questionnaire templates (SIG, CAIQ, or custom) appropriate for each risk tier. Automate distribution and collection. Validate responses through evidence review (policies, scan reports, certifications). Use scoring rubrics for objective evaluation. Share questionnaires across departments to reduce vendor burden. Update questionnaires annually based on threat landscape. Consider third-party risk rating services for supplemental intelligence.

Question 6

What are vendor breach notification requirements?

Accepted Answer

Contracts should mandate: immediate notification (within 24-48 hours) of security incidents affecting your data, detailed incident reports including scope and root cause, remediation plans and timelines, and cooperation with your incident response. Specify your right to audit post-breach. GDPR requires processor breach notification within 72 hours. Test notification procedures during onboarding.

Question 7

How often should you reassess vendor security?

Accepted Answer

Continuous monitoring for critical (Tier 1) vendors using security ratings services. Annual comprehensive reassessment for all tiers, with quarterly reviews for Tier 1-2. Immediate reassessment after vendor security incidents, significant service changes, mergers/acquisitions, or compliance audit failures. Automated security posture monitoring detects real-time risk changes. Regular assessment maintains security as vendor environments evolve.

Question 8

What are vendor contract security requirements?

Accepted Answer

Include: security control requirements matching your standards, right to audit security controls, breach notification obligations, data encryption requirements (in transit and at rest), data retention and deletion procedures, subcontractor security requirements, liability and indemnification for breaches, insurance requirements ($1M+ cyber liability), compliance with applicable regulations, and termination rights for security failures. Legal review essential.

VRM Breach-Proof Scorecard

Inventory & Scope

How many active vendors does your organization currently manage?

Need Professional IT Services?

References & Citations

Key Security Terms

Attack Surface

Cloud Security Posture Management (CSPM)

Vulnerability Management

Common Vulnerabilities and Exposures (CVE)

Frequently Asked Questions