Why is Vendor Compliance Management Important for Your Business?
Vendor compliance management is the process by which organizations understand and control the risks associated with working with vendors, third parties, or business partners. If your organization utilizes vendors to conduct part of your business process – whether that be billing, customer service, data processing, etc. – the risks associated with that partnership could ultimately put you out of business.
An effective risk management strategy includes a strategic process for assessing and monitoring vendor compliance. Some vendors go to great lengths to secure their services and processes, but others may leave you with consequences to pay. Vendors need to prove what they are doing to reduce risk to you and your customers. You’re putting a great deal of control into vendor’s hands, so managing vendor risk must be an integral part of any business.
What happens if your operations depend on the availability of your vendor’s services, but their service has an outage? If your vendor goes out of business, how does your organization continue to operate? If your organization shares cardholder data with a vendor and that vendor has a breach, what are the consequences to your organization? These are the types of scenarios your organization must consider when selecting vendors and effectively managing vendor risk.
Working with vendors puts your organization at risk for data breaches or security incidents, often leaving you to deal with operational, financial, and reputational damages. By having an effective vendor compliance management program, you will be able to identify, mitigate, and better control vendors’ risk and improve the security of your organization. Not to mention, for many industries, validation of a vendor’s security practices is not optional. For example, for HIPAA, PCI DSS, NY CRR 500, and SOC 2 compliance, organizations must have some form of vendor compliance management programs in place and functioning.
As businesses increasingly look to outsource various components of their organizations, it’s more crucial than ever to have a strong vendor compliance management program. Ready to get started on yours?