Vendor Management Step One: The Threshold Analysis
“We don’t do diligence on that vendor because we have mitigating controls in place.”
A common problem in most organizations is that nobody is on the same page about the way vendors are classified. Purchasers are classifying them by ease-of-use, CFO’s by value, Compliance Officers by residual risk, and information security professionals are just now getting a handle on the issue.
We have found that the easiest manner of classification considers the following factors:
- Access to Information: If they host (possess, take-with-them, provide-in-the-cloud-services) information that is considered to be confidential or critical in nature (see data classification articles) then they should be considered to be Critical Vendors. If they have access to information temporarily, and that information is not large volumes of customer information (NPI), then they should be considered High Risk. We have a handly “threshold analysis” that helps sort through these questions.
- Business Impact: If the vendor provides a product or service that, if suddenly unavailable, would cause a critical business impact, that vendor should be considered a Critical or High Risk Vendor, depending upon available mitigating controls or compensating factors. Again, we have a template “threshold analysis” that helps sort through these questions.
A good threshold analysis helps lay a paper-trail not only for those vendors whom you perform due diligence upon, but more importantly, for those vendors you do NOT scrutinize. The analysis should be quantitative, and it should be applied to all vendors at least once.
We actually suggest a quantitative analysis be run on all active vendors periodically (for our program, it’s every three years.) New vendors are analyzed, of course, prior to engagement. But to make sure nobody falls through the cracks . . . . and they do . . . . and to also be sure that changes in service-sets do not change vendor profiles enough to change their classification . . . we run a full analysis on all active vendors every three years. Some of our bank clients do this annually, others bi-annually.
The minimum-effective-dosage approach to vendor management would warrant that at least once, all active vendors undergo a full analysis. The analysis would consider various risk-factors such as type of information, type of access to the information, volume, how easy it is to replace the vendor, and other questions along side the standard financial statement and security controls review.
It is important to remember that the initial threshold analysis is about inherent risk, rather than residual risk. The controls we can apply should not factor into determining whether we should consider the controls we can apply. (Re-read that sentence, it is correctly stated.) Very often we will hear statements like, “we didn’t put them through the threshold analysis because we do background checks on their employees for them.”
A templated threshold analysis is available as a stand-alone document and is also available in our Vendor Management Kit. Of course, Clients are welcome to any of our boilerplates at no charge, just e-mail us.
The threshold analysis is where we sort vendors by Inherent Risk.
Another awareness poster for YOUR customers (and users). Now that we have our own employees aware, maybe it’s time to start posting content for our customers! Download the large versions here: Awareness Poster (Portrait) Awareness Poster (Landscape) You are welcome to print out and distribute this around your office.
Intelligence agencies from five nations contributed to the new advisory… An article review. For the first time, the cybersecurity divisions of the nations in the “Five Eyes” alliance (The United States, United Kingdom, Canada, Australia and New Zealand) have released a joint advisory concerning incident response. The report, available here, does not provide a complete […]
PRESS RELEASE – FOR IMMEDIATE RELEASE BUSINESS NEWS NEW EMPLOYEE FOR INFOTEX infotex has just hired Nathan Harrell, to be a new Engagement Coordinator to assist with all communications between both current and prospective Clients. “We’re really excited to have Nate joining the team to help us keep the channels of communication open!” says Bryan […]
A Webinar-Movie Short Back by popular demand! Our Board Awareness Training program continues with this movie, entitled Vulnerability Management for Directors, that can be presented directly to your board of directors.
Nearly half of all companies expect a security issue due to telecommuting… An article review. A few months ago we discussed a warning from the Department of Homeland Security regarding hackers taking advantage of the business disruptions caused by COVID-19, and according to an article shared with us by our friend Wes Pollard it appears […]