Vendor criticality is the level of risk that vendors are categorized into during the risk assessment phase. Determining vendor criticality is an essential part of the third-party risk management (TPRM) program to help organizations better prioritize their risk remediation goals.
Why is Determining Vendor Criticality Important in a Vendor Risk Management Program?
During the procurement process or an annual vendor review, determining vendor criticality helps organizations identify their biggest weaknesses in the supply chain and which areas they need to address first.
Potential new vendors or service providers deemed a high or critical risk may not be worth partnering with because they have a higher potential for a security breach. On the other hand, critical vendors with critical risk levels are prioritized first because their continued operation is necessary for the organization to succeed.
Throughout the vendor lifecycle, vendors should be continually monitored and assessed for risk regularly to ensure that they are keeping up with the minimum security standards set by the organization and regulatory compliance requirements. Vendor relationships must be managed individually to ensure no weaknesses in the overall VRM program.
What Are the Vendor Criticality Classifications?
The process of categorizing these vendors based on their level of risk is called “vendor tiering.” Although vendor risk criticality may vary between organizations, they are generally classified into four main levels:
- Critical or business-critical risk - Risks or vulnerabilities that place the business in immediate threat of data breaches or leaks.
- High risk - Severe risks that should be addressed immediately to protect the business.
- Medium risk - Unnecessary security risks that can potentially lead to more serious vulnerabilities.
- Low risk - Areas of improvement to reduce risk and improve cybersecurity ratings.
How Can Businesses Determine Vendor Criticality?
Businesses can quickly gain visibility into their vendor’s security postures and determine their criticality levels through vendor risk assessments. Through a combination of the following methods, organizations can view vendor risks, determine vendor criticality, and take action to help their third-party vendors mitigate their risks.
Instant Security Ratings
One of the fastest and easiest ways to identify critical third parties and high-risk vendors is through an instant security rating assessment. Different security rating services will use different risk criteria, but the goal is to gain instant visibility into a vendor’s most critical risks and how those risks can affect the organization.
Using the vendor tiering process, the security rating service will generate a score or risk rating based on their formula or algorithm and automatically categorize the vendor into a criticality tier. Using a service is important because it uses quantifiable metrics rather than subjective measures of cyber risk to indicate the vendor’s security posture.
Security ratings should also include an overview of a vendor’s risks, determined through various risk categories which are calculated into the final score. This breakdown helps the organization better understand which areas of the vendor require more attention and which are adequately secured. The more risk factors that are measured and scanned, the more accurately the rating reflects the vendor’s true security posture.
How UpGuard Can Help
UpGuard measures hundreds of risk factors including open ports, common vulnerabilities, email security, SSL certificates, and DNS health among many others to quickly and accurately generate a security rating and vendor criticality classification. UpGuard uses its proprietary scanning infrastructure to monitor billions of data points to ensure that all security postures are accurate and fully reflect the vendor’s security performance.
UpGuard’s instant security ratings also include the risks identified from security questionnaires for a comprehensive view of the vendor’s security posture. The rating system is designed for organizations to view vendor security performances against their peers objectively.
Security questionnaires also play a factor in determining overall security postures and the security rating. However, questionnaires also have a secondary purpose in determining framework or regulation compliance that organizations may require vendors to have.
Vendors that are not in compliance with industry-based frameworks and regulations will be classified as higher risk and may not have sufficient security controls to handle sensitive data. However, because most frameworks and regulations don’t directly offer checklists or questionnaire resources, choosing a vendor risk management (VRM) solution that can manage this process can save significant amounts of time and resources.
How UpGuard Can Help
To meet regulatory requirements, UpGuard has a comprehensive library of over 20 industry-standard questionnaires, such as HIPAA, NIST CSF, and HECVAT, that help organizations maintain their vendor’s security posture. Each questionnaire can be tailored and customized to your organization’s specific needs for vendors and the entire process is automated through UpGuard’s user-friendly platform.
Based on vendor responses, UpGuard automatically identifies the biggest risks and surfaces them for your organization to review and request remediation. Risks can also be waived using Risk Waivers so that they won’t negatively impact your organization’s security posture.
Continuous Monitoring Services
Over the course of the vendor lifecycle, security postures will inevitably change and fluctuate over time. Even with dynamic security ratings, vendors must be closely monitored for critical risks and potential business disruptions. If a software misconfiguration, cyber attack, or internal breach occurs, continuous monitoring services will immediately alert the organization and the vendor of the breach to initiate remediation protocols.
Continuous monitoring is an automated approach to monitoring breaches of information security controls, indicators of compromise (IOC), software vulnerabilities, and more. By allowing organizations to view their vendor’s attack surfaces, it allows them more capability in mitigating their cyber risks.
How UpGuard Can Help
UpGuard monitors over 800 billion data points every day to quickly identify the most critical risks that can affect your organization’s vendors. Your organization can also collect additional evidence and assess each identified risk through the UpGuard platform and get real-time alerts and updates on vendor security postures.
If a vendor is flagged through UpGuard’s notification system, users can quickly generate vendor security reports to understand which risks they are facing and how they are impacting the overall security posture. UpGuard streamlines the entire process from end-to-end to help organizations and their vendors avoid significant disruptions to their operations.
Vendor Risk Management (VRM) Solutions
One of the most difficult parts of managing vendor risks and assessing vendor criticality is scaling the process along with the business. Larger organizations could end up managing hundreds, or even thousands, of vendors that can be hard to track and keep up with without a dedicated vendor management solution or service.
Using manual spreadsheets to manage vendors is a thing of the past, as using a manual process could result in additional errors and unnecessary time and resource consumption that could be easily managed and automated using a dedicated VRM solution.
How UpGuard Can Help
UpGuard Vendor Risk is designed to scale with businesses as they grow by providing end-to-end vendor management through their entire lifecycle. Each vendor can be managed in-platform in one central location using easily customizable dashboards that contain all the information you need to make important business decisions.
Security questionnaires, vendor security ratings, vendor risk assessments, and remediation requests can all be managed within the UpGuard platform. Save time and money by using one singular solution to manage every aspect of the VRM process and generate high-level reports to present to management, investors, and stakeholders.
Additionally, UpGuard easily integrates with over 4000+ workplace tools, apps, and software so you can better manage your company’s workflow and communication. Custom integration options are also available to help you and your organization seamlessly incorporate our platform with your work.