Today’s best vendor risk management systems offer a growing list of features and functionality that help you manage risk with vendors and other third parties.
Many have also expanded functionality to support other areas of vendor management including sourcing, onboarding, purchasing and contract management too.
But don’t get too excited about the sheer breadth of functionality that’s offered.
As I mentioned in my blog How to Choose the Best Vendor Management Software for Your Organization, it’s nearly impossible to find a single vendor management system that allows you to effectively manage every stage of the vendor relationship.
So, if vendor risk management is your primary focus, you want a solution that best aligns to your documented requirements for managing risks with your vendors each and every day.
Here are my Top 8 features you should care most about when choosing a vendor risk management system.
- Vendor Master Data Management. You want the ability to create and maintain a centralized repository of both your vendor metadata as well as the associated due diligence documents like cyber policies, SOC reports, financial statements and insurance certificates.
- Secure Vendor Collaboration. It should be easy for your vendors to provide you with information and documentation in a secure way. Look for solutions with secure portals that you and your vendors can use to respond to questions, share documents and collaborate.
- Automation of Risk-Based Classification. There should be a workflow-based process for assessing new vendors (or existing vendors when a change in scope occurs), and scoring logic to calculate an inherent risk level, therefore helping you determine what level of risk-based due diligence to perform on your vendors.
- Risk Assessment Template Library. Modern solutions will save you a lot of time by providing you a library of ready-to-use risk assessment and due diligence templates out of the gate. Many software providers have templates that align to the most common regulatory requirements and cybersecurity frameworks. They also include templates aligned to emerging diligence areas like supplier diversity, ESG and modern slavery.
- Automation of Question Response and Residual Risk Scoring. A huge time saver, automated risk scoring means the system is doing all of the legwork to provide an initial response – and scoring – of vendor due diligence questionnaire responses. This is done by building your risk standards in the system, and aligning them to individual question responses so the system can take a first pass. This gets you out of the weeds and allows you to focus on the risks and how best to remediate them.
- Tracking of Residual Risks and Overall Risk Register. When risks remain with a vendor, you need a way to track, remediate and monitor them. Look for the system’s ability to automate residual risk and remediation tracking at the vendor level, and also roll everything up into an overall risk register so you can see a snapshot of all of your vendors across the company at any point in time.
- Continuous Risk Monitoring. Your system must have the ability to monitor risks throughout your relationship with the vendor. This includes the ability to re-perform due diligence on a standard cadence, as well as the ability to integrate with third-party risk and threat intelligence solutions that feed data on cyber threats, business health, sanctions, and other areas of risk.
- Standard and Customized Reporting. Lastly, your system should make it easy to report on vendor risk management KRIs and key activities, allowing for the easy collection of data used in reporting to senior management, committees or your board. It should also allow for ad hoc reporting in case staff need to obtain information specific to their needs (for example, a list of active vendors in their department). There should also be role-based dashboards that make it easy for each user to see only the most relevant information.
The leading vendor risk management software providers also offer a variety of ancillary services beyond just the technology to make your life a whole lot easier.
These include everything from vendor exchanges (i.e. ready-made due diligence reports for you to purchase) to full-on managed services to risk assess your third-party vendors. Depending on your resource constraints/needs, you’ll want to consider these ancillary services when choosing the best overall solution for your organization.
Vendor Centric’s team of vendor management technology specialists know the market. We can help you mitigate your risk of selecting the right overall solution, and even support you successfully implement the software across your organization. Contact us today to learn how we can help.