Why and How to Use Risk Intelligence for Continuous Vendor Monitoring

Most organizations understand that comprehensive third-party risk management includes ongoing monitoring. Even so, many organizations struggle to monitor their vendors once a contract is signed and they’re quietly hopeful that periodic risk reviews will be enough to meet regulatory requirements and best practices. Though periodic risk reviews and due diligence updates are essential, they’re also only a snapshot in time. As most third-party risk professionals know, vendor risk profiles can change dramatically in a short amount of time. While constant day-to-day monitoring is necessary, it isn't always easy.

Why is effective ongoing monitoring so difficult for many organizations? Truthfully, ongoing monitoring can be tough when there is a lack of actionable information. Vendors don’t always disclose problems proactively, if at all. Meanwhile, search engine news alerts can overwhelm you with information that isn’t relevant, timely, or factually correct. In most cases, your organization is already behind when negative vendor news becomes public information.

Despite these challenges, ongoing monitoring is still necessary to ensure that your organization meets regulatory requirements, protects sensitive data, avoids financial losses, and maintains a positive reputation.

Vendor Risk Intelligence Is Now Widely Available

Many firms now offer risk intelligence products designed to help third-party risk teams and their organizations stay one step ahead of new and emerging vendor risks. These services, which are usually sold as a subscription or one-time report services, can be the most valuable tool in your monitoring toolbox. Let's explore how these services work and the risk domains that are typically covered. We’ll also discuss how to use these services, what to look for in a provider, and three compelling reasons to supplement your ongoing monitoring with vendor risk intelligence.

How to Use Risk Intelligence in Your Third-Party Risk Management Program

Using risk intelligence to supplement your ongoing vendor monitoring is a sound strategy. However, there are other uses for risk intelligence, as well.

Using risk intelligence can help your organization:

• Highlight risks during pre-contract evaluations and vetting
• Prioritize vendors for risk mitigation management
• Provide a consistent approach for comparing vendors for the same product/service
• Identify and justify risk-driven contractual clauses as a new customer
• Give visibility to the risks of fourth parties, fifth parties, etc. The use of risk intelligence can help identify fourth parties' risks and make them more discoverable
• Gather directional guidance and determine actions to take

Three Compelling Reasons to Use Risk Intelligence

There is no doubt that vendor risk intelligence can be an amazing tool for identifying and managing vendor risks in your organization. Still, there may be concerns over the potential costs of these services or the work of incorporating new risk data. Some may even wonder if risk intelligence is necessary or if it’s just another fad.

The truth is that vendor risk is here to stay, and the threat landscape has continued to grow.

The smartest organizations consider the potential damages a single bad vendor can cause. However, if you’re still on the fence regarding risk intelligence, here are three compelling reasons to consider using vendor risk intelligence.

1. Your TPRM team can't do it all
   Even in the most well-resourced and mature organizations, TPRM teams can be overwhelmed with the number of processes and tasks they must complete daily. Ineffective or manual processes for monitoring vendor risk add additional workload to an already overloaded plate. In these cases, vendor risk monitoring becomes a reactive exercise vs. a proactive one. Adding vendor risk intelligence can often add more value to the risk monitoring process than adding full-time employees.
2. The cost of a data breach
   According to the Ponemon Institute's Cost of Data Breach Report 2022, the average cost of a data breach has reached an all-time high of $4.35 million. Constant proactive monitoring of your vendors can help detect security vulnerabilities before a major breach or another cyber incident occurs.
3. Ongoing monitoring is both a regulatory requirement and best practice
   Your organization is responsible for the effective risk monitoring and management of its vendors. In addition, regulators won’t be very understanding if you fail to establish a proper vendor risk monitoring posture, especially if you claim insufficient resources. Your existing resources can leverage tools like vendor risk intelligence to improve and strengthen your risk monitoring practices.

Ongoing vendor risk monitoring is essential for effective third-party risk management. It can be greatly enhanced with the addition of tools such as vendor risk intelligence. Suppose your organization hasn’t yet explored the many benefits of using vendor risk intelligence. In that case, it's a great time to investigate adding it to your third-party risk management toolkit.