The vendor risk management process aids businesses in assessing and managing risks. These risks are related to outside suppliers, IT services, and goods. It is a regulation that companies use to evaluate suppliers, business associates, or third-party vendors. It is done before establishing a business relationship and during the contract period. With enterprises becoming more complex, it has become increasingly common for businesses to outsource parts of their operation.
For example, you contact an accountancy firm or service to help with accompanying tax and compliance. As a result, your delicate monetary details will be held by the accountancy firm or accessible through their cloud-based software. Your business risks facing a distressing cybersecurity threat that might disclose your company's or an employee's financial information if the third party is compromised.
Now let’s move further to get some insights on VRM outcomes from the year 2022
Vendor Risk Management Outcome of 2022
In 2022, the risk management countryside experienced multiple confusing changes. This included new regulations and resulting technologies to restore further the connections between IT and non-IT evaluations of third-party vendors and suppliers. While cyberattacks on companies of all sizes have increased, so has geopolitical risk, inciting new government sanctions and stringent rules to preserve human rights violations.
Other issues businesses encounter includes personnel shortages, prolonged supply chain outages, and the work-from-home argument. As if these weren't enough, vendor fiscal health and firm continuity remain important third-party risk management concerns.
Businesses need to investigate and monitor their third-party suppliers and vendors. Numerous reasonable and physical threats can disrupt a third-party vendor or service. As a result, businesses should widen the scope of their evaluations to include more risk regions in their research.
Also, get insights on Vendor Risk Management with ServiceNow
Some Key Takeaways From 2022
1. Regulatory compliance is essential.
2. Supply chains need to be made more resilient.
3. Cybersecurity is a major concern.
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Top Vendor Risk Management Trends & Predictions
Firms face many challenges in today's complex and changing global marketplace. This includes forecasting, ability retention, increased costs, and continuous global supply chain disruptions. These are just to name a few prominent issues.
The good news is that companies are aware of these concerns and notice the need to upgrade their risk management positions in the coming period. According to a current report from Protiviti, firms of each size — from established big-league businesses to small startups — plan to strengthen their risk management processes in 2023.
1) Vendor Breaches Will Continue to Rise
The frequency of supply chain attacks has increased 300% in the past year alone. Also, there is no indication that this vendor risk management trend will change in 2023. Microsoft predicted last year that the SolarWinds attack was so cultured that it possibly enforced over a thousand engineers to execute.
It was later found that the hackers didn’t need such sophisticated plans. But in practice, assaults with this level of complexity happen more frequently than ever. Unfortunately, SolarWinds was only the beginning.
There will be more large-scale vendor attacks and instances where well-skilled threat players will target supply chains rather than real firms. In the future, companies will need to investigate all potential partners extensively.
2) New Risks Are Emerging at an Exceptional Pace
Digital transformation and worldwide supply chain trends have created a new element of risk for organizations. The workforce has been dispersed and accompanying many firms shifting to remote office work as the standard processes have had to adapt. As a result, the digital transformation of enterprises rapidly accelerated at an exceptional rate. These trends have generated big opportunities and also brought in a new dimension of risk for organizations.
Technological advances have transformed operating models and how employees work and live. This has reshaped shareholder expectations, requiring firms to accelerate digital plans to build a competitive advantage. The ongoing disruptions to the all-encompassing supply chain have still had an overwhelming ripple effect across many lines of enterprises. These surroundings require a deeper recognition of the external and system risks that threaten commercial and operational resiliency.
3) Privacy Laws Will Take Center Stage
Governments and regulatory organizations are aware of the uncertain, challenging environment that modern businesses operate in. But legislative progress usually proceeds moderately. Gartner thinks that by next year, 75% of the world’s population will be subject to at least one set of privacy rules. You must, therefore, immediately begin setting up the foundation for adapting to those changing environments, beginning with a framework for vendor risk management.
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4) Budgets are Limited While Demand for Risk Management Increases
The economic concern is compelling risk teams to address growing risk demands with existing resources. The current post-pandemic environment, geopolitical uncertainty, regulatory changes, rises in inflation and recession fears are sustaining the need for enterprises to be more creative and accelerate performance. Many leaders hesitate to make new investments in this environment, and the pressure on the existing headcount is high.
The challenge for risk management groups is that they are requested to provide risk insights in new areas without new resources. The good news is that purpose-built technology solutions also allow teams to improve their impact without needing additional associates. Information collection for risk response and data for board reporting are only two examples of the repetitious administrative operations the program may automate and improve. This free-up teams to focus on other aspects of risk management more actively and creatively without requiring more resources.
Learn more about how ServiceNow can help you streamline your vendor risk management processes and protect your business from potential risks.