What is Cyber Vendor Risk Management? Cyber VRM Explained

Cyber VRM is the practice of identifying, assessing, and remediating the cybersecurity risks of third-party vendors. This involves combining objective, quantifiable data sources like security ratings and data leak detection with subjective qualitative data sources like security questionnaires to get a complete understanding of each vendor's security posture.

‍In this 2021 report, nearly three-quarters (74%) of organizations breached within the last 12 months said the exposure originated from granting too much-privileged access to third parties. Cyber VRM solutions provide cybersecurity-focused actionable insights to teams that mitigate the information security risks of onboarding and maintaining a vendor relationship.

How is Cyber VRM different from Vendor Risk Management (VRM) and Third-Party Risk Management (TPRM)?

‍Vendor risk management (VRM) deals with managing and monitoring risks resulting from third-party vendors and suppliers of information technology (IT) products and services. VRM programs are concerned with ensuring third-party products, IT vendors, and service providers do not result in business disruption or financial and reputational damage. VRM focuses on managing different types of risk from third-party vendors like operational, financial, regulatory, security, and more.

Third-Party Risk Management (TPRM) is the process of analyzing and minimizing risks associated with outsourcing to third-parties. TPRM is an even broader area of risk management that covers a variety of third-parties like suppliers, vendors, service providers, business partners, contractors, affiliates, distributors, resellers, and agents, along with different types of risks associated with them like financial, operational, reputational, legal, cybersecurity, environmental and more.

A Cyber VRM program focuses specifically on managing cybersecurity risks for third-party vendors like software service providers and IT products. With the explosion of data and the growing complexity of vendor supply chains, it is no longer acceptable for organizations to rely on inefficient manual processes and subpar technology solutions to manage vendor cybersecurity risk.

According to a 2020 Ponemon survey, the average enterprise has 5,800 third-party vendors, with 90% of them using some sort of cloud service. In 2019, IBM reported that the average time to identify a data breach was over six months. In 2020, they said the average cost of a breach is now $4.24m. Due to the widespread use of cloud-based vendors and the high costs and reputational damage associated with a data breach, cybersecurity risks from third-party vendors have become a strategic priority for most organizations. Current TPRM and VRM solutions are spread too thin to focus on cybersecurity risks originating from third-party vendors, and hence Cyber VRM has emerged as the leading solution to the challenge of managing vendor cybersecurity risk. 

Learn about the top VRM solution options on the market >

Why is Cyber VRM Important for Vendor Cybersecurity?

Cyber VRM is important because of the unique challenges faced by security teams worldwide in the face of an explosion of data and the pace of cloud adoption. Many TPRM solutions are too broad and don’t focus enough on cybersecurity effectively, leading to Cyber VRM emerging as a new category of cybersecurity risk management.

As businesses begin to rely heavily on global connectivity and digital storage of sensitive data, Cyber VRM solutions are especially necessary to protect against cybercriminals. Simple solutions such as antivirus software or password protection are things of the past as cyber attacks continue to grow in sophistication and new threats continue to emerge.

Common cyber risk management challenges faced by conventional approaches include:

1. Accurately identifying and assessing the cybersecurity risks posed by third-party vendors.

The rapid adoption of cloud-based vendors poses increasing risks for CISOs and security teams. Before the cloud era, the priority for security teams was protecting data and technology assets “behind the firewall” or wholly under the control of their organization. Now, accurately assessing cybersecurity risk has become a more challenging problem, with sensitive business information shared across third and fourth-party vendors to facilitate essential business tasks.

2. Rapidly responding to critical cybersecurity threats by continuously monitoring vendors and remediating risks.

Traditional vendor risk assessments may be too slow to detect and remediate cybersecurity risks. A decade ago, it was acceptable to run annual, even bi-annual vendor risk assessments. Today, it has become critical to understand what is happening between risk assessments. In 2019, IBM reported that the average time to identify a data breach was over six months. In 2020, they said the average cost of a breach is now $4.24m. Reducing the time to remediate the risks that cause data breaches is a top priority for security professionals.

3. Scaling third-party vendor risk management processes to meet the pace of vendor adoption.

Existing TPRM processes struggle to meet the pace of vendor adoption. More businesses than ever are moving their data to services run by cloud-based vendors, making them more vulnerable to the risk of data leaks and breaches. Some 94% of mid-sized essential businesses in the United States will adopt cloud technology this year, up from 25% that declared cloud a strategic priority in 2020. This trend represents a massive migration of data to the Internet. Meanwhile, 88% of businesses have low confidence in their current third-party vendor risk management processes.

