For businesses, managing the various risks that come with third-party relationships has become a critical function of the organization and a matter of complying with the law. However, organizations are still determining the most essential aspects of an effective third-party risk management (TPRM) program.
One pillar of any successful program is the vendor risk assessment questionnaire, a document created to evaluate the risks associated with vendors and business partners – and the partners they do business with.
In gauging third-party risk, organizations should learn as much about their partners and vendors as possible. The questionnaire is a way to find potential weaknesses in their security, privacy, and compliance practices by evaluating policies, controls and supporting evidence of those controls.
Risk assessment and mitigation begins with information gathering. The questionnaire is the key to getting an inside-out, trust-based view of a vendor’s security posture. They help an organization answer critical questions, such as:
- Does this vendor have acceptable risk controls?
- Are there risks with this vendor that require remediation?
- Are there compensating controls in place for identified risks?
Questionnaires may just be one piece of the TPRM puzzle, but they are an extremely useful mechanism for getting a detailed internal perspective of third-party risk.
Choosing the right questionnaire
Creating TPRM assessment questionnaires from scratch is something only some organizations have the time, resources, or expertise to accomplish. That’s why many choose an industry-standard template, for example the Standard Information Gathering (SIG) questionnaire or the H-ISAC questionnaire (if it is a healthcare organization). These templates offer a good starting point, based on established frameworks and address critical areas like data security, operational resilience and compliance with the law.
While these questionnaires vary, many include these standard building blocks:
- Vendor policies on data protection.
- Compliance with standards, laws and regulations.
- Access management, information privacy, incident response and other security controls.
- Security measures related to both digital and physical infrastructure.
Another advantage of industry-standard questionnaires is that vendors—those who will be answering the questions–are likely already familiar with such questions and will be ready to give detailed responses. Instead of settling for a cookie-cutter approach that often comes with using templates, organizations should adapt these templates to meet the specific needs of their business, adjusting as needed for risk tolerance, industry, and regulatory requirements. This ensures the questionnaire will collect relevant, accurate, and timely information.
However, like most things that are important in business, the questionnaires that help an organization gauge risk come with their own set of challenges.
Questionnaires and their challenges
Organizations must surmount a series of challenges to get risk-assessment questionnaires to reach their full potential. Questionnaires, for example, can be:
Work-intensive: Completing a questionnaire can be time-consuming, especially if an organization has numerous vendors. Creating, distributing, and analyzing risk assessment questionnaires takes dedicated resources and expertise.
A snapshot, not a movie: Security questionnaires offer a limited glimpse of a vendor’s security profile at a certain point in time. However, the nature of risk changes constantly, and new vulnerabilities can arise after a questionnaire has been completed and filed away.
Supply chain complexity: Interconnected supply chains mean organizations must assess the risks associated with third-party and fourth-party vendors. This means additional complexity to the risk management process.
Vendor fatigue: Vendors may delay or deprioritize completing such questionnaires, as they may be suffering from fatigue from filling out so many. This can slow down the timeline of assessing their risks.
To combat this fatigue, organizations can streamline questionnaires with AI programs that automatically populate a new questionnaire by pulling from an older one or extracting details from sources like SOC2 reports or ISO Statements of Applicability. Tailoring questionnaires to the vendor’s specific role can also lessen the burden and boost engagement. And using automated workflow for follow-ups can relieve more of the burden.
How to get the best use of questionnaires
Once an organization has pushed through the challenges and created a robust questionnaire for risk management, it’s time to put it to use. Below are tips on how to get the best use of it:
Refrain from settling for a fixed and rigid questionnaire. Don’t fall prey to “analysis paralysis,” in trying to create a perfect questionnaire. The one-and-done approach doesn’t suffice when it comes to the dynamic nature of risk. Information starts getting stale the moment a questionnaire is completed, so be aware that maintaining real-time risk knowledge and awareness takes continuous evaluation.
Be ready to customize. An organization should be able to import or create items for review as the assessment process moves along, along with customization options for adding questions as more unique needs are identified.
Regularly reassess third parties. Assessment of risk should be repeated regularly, especially if any vendors bring extra risks. How often you reassess depends on how critical the vendor is to your operations and also the sensitivity of the data they handle. Organizations may need to reassess their vendors annually or more often in highly regulated industries, depending on compliance requirements.
Risk evolves rapidly in our digital and connected world, so a vendor’s security posture can easily change as new vulnerabilities, incidents, or changes in business processes come to light. That’s why automation and continuous monitoring are essential to stay ahead of such changes.
Next steps in the process
A robust third-party risk management program begins with a risk assessment questionnaire. These documents can be paired with real-time security monitoring, automated risk management products, and continuous vendor monitoring to manage and mitigate third-party risk most effectively.
Tools and strategies in the right combination will help any organization mitigate the risks that come with a large ecosystem of vendors, ensuring the business stays secure.
TPRM best practices should always include using real-time monitoring to assess vendor performance continuously and validate the effectiveness of controls “in the wild”, reassessing vendors regularly to ensure their security measures are still effective and customizing your questionnaire to mirror the unique risks each vendor brings.
However, every successful TPRM program begins with something simpler: the risk-assessment questionnaire.
