Working with third party vendors to provide services is nothing new. Yet a focus on vendor risk management has recently emerged.
This is partially due to compliance, cybersecurity, and productivity. But in this post, we’ll answer the question, “Why is vendor risk management important?” And we’ll share some powerful ways to manage your third-party risk, such as risk management software for healthcare.
This is particularly true for organizations in regulated industries, like financial services and healthcare, who rely on third-parties to enable mission critical services for their customers.
With the heightened and reinforced regulatory expectations around third-party risk management processes, it’s imperative to have the ability to continuously monitor and manage your vendors’ performance and the risks they introduce.
What is Vendor Risk Management?
Companies in regulated industries like healthcare and finance often partner with third parties to enable product and service delivery.
Vendor risk management (VRM) deals with monitoring these third parties to limit additional risks they may bring to the table.
The Importance Of Vendor Risk Management
In short, VRM can be described as risk mitigation. Here are some of the ways in which VRM can be applied:
This refers to the risk from a cyber attack or data breach. This type of risk can often be minimized by properly researching new vendors before bringing them onboard. You can also conduct ongoing monitoring.
A third party could cause disruption to your business. This type of risk usually comes in the form of service level agreements (SLAs). Utilizing backup vendors is one way to minimize this type of risk. It can help ensure business continuity. This is particularly common in the financial industry.
Regulatory / Compliance / Legal Risk
One of the main reasons why third-party risk management is important is because of the regulations in the healthcare industry. It is paramount to stay compliant with legislation and regulations. This applies to government, financial, and health organizations even more.
Risk To Reputation
If a dissatisfied customer or patient goes public, it could be catastrophic to your reputation. Of course, a data breach could do irreversible damage to your brand as well.
The effect on your finances could be dire if you experience a cyber attack. You may have to halt the supply chain completely. You may be unable to deliver your products or services.
If your third-party vendor is not living up to their end of the agreement, it could affect your strategy. You may be unable to meet key business goals.
If you haven’t already, read our vendor risk management guide for more details now.
How to Manage Third-Party Risk
Firstly, to manage vendor risk, you should have excellent SLAs in place. These will inform the way you interact with your third-party partners.
Additionally, be sure to have strong management practices in place. An assessment process should be established with clear criteria to meet.
For instance, you can use the following:
- Criteria list
- Quarterly reviews
- Vendor risk management software
- External consulting
- Security ratings
For third-party risk management automation, you can leverage the consulting firm at ComplyAssistant, which can help you protect yourself against risk.
Discover Vendor Risk Management Software For Healthcare
ComplyAssistant offers vendor risk management in the cloud. You can quickly and easily audit your third-party associates to ensure compliance. Never worry about HIPAA-HITECH again when you reach out to us today.