Your guide to vendor risk management software

Key takeaways:

• Vendor risk management software establishes an ongoing risk assessment process to help prevent expensive supplier risks.
• Automating the vendor risk management process offers a ton of benefits, like managing vendor SLAs in a single window, streamlining vendor assessments, simplifying compliance audits, and more.
• An ideal vendor risk management software must have features like built-in questionnaires, risk filtering and ranking, rule-based workflows, audit logs, and reports and dashboards.
• Venminder, Archer, ProcessUnity, and UpGuard are some of the top contenders in the vendor risk management software space.

Manual vendor risk management is a way of life for most organizations. This approach can allow supplier risks to flourish and blossom. A manual third-party risk management program (TPRM) is filled with a ton of paperwork, siloed data, sluggish processes, and human errors.

Additionally, manual vendor risk management processes don't offer a way to monitor the supplier's ongoing risk and compliance environment or risk ratings, leaving businesses vulnerable. Relying on manual tools like spreadsheets can lead to a risk management process rife with errors, duplication of work, and inconsistencies throughout the risk management lifecycle.

To prevent the loss of money, effort, and control, organizations need to automate vendor risk management and implement vendor risk management software that keeps track of the supplier risk environment round the clock. If you are new to vendor risk management automation and have no idea where to start, don't worry.

We have done the groundwork on the vendor risk management software space for you and will outline everything from what a vendor risk management software is to the benefits and features an ideal vendor risk management tool should have.

What is vendor risk management software?

Vendor risk management software is a solution that provides a strategic approach to monitoring, managing, and mitigating supplier risks, including financial, reputational, and cybersecurity risks. It streamlines vendor due diligence with rules-based workflows, intuitive dashboards, risk score templates, and security ratings.

What are the benefits of vendor risk management automation?

The ideal vendor risk management software offers businesses endless opportunities to streamline their vendor risk assessments and automate due diligence throughout the SaaS stack. Let’s take a deeper look into the top five benefits of implementing a vendor risk management solution.

1. It helps manage different vendor SLAs in a single window

In third-party relationships, there are a ton of contractual SLAs to be tracked to ensure that predefined performance and service qualities are met. When tracked manually, this time-consuming mammoth of a task can easily result in lost or forgotten SLAs.

But vendor risk management tools can properly track and monitor all vendor performance on an ongoing basis. What's more, in addition to tracking SLAs, they can set saturation levels for escalation, move under-performing vendors into remediation, and measure remediation efforts all in one place.

2. It streamlines vendor risk assessments

The key to maintaining good third-party supplier relationships is timely vendor risk assessments. To ensure that you are free from inherent risk and residual vulnerabilities, you need to run your risk assessment process regularly.

When these audits are conducted manually, employees from different departments may send vendors different questionnaires for the same audit, resulting in data silos, duplication of information, and inconsistent risk assessments.

On the other hand, vendor risk management software enables businesses to have a consistent risk assessment experience. Stakeholders are free to select and modify pre-listed questionnaires to create a custom risk assessment. Data centralization helps stakeholders see whether a vendor has undergone an assessment, review the assessment's progress, and review the assessment results to calculate risk profiles.

3. It automates and simplifies compliance audits

Without timely compliance audits, you will have no idea whether or not your service providers are doing the necessary due diligence to protect your sensitive data. Most of your suppliers may already undergo third-party risk assessments to attain security certifications. Request a copy of those reports, and read through them carefully.

While you are reviewing the attestations of compliance (AOC), check what standards your vendors are going after. Are they going after SOC or ISO? If so, to what extent. Are they compliant with accountability standards like HIPAA and GDPR? Do they also stay compliant to regional standards like the California Consumer Privacy Act (CCPA)? 

In this scenario, a third-party risk management platform allows businesses to consolidate and deliver all compliance management activities as a single strategy. With these tools, compliance failures become a thing of the past, as businesses can efficiently assess and adapt to regulatory changes and information security challenges.

4. It reduces the due-diligence workload

Due diligence is not just done during new vendors' onboarding. In order to keep vulnerabilities away, due diligence must be done regularly. It could be anything from subscribing to Google Alerts for your vendor information to retrieving reports from credit agencies to learn about a supplier's financial health. 

