What is vendor risk?

Vendor risk refers to the potential risks that an organization faces when working with third-party vendors, suppliers, or service providers. These risks can arise due to a variety of factors, including inadequate security measures, operational disruptions, compliance failures, data breaches, financial instability, and reputational damage.

Vendor risk management involves identifying and assessing these risks, developing mitigation strategies, monitoring vendor performance, and maintaining a proactive approach to vendor management to ensure that the organization’s operations are not disrupted and its assets are protected. Effective vendor risk management is essential for organizations that rely heavily on external vendors and third-party services to maintain their operations.