Vendor Risk Management (VRM) has emerged as a crucial area of concern for organizations due to the increased threat landscape and challenges arising from the global supply chain. Business entities are stepping up the focus and investment towards third-party pre-screening. They use AI for enhanced risk profiling and acquire and deploy acquiring and deploying UTMs to protect the business.
Additionally, cooperation and law observance are now considering sustainable and ethical processes to turn to customers. They are trying to achieve this by developing and adopting innovative trends. This means you can construct a more reliable and sustainable supply chain on the ServiceNow partner portal. Vendor Risk Management helps in the future success of a globally integrated environment.
Now, let’s look at all the emerging VRM trends that you should know and their importance. We will also discuss how these trends will help you with risk management.
Increased Emphasis on Third-Party Due Diligence
The significance of third-party due diligence in vendor risk management cannot be overstated in 2024. The advantages of due diligence encourage companies to use them. Here are some of the features you should know before choosing it.
The use of international databases and vendor watch lists to ensure that the names of all the unaffiliated vendors are correct. Another advantage is choosing a vendor from the ServiceNow partner portal, which saves you valuable time.
Seeking any signs of corruption, other reputational problems, or ethical problems while your third-party partner is being mentioned in the press releases, media, internet, and other relevant areas.
Verifying in official records or watchlist databases as to whether the third party or its principals and owners are of a designated country.
Third-party due diligence ensures that you use a system that has checks and balances or tries to cross-check the information you gathered through your inquiry with the information the subject of your inquiry provided in your due diligence questionnaire.
Increased due diligence involves executing investigations that may include local intelligence requirements for research and site visits, ‘word of mouth’ inquiries or offline research on ownership or documentation like filings. Sometimes, it is these key configurations that take time to fix which can be easily handled by ServiceNow Partners.
Integration of AI and Automation in Risk Assessment
By measuring and ranking vendor risks, artificial intelligence (AI) plays a critical role in vendor risk management. Instead of responding to possible dangers reactively, it helps organizations to neutralize them proactively. An AI tool, for example, can evaluate the financial health scores of vendors and notify them of hazards before they impact the supply chain. Here are some additional benefits you can get:
- Risk Assessment and Detection: Mechanisms of AI integration with the ServiceNow partner portal can identify threats that could be unnoticed by human analysts during data analysis of unstructured information coming from various sources.
- Prevention and Prediction: Despite the current threats, AI can acknowledge present and predict future threats.
- Enhanced Productivity: AI can efficiently manage the heavy mechanical risk management responsibilities leaving the complex tasks to be performed. Thus, the general overemphasis on risk improves the prospects of risk assessment and risk management.
Get more insights on 10 Effective Risk Management Strategies for ServiceNow GRC
Focus on Cybersecurity and Data Privacy
According to the IBM Cost of a Data Breach, the average cost of a data breach in the healthcare segment is USD 10.10 million while breaches in the hotel industry cost them USD 2.9 million.
Inadvertently, with today's rapidly growing technology, protective measures against cyber threats are crucial for cost-effective vendor risk management. These aspects must be addressed to ensure organizations protect critical information and prevent third-party risks.
1. Data Minimization
Vendor Risk Assessment means identifying precisely what information is processed, located, and accessible to others. By identifying these aspects, organizations can also measure the risks associated with them. Adopting the ‘Need-to-Know’ principle to minimize data collection and retention dramatically reduces the exposure to such threats. This means the fewer data you hold, the less likely you are to be targeted by cybercriminals.
2. Continuous Monitoring
This type of monitoring acts as a safeguard to alert the organization of possible threats that need to be dealt with before they become threats to the organization. For CISOs, ensuring constant scouting is paramount in preventing such attacks from persisting.
Vendor Risk Management goes with protecting the data and reducing the effects of an attack. By keeping track of the vendors, their actions, and decisions, one can address vulnerabilities and eliminate the chances of data leaks and breaches in the set security standards.
Enhancing Collaboration and Transparency
Transparency can be revolutionary in terms of vendor risk management. Data sharing may significantly enhance how businesses manage and lower risks. Interestingly, however, neither insurers nor their clients make this kind of cooperation a habit.
For several reasons, including a reluctance to divulge secret risk assessment techniques and algorithms, some insurance companies decide not to provide their clients with risk assessment data. Additionally, customers may be reluctant to reveal information to their insurance providers because they believe it will negatively affect the cost or terms and conditions of their policy.
In risk management, openness and sharing of data are not only moral obligations but also necessary for commercial success. It also promotes better decision-making, increased trust, compliance, ongoing improvement, and stakeholder involvement are all made possible by them.
Also, read about Exploring Strategies for Effective Vendor Risk Management.
Sustainable and Ethical Vendor Practices
Companies should incorporate environmentally friendly methods into their supply lines as consumers focus shifts on sustainable products. Businesses should focus on minimizing the harmful effects of their products while simultaneously improving their brand reputation. These strategies include eco-friendly shipping, environmentally friendly resources and design, energy conservation in production, and supplier selection.
The task of developing a supply chain that is genuinely ethical and sustainable can be challenging but rewarding. Your company can become an agent of change in the global market with the help of professionals for well-thought-out strategic planning of ServiceNow Partners.
Regulatory Compliance and Risk Governance
Regulatory risk refers to the potential adverse effects on a company's operations, profitability, or reputation that could arise from modifications to laws, rules, or government policies. Numerous factors, including alterations to tax laws, trade policies, environmental regulations, labor laws, and data privacy laws, may give rise to this risk.
Businesses should monitor any changes to legislation that may impact their operations to manage regulatory risk and comply with compliance standards. ServiceNow Partners also design plans to comply with rules and have a thorough awareness of the laws and regulations in which they operate for better vendor risk management.
Conclusion
In 2024, vendor risk management (VRM) operations are evolving rapidly in response to growing cybersecurity threats, particularly those linked to third-party vendors. Companies are increasingly prioritizing third-party due diligence, AI-driven risk assessments, continuous monitoring, and collaboration to enhance transparency and security.
Emphasizing cybersecurity, data privacy, and sustainable practices, organizations are also focusing on compliance with regulatory standards to protect their operations and reputation. By adopting these emerging vendor risk management trends, businesses can better mitigate risks, ensure ethical practices, and maintain a strong, secure, and resilient supply chain. Additionally, you can connect with inMorphis, a ServiceNow-invested company for the best result with your vendor risk management.