There may be a need to collect 100-plus data points for every supplier, depending on the criticality of the relationship. However, collecting all these data points manually through a spreadsheet will make the entire process time-consuming and tedious. Automation doesn't just accelerate the collection of data but also ensures that the collected information is current, complete, and accurate. 

5. It offers a bird's eye view of risks in the SaaS stack

When vendor risk management happens manually, stakeholders will have to sift through stacks of spreadsheets and online forms to get an idea of their organization's risk trend. 

On the other hand, automation enables businesses to visualize their cyber risk trends in an easily interpretable graph or chart. A visual representation makes it easy to identify third-party vendor risks with high probability and high potential impact. Automation makes it easy to create a risk visualization for the entire SaaS stack.

Features to look for in a vendor risk management solution

Selecting a vendor risk management system can be an arduous task, as it’s crucial to ensure that your chosen solution has the right set of functionalities to support your organizational needs. 

Listed below are some quintessential features that the best vendor risk management software must have.

1. Built-in questionnaires

Look for a solution with built-in questionnaire functionality where you can easily create custom questionnaires for external suppliers, share them across departments, collect responses, and analyze results at the click of a button.

2. Risk filtering and ranking 

Risk filtering and ranking is the process of comparing and classifying risks based on their inherent risk levels. What's more, the filtering process breaks down the overall risk into itemized components, evaluates them individually, and then automatically captures their individual risk contribution to the overall risk.

3. Rules-based workflows

You must have the freedom to establish custom workflows that deliver supplier risk information to stakeholders promptly. On top of that, rules-based workflows can help enforce policies and ensure compliance while enhancing the consistency of risk management processes.

4. Audit logs

You can gain control over inherent supplier risks with complete audit logs. These audit logs keep you proactively informed on events like the moment risks were identified, what actions were taken to minimize them, and the results of risk mitigation exercises.

5. Reports and dashboards

You need to look for a reporting and analytics module in your vendor risk management system for automating risk visualization. Your reporting module should offer an array of ready-to-use reports and an intuitive dashboard that allows you to spot high-risk vendors and identify high-impact risks at a glance.

Top vendor risk management solutions in the market

We know that selecting an ideal vendor risk management software from the sea of solutions available is a challenging task. To help you choose the right solution faster, we’ve assessed vendor risk management solutions, analyzed their pros and cons, and prepared a list of top contenders.

Here's a list of top vendor risk management software in no particular order.

1. Venminder

Venminder offers a sleek reporting functionality that changes the way organizations do board reporting. It also offers excellent external risk assessment services for SOC reviews and GRC (governance, risk, and compliance) implementation, lifting the due-diligence burden off stakeholders. 

2. Archer

Archer third-party governance offers provisions for risk evaluation, reporting, and management. Its user-friendly interface offers a great user experience. What's more, it allows businesses to process risk documents from different sources to collate risk information. Its flexibility and cost-effective pricing model are its unique selling point.

3. ProcessUnity

ProcessUnity offers cutting-edge functionalities to perform remote risk assessments, make observations and escalations, respond to regulatory exams and incident reports, assign tasks to end users, and more.

4. UpGuard

UpGuard is a well-known vendor risk management platform that monitors security profiles proactively and flags any potential supplier risks by comparing them with pre-existing benchmarks. It can monitor vendor performance, check for inherent risks, highlight issues across vendors, and track the real-time progress of these issues. 

Why wait to automate your third-party due diligence process?

As vendor risks fester and grow, businesses are realizing the need to discard their manual vendor risk management process. These businesses are moving toward an automated risk management environment that reduces the due diligence workload, automates compliance audits, ensures consistency in the process, and saves valuable labor hours. 

If you are hunting for a vendor risk management platform, make sure they have the five indispensable features discussed above. Automated vendor risk management tools like Venminder, Archer, ProcessUnity, and UpGuard can roll out an automated vendor risk management strategy in a matter of days. Stop waiting and start automating compliance and risk management. 

Want to further automate your SaaS stack? Leave the renewals to us. Contact Vendr today to find out how we can help!