While the cloud provides many great opportunities for business growth, cloud migration has left security teams with the essential question: how will we protect the ever-growing quantity of data now accessible via the Internet?

Learn how to choose automated vendor risk remediation software >

Vendor Risk Management (VRM) vs. Third-Party Risk Management (TPRM) vs. Cyber VRM

Third-party risk management (TPRM) is a broader category of risk management that covers all types of risks involved with third parties, including financial, environmental, regulatory, reputational, and cyber risks. In addition, third parties can include a variety of external organizations such as vendors, suppliers, wholesalers, authorized resellers, contractors, affiliates, or business partners, among many others.

Vendor risk management (VRM) is a more nuanced area of TPRM that only deals with third parties in the supply chain, which includes vendors, suppliers, manufacturers, contractors, and service providers. VRM processes help secure and manage all related potential risks (financial, regulatory, reputational, environmental, etc.) that directly apply to third-party vendors only.

Cyber vendor risk management (Cyber VRM) focuses strictly on the cybersecurity risks of third-party vendors and suppliers, including their information security practices and the use of information technology (IT) services, products, and tools. Cyber VRM practices help secure data for third-party vendors by using cyber solutions throughout the entire lifecycle by assessing cybersecurity risk, cyber incident response plans, and mitigation and remediation processes.

Learn about the top VRM solution options on the market >

Why Do You Need Cyber VRM from a Cybersecurity Vendor?

1. Cyber VRM helps you accurately identify and assess the cybersecurity risks posed by third-party vendors.

The focus of Cyber VRM is to help your security team accurately identify and assess vendor cybersecurity risks. The best Cyber VRM solutions incorporate accurate, timely findings from qualitative and quantitative sources, such as security questionnaires and ratings. Objective findings enable your team to quickly identify risks while reducing wasted effort in managing false positives.

2. Cyber VRM enables you to respond rapidly to critical cybersecurity threats by helping remediate and monitor all your third-party vendor risks.

Cyber VRM enables your security team to assess a vendor’s security posture with a quick rating, dive deeper using automated questionnaires, and manage the remediation process from a single platform. An integrated Cyber VRM solution removes the cost and complexity of stitching multiple disparate systems to run a third-party vendor risk program. You can also scale your process without needing to grow your team by instantly monitoring new vendors and requesting fast rescans for changes to verify your vendors’ remediation performance. Cyber VRM products combine the speed of security ratings with the risk remediation capabilities of IT VRM.

3. A Cyber VRM solution scales with your organization, helping you monitor all your vendors and ensuring your data is protected, especially in the cloud. 

‍According to a 2020 Ponemon survey, the typical enterprise has an average of 5,800 third parties. When evaluating a Cyber VRM solution, you should consider a technology and pricing model that enables you to scale, including monitoring fourth parties. The best Cyber VRM solutions help your organization trust but verify your vendor’s security performance by detecting and assessing emergent risks such as cloud data leaks.

What Features Should I Look For From a Security Vendor's Cyber VRM Solution? 

Software can be an effective way to manage cyber risk from third-party vendors. It's important to consider all the lists outlined above when assessing a potential Cyber VRM platform like UpGuard's Third-Party Risk Management software. A good product will be able to address the complete lifecycle from continuously monitoring third parties for cyber risks all the way to remediating them.

Security Ratings

Security ratings or cybersecurity ratings are a data-driven, objective, and dynamic measurement of an organization's security posture. They are created by a trusted, independent security rating platform, making them valuable as an objective indicator of an organization's cybersecurity performance.

Just as credit ratings and FICO scores aim to provide a quantitative measure of credit risk, security ratings aim to provide a quantitative measure of cyber risk.  

The higher the security rating, the better the organization's security posture.  

Security Questionnaires

Look for a solution that provides a library of pre-built questionnaires so you can quickly monitor your vendors against industry best practices and regulatory requirements.

Beyond standardized questionnaires, some organizations may want to develop their own security questionnaires based on their unique needs and desires. With UpGuard Vendor Risk, you can create your own custom security questionnaires.

Cyber risk assessments

The solution should have risk assessment workflows to conduct end-to-end tailored cyber risk assessments depending on a vendor's security posture.

