The Vendor Risk Management Playbook: What Not to Do

In today’s hyperconnected world, organizations rely on a complex web of vendors to support their operations. However, managing vendor risk effectively requires a balance between security, efficiency, and practicality. Unfortunately, many organizations fall into common pitfalls that not only hinder security but also create unnecessary friction in their processes. Let’s explore some of these missteps and how to avoid them.

1. Collect Data with Purpose, Not Just for the Sake of It

A common mistake in vendor risk management is collecting excessive amounts of data without a clear strategy for how to use it. Some teams believe that more data equals better security, but without a defined plan for analysis and action, the result is just an overwhelming pile of information. Instead, focus on gathering only the data that directly informs risk decisions and aligns with business objectives.

2. Respect Startups' Bandwidth When Assessing Vendors

Startups and smaller vendors often receive massive, enterprise-level security questionnaires that would take weeks to complete. Expecting them to provide detailed responses within unrealistic timeframes leads to frustration and incomplete answers. A more effective approach is to tailor risk assessments to the vendor’s size, the nature of their service, and the actual level of risk they pose to your organization.

3. Streamline Vendor Risk Tracking

Managing vendor risks through an unorganized mix of spreadsheets, email threads, and disconnected tools is a recipe for confusion and inefficiency. Organizations should invest in centralized platforms that provide real-time tracking, automation, and clear workflows. This minimizes human error and ensures a more structured approach to managing risk and remediation efforts.

4. Risk Categorization Should Be Meaningful, Not Just Overly Cautious

Labeling every vendor as "high risk" might seem like the safest approach, but it often leads to unnecessary scrutiny for low-risk providers while desensitizing teams to genuinely high-risk relationships. Implement a structured risk assessment model that considers factors such as data sensitivity, integration depth, and historical security posture before assigning risk levels.

5. Security Scans Are Tools, Not a Complete Solution

Relying solely on external security scanning tools to assess vendor risk is like judging a book by its cover. These tools provide valuable insights but do not offer a full picture of a vendor’s security posture. They should be supplemented with in-depth assessments, compliance reviews, and ongoing monitoring for a more comprehensive risk management strategy.

6. Don’t Be Reactive – Monitor Vendors Before a Breach Happens

If the first time you review a vendor’s security is after their data breach makes headlines, you're already too late. Continuous monitoring, regular audits, and proactive engagement with vendors help organizations stay ahead of potential risks rather than scrambling for damage control when an incident occurs.

7. Risk-Based Procurement, Not Bureaucratic Hurdles

Low-risk vendors often face an arduous approval process, while critical vendors sometimes slip through procurement with minimal scrutiny. Risk management should be proportionate to the vendor’s impact on the organization. Establish clear, risk-based procurement workflows that streamline approvals for low-risk vendors while enforcing strict due diligence for high-risk ones.

8. Verify, Don’t Just Take Their Word for It

Self-assessment questionnaires are valuable tools, but taking them at face value—especially for critical controls—can be a major mistake. Instead of relying on unchecked responses, validate vendor claims with independent audits, certifications, and security testing where applicable.

9. Vendor Reviews Should Be Structured, Not Surprise Attacks

Springing last-minute compliance requests on vendors with unreasonably short deadlines damages relationships and leads to rushed, inaccurate responses. Instead, establish a transparent review process with clear expectations and sufficient lead time to ensure vendors can provide meaningful, verified compliance evidence.

10. Security Policies Should Be Practical, Not Novels

Creating security policies that are overly long and complex does not enhance security—it deters people from reading and following them. Instead, focus on clear, actionable, and well-structured policies that align with business needs while ensuring compliance.

11. Governance Meetings Should Drive Action, Not Just Status Updates

Holding recurring governance meetings where everyone presents status slides but no real decisions are made is an ineffective use of time. These meetings should focus on actionable outcomes, clear accountability, and measurable progress toward risk management goals.

12. Right-Sized Security for the Right Vendor

Applying enterprise-level security requirements to small, low-risk vendors can lead to unnecessary bottlenecks and resistance. While security is important for all vendors, it should be proportional to the risk they introduce. Focus on meaningful security measures that align with the vendor’s role and the level of exposure they bring to your organization.

13. Continuously Educate Your Internal Teams

Vendor risk management isn’t just about assessing external parties—it also requires educating internal teams on best practices. Providing ongoing training on vendor risk policies, emerging threats, and security requirements ensures that stakeholders make informed decisions throughout the vendor lifecycle.

14. Foster Strong Vendor Relationships

A transactional, compliance-only approach to vendor risk management can create friction. Instead, build strong partnerships with key vendors by fostering open communication, collaborating on security improvements, and working together to mitigate risks effectively.

15. Leverage AI and Automation for Smarter Risk Management

Manual processes can slow down vendor assessments and increase the likelihood of oversight. Leveraging AI and automation for continuous monitoring, risk scoring, and compliance tracking can help organizations stay ahead of potential threats while reducing administrative burden.

Conclusion: A Smarter Approach to Vendor Risk Management

Effective vendor risk management isn’t about taking the most extreme security measures possible; it’s about striking a balance between security, efficiency, and business needs. By avoiding these common missteps, organizations can create a vendor risk management program that is both practical and effective—ensuring security without unnecessary friction.