The Importance of Vendor Compliance Management

Holli Hagene

Apr 21 2021


In today’s world of commerce, there are many links that exist between companies all over the world—like the suppliers and other external, third parties that you rely on, for example.

For instance, if you manufacture products and distribute them into the marketplace, you will be dependent upon other entities to provide you with the raw materials, as well others to ensure that what you deliver to your customers is of high caliber.

But with all these interconnections, any failure at one node can quickly cascade onto other parts of your manufacturing and distribution processes. One area in which this is happening more often is third party vendor cybersecurity, which is the focal point of this article.

What Is Vendor Compliance?

Simply put, it can be specifically defined as follows:

“It refers to managing all aspects of your company’s and your suppliers’ compliance with statutory, legal, and technical requirements. It ensures that both your business and your suppliers are legally compliant, vetted and verified to access industry-relevant trading opportunities and mitigate trading risks.”

(SOURCE: 1).

In other words, you want the third parties that you rely upon to be up to the same cybersecurity standards that you have established and maintained for your business. This includes primarily two areas:

  • The protection of Personal Identifiable Information (PII) datasets;
  • Compliance with the recent data privacy laws, especially those of the CCPA and the GDPR.
  • Implement a well-known model:
  • Making sure of compliance:
  • It is not a one and done process:

In most instances, you will be sharing confidential data about your customers to these vendors in order to accomplish the tasks that you have outsourced to them. You must ensure that all security protocols are in place (like how you have them) to protect your customers, especially when it comes from the standpoint of authentication. For example, only those individuals that must access it will have their identity confirmed across different levels.

Part of this is ensuring vendor compliance with major data privacy laws. Unfortunately, the law dictates that if any of the PII datasets that you have trusted to your third party is released either accidentally or maliciously, you’re likely to be at fault for this; facing audits and potentially harsh financial penalties that are imposed by data privacy laws.

Therefore, it’s important to take the time to carefully scrutinize each vendor you consider. You must have a reliable and comprehensive vetting process in place before you decide on an external, third party that you can work with. This is where the role of having a good Vendor Compliance Program will come into crucial play.

The Components

When it comes to cybersecurity, creating a Vendor Compliance Program can also be referred to as the “Vendor Cyber Risk Management Framework,” or “VCRMF” for short. It should include the following:

True, you can pretty much set up your own checklist in deciding what you need to look for when deciding upon a hiring a third party to work with. But if this is the first time that you are doing this, it is highly recommended that you make use of an already established template in order to fully ensure that you have all your bases covered. One such highly regarded methodology that you can make use of is known as the “NIST Cybersecurity Framework.” The models that are provided by NIST already have a listing of standards and best practices that you start using almost immediately. They also have an established list of security controls and risk management tools that you can implement not only for your own business, but also for your hired third party as well. A key certification that you need to make sure that your potential third party vendor has is what is known as the “ISO 27001”. If they have this designation, then you can be assured that they already have a strong set of controls and procedures in place to safeguard their own PII datasets. It simply means that if that the PII datasets that you hand over to them will be as secure as possible.

As you start to craft your VCRMF, it is absolutely critical that you have a section on it in which you check that your potential third party has achieved a full level of compliance in your specific industry. For instance, if you are a healthcare organization, not only will they be bound to the policies of the GDPR and the CCPA, but also to HIPAA as well. A good way to initiate this process is by making a detailed list of the cyber related checks and balances that you have and cross compare that with what the third party that you are considering hiring also has in place. If there are any gaping discrepancies, then you know it is time to move on and start looking at for new partner to work with. Also, in this vetting process, you also need to find out if they have been the subject of any audits and/or fines. If there are any, then this should also be a red flag to you.

Many businesses think that once they have carefully screened and thoroughly vetted out their external, third parties from the outset, then all the work is done. But this not the case at all. Over the course of the relationships you have established, the working dynamics can change, especially from the standpoint of cybersecurity. Therefore, ensuring that the process you have set forth to make sure that your third parties are in the levels of compliance that you expect them to be is iterative. This simply means that you have the right to execute random audits on them to make sure that the same security protocols and controls are still in place as when you first hired them. A key point to remember here is that the terms for carrying out this kind of audit should be explicitly spelled out in the contract that you sign with them, just to avoid any potential misunderstandings down the road. In fact, according to a recent study by Garner, 83% of all Cybersecurity risks escalate after the contract has been signed and the work has been started.

(SOURCE: 2).

Also, clear lines of communications must be in place as the relationship develops with your third-party vendor. For example, if they have been hit by a cyber-attack, they must notify you immediately so that you can take steps to mitigate the risks of this happening to your business.


Finally, as you start the process of hiring a potential third-party vendor, it is equally important to make sure that you don’t get bogged down in each and every detail. Yes, you have to conduct your due diligence in detail, but it does not mean that you should lose oversight of what matters most: Keeping your mission critical processes running as smoothly and efficiently as possible during this selection process.

If you are completely new to this, it would be prudent to reach out to a cybersecurity consulting firm that specializes in this, such as that of a Managed Security Services Provider (MSSP). And, turn to the FTK product family when you need the gold standard in forensic investigation tools. The FTK portfolio will transform the investigative environment, empowering users with pioneering tools so that they can get access to evidence faster and help uncover more relevant findings when processing and analyzing data, while understanding connections that could sharpen focus and direction.


Contact us today to learn more about our products and our
approach to improving how you collect, analyze and use data.
Tell Me More