What to Look for in a Vendor Risk Assessment Report

Vendor risk assessment reports are essential to your third-party risk management program. Beyond highlighting program weaknesses or gaps in security controls, good reports also help strengthen vendor relationships, demonstrate proper due diligence and risk management to regulators, and shed light on best-practice security controls.

So, what makes a good vendor risk assessment report? Broadly, there are three core elements to consider: continuous vendor risk assessment, regulatory compliance, and cybersecurity reports for vendor due diligence. In this article, we go over these core elements and other critical considerations in your vendor assessment reports.

Continuous Vendor Risk Assessment Reporting

Gone are the days where vendor evaluations were conducted using a “one-and-done” approach. To stay on top of evolving threats, it’s critical to conduct the vendor risk assessment process on a regular basis. This is typically done with a pair of report types: initial risk summary reports and final risk summary reports.

Initial Risk Summary Reports

The Initial Risk Summary Report provides internal teams and third-party vendors with details on risks in their environments that require mitigation or compensating controls. You can think of it as a “pre-test” that identifies where the third party is doing well and where they need to improve. The report should be flexible enough to display risk ratings and other important details, while allowing stakeholders to drill-down to the most critical vulnerabilities. Mature third-party risk programs use this type of report to add leverage to vendor discussions and negotiate remediation commitments.

Final Risk Summary Report

The Final Risk Summary Report builds on the Initial Risk Summary Report by detailing any justified risk adjustments, remediation plan commitments, and/or compensating controls. It essentially documents what you are going to do about the risk. It should also be a living report that is updated whenever a risk is identified, verified, or mitigated – or when specific incidents or alerts otherwise call for an update. This report serves to document vendor commitments, record implemented security measures, and keep track of any related vulnerabilities revealed after the initial controls assessment.

Regulators often require both Initial and Final Risk Summary Reports as evidence of a closed-loop process whereby you inform vendors of any vulnerabilities revealed during assessments, track and validate risk remediation, and continuously communicate met and missed commitments.

Vendor Risk Assessment Reports for Compliance

Regulators need to determine if your third-party risk management complies with best practices for vendor risk assessment, and reporting can make or break your compliance initiatives.

Compliance reports function as TPRM table stakes. However, they can also provide internal visibility into these best practices, so department leaders can make informed decisions that also align with compliance goals. For example, privacy departments need risk reports that include context around CCPA, GDPR and other compliance regulations.

Think of each compliance regulation or framework as a different language. Your vendor risk assessment data needs to be translated into each language for effective compliance reporting. That’s why your third-party risk management solution should include capabilities like risk-to-compliance mapping, compliance-specific dashboards, and reporting on “percent-compliant” for individual regulations.

To speed compliance reporting and gain visibility into each vendor’s level of compliance, start by establishing a compliance “pass” percentage threshold for each risk category. Your reports should tie back to percent-compliant ratings, enabling your assessment team to focus on areas where compliance pass rates are low.

Also, don’t stop at the vendor level. Conduct compliance at a macro level across all vendors. This will be important for the board as they seek to determine how compliant the vendor portfolio is against the ever-changing and new regulations.

Prevalent has a detailed white paper on third-party risk management and compliance that extracts the specific requirements set forth in multiple regulations and industry frameworks; explains what those requirements mean; and then maps key solution capabilities into the requirements to demonstrate how a complete TPRM platform can help ease the burden of compliance.