Knowing who your most crucial vendors are, also known as your most significant vendors, is a fundamental element of a risk-based vendor management program. The idea that a “critical vendor” and a “high-risk vendor” are interchangeable is a prevalent misconception. When establishing your program, it’s crucial to distinguish between the two because they are not the same thing.
Not only is it a smart practice, but many industries have regulations requiring you to identify your critical vendors. Despite minor differences in definitions among regulatory agencies, critical vendors do have a few traits in common that are always relevant:
· The product or service provided by the vendor is vital for your day to day operations.
· If the vendor doesn’t deliver the goods or service as specified, it will have a significant impact on your business or your customers.
When interacting with your critical vendors, exercise caution. Avoid taking shortcuts since they could leave hidden or unaddressed risks that could jeopardize the security of your business.
However, regardless of how important they are to your business’ operations, a high-risk vendor poses a higher amount of danger to your business. A typical illustration is a vendor who handles, keeps, or has access to your non-public data. The fact that these vendors have access to your data makes them more dangerous, but the services they actually offer might not be vital to your business.
Knowing your own key activities clearly is the first step in defining which vendors are critical and which vendors are high risk. To prevent serious threats to your business it is important to identify who your critical vendors are and what role they play inside of the company’s operations. Critical vendors are essential to your business’s day-to-day operations despite their dangers. You’ll build a strong and enduring partnership by exercising diligence and adhering to the greatest vendor risk management techniques.