Learn how to implement an effective VRM workflow >

Recommended security controls

The solution should be able to recommend the additional controls that third parties should implement to improve their security posture. 

Managed services

The best Cyber VRM solutions offer assistance in the form of managed services to work directly with third-party vendors to assess risks and remediate them.

Scalability and Automation

Not every solution will be able to provide the automation needed to scale and manage hundreds or unlimited third parties rapidly.

Nor does every solution provide the same level of coverage. If your organization employs small specialist vendors, ensure the solution covers them. For example, UpGuard scans over 2 million organizations daily, and customers can instantly monitor new vendors.

Remediation Workflows

A platform with remediation workflows will allow you to request remediation from a specific vendor based on automated scanning and completed questionnaires. It will also allow you to view current remediation requests, what risks were requested to be remediated, and when the remediation request was sent.

Reporting Library

It's important to be able to report on the results of your Cyber VRM program, whether that be to the Board, senior management, regulators, or colleagues. This is why a robust and easy-to-understand reporting capability is an important part of Cyber VRM.

Fourth-Party Discovery

It's important to understand who your fourth-party vendors are. While you may not have a contractual agreement with them, they can still impact your organization's confidentiality, integrity, and availability.

For example, even if you don't rely on AWS, but you have many vendors who do, an AWS outage could result in your organization being unable to operate.

Continuous Monitoring

To ensure you stay on top of new risks, you need an always up-to-date solution that is continuously updated to monitor the latest vulnerabilities and cyber threats.

Integration with GRC and VRM solutions

Make sure the solution can be integrated natively or via an API with other security, risk management, and incident management solutions like ServiceNow, JIRA, OneTrust, Splunk, RSA Archer, and more.

Accuracy and Thoroughness

Your third-party risk management program is only as effective as the data it relies on. If you use security questionnaires, try to use a well-tested template, and if you use security ratings, look for ones that adhere to the Principles of Fair and Accurate Security Ratings.  

• Transparency: UpGuard believes in providing full and timely transparency not only to our customers but to any organization that wants to understand its security posture, which is why you can request your free security rating here, and you can learn about how ratings are calculated.
• Dispute, Correction, and Appeal: UpGuard is committed to working with customers, vendors, and any organization that believes its score is not accurate or outdated.
• Accuracy and Validation: UpGuard's security ratings are empirical, data-driven, and based on independently verifiable and accessible information.
• Model Governance: While the datasets and methodologies used to calculate our security ratings can change from time to time to better reflect our understanding of how to mitigate cybersecurity risk, we provide reasonable notice and explain to our customers how their security rating may be impacted.
• Independence: No commercial agreement or lack thereof gives an organization the ability to improve its security rating without improving its security posture.
• Confidentiality: Any information disclosed to UpGuard during the course of a challenged rating or dispute is appropriately protected. Nor do we provide third-parties with sensitive or confidential information on rated organizations that could lead to system compromise.

What is UpGuard Vendor Risk?

UpGuard Vendor Risk is the first cloud-focused, cyber vendor risk management platform designed for security teams.

Vendor Risk helps you rigorously manage the complete lifecycle of vendor cybersecurity risk. From risk identification and assessment, through remediation and continuous monitoring, UpGuard integrates security ratings, automated data leak detection, security questionnaires, risk assessment, and remediation workflows into an easy-to-use platform. 

UpGuard helps protect your most sensitive data. Hundreds of the world’s most data-conscious companies are scaling faster and more securely by relying on UpGuard’s platform.

UpGuard is the only Cyber VRM solution that provides a complete view of a vendor’s cybersecurity risk. In addition to point-in-time assessments, UpGuard offers continuous vendor monitoring, providing customers with the ability to track changes in a vendor’s security posture over time.

UpGuard helps you accurately identify and assess the cybersecurity risks posed by third-party vendors.

• Our security ratings provide full transparency, down to the underlying findings, helping your vendors diagnose the cause of a scoring drop and lift their performance.
• Expert security analysts independently review cloud data leaks to assess the severity of every leak, ensuring your team focuses on working with vendors to remediate the highest priority leaks.
• Unlike most security rating solutions, UpGuard’s Cyber VRM provides deep visibility into a vendor’s security performance with automated security questionnaires. A key differentiator of UpGuard’s questionnaires is that vendor responses automatically map to hundreds of pre-defined cybersecurity risks, which form part of the security rating that a vendor receives.
• Vendors can create shared profiles to share their security posture proactively, and UpGuard’s growing library of content reduces the need for you to send questionnaires through automated risk detection.

