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Vendor Offboarding: A Checklist for Reducing Data Breach Risks

Follow these 6 steps for more secure and efficient offboarding when third-party relationships are terminated.
August 18, 2021
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Vendor offboarding is the practice of effectively removing a vendor's access to systems, data and corporate infrastructure upon the conclusion of a contract. Building a carefully considered process to efficiently and securely offboard vendors is a key component of any third-party risk management program.

Many organizations fail to completely offboard vendors, leaving them with access to IT environments and sensitive information – creating security and privacy exposures as a result. These post-contract exposures can result in data breaches, compliance violations, damaged reputations, and lawsuits.

This is particularly true for large companies with many different siloed departments. Some organizations resort to using spreadsheets to try and keep track of hundreds of vendors across multiple business units as part of an ad-hoc approach. While this may work temporarily, it often results in security lapses that could leave you vulnerable to a third-party data breach.

This article provides an easy-to-reference checklist to ensure that vendors are competently and quickly offboarded. If you are concerned about your vendor offboarding processes, it may be worth considering using a third-party risk management platform to help centralize vendor data and build clear workflows for the entire vendor risk management lifecycle.

Vendor Offboarding and Third-Party Risk

Both vendor onboarding and offboarding processes are closely tied to third-party risk. Failing to have a centralized database of vendors and a well-defined offboarding process can result in significant risks to the enterprise. In fact, 60% of organizations don’t consider third-party risk when offboarding a vendor. When companies take an ad-hoc approach to vendor offboarding, they not only risk third-party or Nth party data breaches, but they also run a substantial risk of third-party risk management compliance issues.

While the checklist below can help you avoid future headaches related to poor vendor offboarding procedures, it must be understood that vendor offboarding is a larger function of the vendor management lifecycle. Without a well-defined vendor risk management program it can be difficult to effectively understand and mitigate risk.

Vendor Offboarding Checklist

Having a documented vendor offboarding checklist that’s applied uniformly across the enterprise can make it easy to ensure that vendors are effectively offboarded and that their access to IT environments and sensitive data is removed.

1. Perform a Final Review of the Contract

Your first step when offboarding a vendor should be to review the contract. Ensure that the vendor provided all the contractually obligated goods and services. As the vendor’s contract progresses, take note of any changes to the scope of work or termination procedures required. This enables you to effectively review your notes during the offboarding process to ensure that the termination process is handled properly.

2. Settle Any Outstanding Invoices

Once a vendor has completed their work for your organization, it can be easy to lose track of making any final payments. After you review the contract and have ensured that the vendor has lived up to their obligations, check with your finance department to ensure that all outstanding invoices are scheduled for payment.

3. Remove Access to IT Infrastructure

Without a clear offboarding workflow, third-party vendors may retain access to IT infrastructure after the contract provisions have expired. This presents a two-pronged risk. First, if the vendor has access to systems storing sensitive data, then this could present third-party compliance risks. Secondly, if the vendor experiences a data breach or insider threat and still has access to your systems, your organization could be affected as well.

Be sure to carefully record which systems each vendor has access to. Having a centralized vendor risk management database can make this process significantly easier. Once the contract has expired, carefully review each IT system to ensure that access has been fully revoked. Make sure to document that all systems have been reviewed and that access is fully removed.

4. Revoke Access to Physical Buildings and Infrastructure

Many organizations focus heavily on IT systems and remote access, however, it is also critical to revoke access to physical buildings and systems. Insider threats account for an astonishing number of data breaches, and by failing to revoke physical access you leave yourself vulnerable. Work with your physical security teams to ensure that there is a clear process in place for managing physical vendor access.

5. Review Data Privacy and Information Security Compliance

Depending on the nature of your business, you are likely bound by several data privacy and information security compliance requirements. These might include CCPA, GDPR, CMMC, PCI DSS, and others. When offboarding vendors, it is critical to review compliance requirements and ensure that vendor termination procedures are aligned with legal obligations. Third-party risk management platforms will have built-in reporting that aligns to these regulatory obligations, which can simplify the compliance process.

Many organizations assume that data destruction occurs as a matter of course upon the conclusion of a contract. This dangerous practice can lead to data breaches and legal consequences even years after a vendor has been offboarded. Take the time to formally confirm that a vendor has destroyed any sensitive data they worked with while fulfilling their contractual obligations.

6. Update Your Vendor Management Database

Your last step should be to update your vendor management system with all termination procedures undertaken. This allows you to have a single point of reference if any questions arise regarding termination processes and vendor access. Make sure that all communications, contracts and other documentation between your organization and the vendor are also stored so that you can quickly resolve any questions or issues moving forward.

Next Steps for Improving Your Vendor Offboarding Process

Manually managing vendor offboarding across a large organization can drain even well-staffed risk management teams. While taking steps such as centralizing vendor data, and ensuring uniform offboarding processes across the organization can help, most large organizations benefit enormously from utilizing a dedicated third-party risk management platform.

A dedicated platform can help your organization get insight into post-contract exposure and take effective actions to mitigate risk. In addition, it can serve as a single point of reference for all vendor data, communications, compliance concerns, and contracts. This enables you to effectively manage the entire vendor lifecycle with confidence and ensures that you are making effective use out of your internal risk management department.

Interested in how Prevalent can help reduce risk during offboarding as part of your broader third-party management lifecycle? Request a demo today.

Prevalent takes the pain out of third-party risk management (TPRM). Companies use our software and services to eliminate the security and compliance exposures that come from working with vendors and suppliers throughout the third-party lifecycle. Our customers benefit from a flexible, hybrid approach to TPRM, where they not only gain solutions tailored to their needs, but also realize a rapid return on investment. Regardless of where they start, we help our customers stop the pain, make informed decisions, and adapt and mature their TPRM programs over time.
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