A vendor risk report provides stakeholders with a snapshot of your Vendor Risk Management (VRM) performance. With concerns over the threat of supply chain attacks growing, cybersecurity reporting is evolving towards an increased focus on Vendor Risk Management program performance. Board members and senior management want to know how effectively your VRM initiatives are identifying and addressing vendor-related security risks.
This post provides a framework of best practices for designing the most effective vendor risk summary cybersecurity report.
The High-Level Objectives of a Vendor Risk Summary Report
The structure of a vendor risk summary report needs to live up to its name - it’s a summary, not a comprehensive breakdown. To help you design the report to communicate as much relevant value as possible, it helps to think in terms of broad VRM metrics - address the primary VRM concerns of stakeholders, and do it clearly and quickly.
At a high level, stakeholders are interested in the following details about your VRM program:
- Security posture performance over time.
- Vendor critical risk distribution, or your degree of exposure to critical vendor risks.
- Which vendors are considered “high risk” in terms of the likelihood of suffering a data breach.
- The impact of third-party vendors on regulatory compliance and alignment with cyber frameworks (GDPR, PCI DSS, HIPAA, NIST CSF, etc.)
- Security incidents involving service providers (cyber attacks, emergence of zero-day cyber threats, sensitive information leaks, malware infections).
- Vendor-related cybersecurity risks impacting business continuity.
Regardless of the style of cybersecurity report, security professionals are always more inclined to include too much information than not enough. But this habit must remain in check, especially when creating a summary report. Remember, for your stakeholders, this is a high-speed vendor risk learning experience, not a slow scenic drive.
The vendor-related security incident section, for example, shouldn’t include excerpts from an incident report because you haven’t been impacted by a third-party data breach - if you have, a vendor summary is the wrong report to be giving the board.
Instead, a summary of publically disclosed security incidents and news related to the vendor is often sufficient. Focusing on information in the public domain will also reduce the risk of appearing biased in your representation of the vendor’s risk exposure.
Board members often ask about recent breaches in the news and whether the same event could impact your organization.
Contrarily, some examples of information that could bloat your vendor summary report with unnecessary complexity include:
- Penetration testing reports
- Security questionnaire submissions
- Incident response reports
- Vendor risk mitigation methodology details
- Remediation reports
- Due diligence workflows for new vendor relationships
- Evidence of certifications (such as SOC or ISO 27001 alignment).
- Vendor risk assessments
Instead of bloating your vendor summary report with a complete vendor assessment, trim it down to just a summary of the primary characteristics of a vendor’s security performance, such as
- Overall Security Posture Performance - Vendor security rating changes over time
- Risk Exposure - A breakdown of risk categories and levels of risk
- Remediation Summary - A summary of recent security measures being implemented to address specific critical vulnerabilities.
To inspire ideas about other risk assessment report details you could include in an addendum to a vendor risk summary report, watch this video overviewing the risk assessment process.
Best Practice 1: Include Graphical Elements
Most stakeholders have a very light grasp of cybersecurity concepts, so your vendor risk summary report will need to distill complex concepts to a level that’s easy to understand by a layperson. Graphics elements are very effective at doing this, and because they reduce the amount of necessary text, they also help keep your report concise.
Security risk ratings are a popular example of a graphical element commonly used in cyber reports. Security ratings represent a concept as complex as a vendor’s security posture in a form as simple as a numerical rating, such as UpGuard’s security rating system, which scores security postures from 0-950.
Here are some examples of graphical elements pulled from actual vendor risk summary reports. UpGuard’s cybersecurity report
Vendor Risk Overview Across Five Risk Categories
Vendor Risk Distribution Across 5 Severity Levels
Cybersecurity Posture Benchmarking Against Industry Average and Top Competitors.
Best Practice 2. Show Evidence of Automation Technology Implementation
According to the 2023 Cost of a Data Breach Report by IBM and the Ponemon Institute, data breaches were contained 108 days faster when AI and automation technology were extensively used.
Popular research reports like the annual Cost of a Data Breach report allow stakeholders to learn of the rising trends in cybersecurity, and automation technology is often the central focus of such discussions. The recent AI technology boom has further piqued stakeholder interest in automation and its potential influence on information security and risk management programs like Third-Party Risk Management.
Though your current application of automation technology may not influence areas of threat detection and intervention, it’s still worthwhile noting the areas of your Vendor Risk Management ecosystem where the technology is applied.
Demonstrating evidence of automation implementation shows stakeholders that your Vendor Risk Management program is innovating in line with industry trends.
When selecting an automation example to highlight, choose solutions with the highest potential impact on operational efficiency. Innovations that will give your VRM program a serious competitive advantage.
3. Demonstrate Compliance Efforts with Critical Regulations
For some stakeholders, compliance with specific regulatory standards is always front of mind - especially for regulations threatening the highest penalties for violations, such as HIPAA. In these circumstances, your vendor summary must expand upon the third-party risks impacting regulatory compliance. This may require augmenting your summary report with vendor security questionnaire results mapping to regulatory standards to highlight issues causing compliance gaps.
Compliance-focused stakeholders would also want further clarification of security measures being implemented to address these compliance gaps, which could lead to questioning your justification for continuing certain vendor relationships. Such concerns can be addressed with a platform tracking alignment with cyber frameworks supporting compliance with specific regulations, like NIST CSF, which includes security controls also meeting GDPR standards.
Watch this video for an overview of how cyber framework alignment can be monitored.
Vendor Risk Reporting by UpGuard
UpGuard offers a customizable vendor risk summary template that can instantly be generated inside its platform. To streamline preparation for board meetings, UpGuard also provides a customizable PowerPoint template, pulling relevant cybersecurity and Vendor Risk Management performance data commonly expected in board meetings.