Why is Due Diligence Necessary When Dealing With External Vendors?

Due diligence is an integral part of vendor risk management. In fact, it may be the most important task you can do when setting up your vendor network. But why?

3 Reasons Vendor Due Diligence is Needed

It helps protect your company. By conducting thorough due diligence and a proper vetting of each vendor, you will detect any areas of concern and/or be able to determine the best partner for your business. Every company will look good by the information they provide, it is by digging deeper with proper analysts where you can find the information you need to make the best decision for your business.

It exposes vulnerabilities of the third-party. And by extension, saves your company from any exposure to risks associated with a vendor that may not be disclosed upfront. For instance, data breaches at third-party vendors are increasing. Your company could be held liable for the cost of your customers’ data even if it is breached at your third-party associate. Knowing that security breaches attributed to vendors has increased from 20% to 28% in recent years (according to PwC’s Global State of Information Security Survey), conducting due diligence on all potential third-party partners is a must.

It is often required by regulators. Due diligence is expected to be performed on all third parties by all of the major regulators. They will require your company to include due diligence in your vendor risk management program. To ensure you meet regulations or requirements of your regulator, it is important to know what other major regulators expect. For instance, OCC Bulletin 2013-29 is considered a must read for regulatory due diligence requirements as we as OCC 2017-7 and the FFIEC guidance on managing outsourced technology.

Implementing a Vendor Risk Management Program

Due diligence is the key to a proper vendor risk management program. By ensuring your company fully vets all of your potential vendors or third-party partners, you will protect your company against multiple risks and possible data breaches. SubRosa Cyber Solutions’ vendor risk management program is a fully scalable solution that can be implemented quickly, and you can assure your organization is protected against third-party risks. SubRosa Cyber Solutions will work closely with your company to implement vendor risk management tools to better assist you in managing vendor cybersecurity risk.