UpGuard enables rapid response to critical cybersecurity threats by continuously monitoring your third-party vendors and prioritizing your risk remediation.

• UpGuard’s instant security ratings enable you to identify and prioritize risks as they happen. With over 2 million organizations scanned daily, the ability to generate instant reports, and rescan a vendor in real-time, you can expect to receive insights about your vendors whenever you need them. 
• UpGuard makes it easy to tier your vendors so that you can run efficient and optimal risk assessment processes against each vendor according to the importance of the vendor relationship.
• To quickly prioritize remediation efforts, UpGuard’s remediation planner clarifies which issues a vendor needs to fix. Combined with remediation workflows, it’s a speedy process to reduce your vendor risk exposure.

UpGuard scales with your organization, helping you monitor all your vendors, and protecting your data in the cloud.

Scaling a vendor risk management program is essential to keep pace with rapid cloud adoption. It only takes one vendor to suffer a data breach for the program to fail. For this reason, UpGuard offers features designed to help organizations scale, such as:

• Unlimited vendor monitoring that easily monitors thousands of vendors for some of the world’s largest companies.
• Unlimited data leak detection to ensure your organization is protected as you scale into the cloud.
• Vendor risk management services complement your team by providing an on-demand pool of expert risk analysts who can help relieve the burden of executing vendor risk assessments.

UpGuard provides actionable insights backed by robust assessment and remediation workflows.

UpGuard isn’t just another cybersecurity monitoring tool. UpGuard combines cybersecurity monitoring with risk assessments and remediation in a single, easy-to-use platform. With UpGuard, customers have the opportunity to reduce their vendor risk exposure rather than just knowing about their risks.

• Vendor risks surfaced by the UpGuard platform through security ratings, questionnaire responses, or cloud data leaks, are all managed through comprehensive risk remediation workflows. 
• Risk assessments provide a straightforward way to collect all the available information about a vendor and produce a complete audit trail to help satisfy the needs of auditors and regulators. Our risk assessment feature lets you take a snapshot of your risk profile at assessment time, document the remediation, and export an assessment seamlessly. 
• Public breach notifications and security incident reports uncover external events affecting your vendors, helping your security team take action.

UpGuard is easy to use and constantly improving, so you’ll always have access to the latest vendor cybersecurity technology.

• Legacy IT VRM solutions require complex implementation and weeks to onboard. All it takes is a 45-minute onboarding call for security teams to be productive with UpGuard.
• Our customers independently rate UpGuard a 4.5/5 on Gartner’s Peer Insights. 
• UpGuard adds new features every month. Our world-class engineering team constantly iterates upon every facet of UpGuard’s platform. From our proprietary data leak detection engine to discovering previously unknown threat vectors, you’ll always have access to the latest security technology.

What Makes UpGuard the Top Cyber Risk Management Solution? 

UpGuard Vendor Risk is a comprehensive cyber risk management, TPRM, and VRM solution that helps organizations streamline critical processes in every stage of the vendor lifecycle. From due diligence to risk assessments and compliance reporting, UpGuard Vendor Risk offers powerful workflows, insights, and data.  

The UpGuard Vendor Risk toolkit includes several features: 

• Vendor Risk Assessments: Fast, accurate, and provide a comprehensive view of your vendors’ security posture 
• Third-Party Security Ratings: An objective, data-driven, and dynamic measurement of an organization’s cyber hygiene
• Vendor Security Questionnaires: Flexible questionnaires that accelerate the assessment process and provide deep insights into a vendor’s security
• Stakeholder Reports Library: Tailor-made templates allow personnel to communicate security performance to executive-level stakeholders easily  
• Remediation and Mitigation Workflows: Comprehensive workflows to streamline risk management processes and improve security posture
• Integrations: Easily integrate UpGuard with over 4,000 apps using Zapier
• 24/7 Continuous Monitoring: Real-time notifications and around-the-clock risk updates using accurate supplier data
• Intuitive Design: Easy-to-use vendor portals and first-party dashboards‍
• World-Class Customer Service: Professional cybersecurity personnel are standing by to help you get the most out of UpGuard and improve your security posture