Conducting supplier security risk management is vital in keeping up with a thorough organization risk management.
But, what really is supplier security risk management? How can you classify vendors? Also, why is it important to implement such in an organization?
Read on to find out more.
What Is A Supplier Security Risk Management?
Supplier security risk management is also called vendor risk management. This practice refers to the management, monitoring, and dealing with risks from third-party vendors. Most specifically of those relating the IT or information technology services.
Conducting diligent supplier security risk management aids in mitigating risks.
Yet risks are hardly inevitable. Although you cannot fully eradicate threats and risks. But you can change and improve the way you deal with vulnerabilities.
And this is what efficient supplier security risk management is all about.
What Are The Different Types Of Suppliers?
Suppliers or vendors can be generally broad. Yes. Suppliers are diverse in nature, and so do they in ways they help companies grow. But, you can classify them for better management.
Below are the three (3) basic types of suppliers.
- By Services– these can include financial, and custodial services. In addition, you can also have services relating to components and logistics. These vendors can be anyone who offer any goods or services to you.
- By Industry Specialty– specific industries also have more specific needs of potential vendors. For instance, a freight company has a very different list of vendors from a food services company. Of course, they are opposite by nature, so they should have differing needs for partners too.
- Geography– in some cases, entities partner from companies overseas. Factors like cost-efficiency and labor costing may contribute. However, this will also present some unique challenges. Time zone differences, language, and political culture, to name a few.
How Many Suppliers Should A Company Have?
Actually, there is no clear cut for the ample amount of vendors or suppliers in each company. Because basically, each company differs in size and needs.
So it should greatly depend on the size, products, and services that a company has.
For example, consider the following examples:
- Procter & Gamble- has 75,000 suppliers
- Microsoft- has 80,000 suppliers
- Wal-Mart- has 100,000 suppliers
Well, the number may be big, because they are big entities. On the other hand, small to medium-sized companies can have dozens to hundreds of suppliers.
Why Is Supplier Security Risk Management Important?
In a word, for security.
Suppliers can gain access to your company’s PII, psychographics, and also PHI. This practically means that the likelihood of security threats is also inevitable.
So this brings us down to our focus- effective risk management.
Besides, studies show that the trend of making use of vendors or suppliers is here to stay. After all, suppliers can provide the benefit of specialization, globalization, and cost-efficiency.
Certainly, suppliers are vital in keeping a company thrive. That is why federal laws impose data protection regulations. For example, CCPA, GDPR, LGDP, and the SHIELD Act.