Your Go-To Vendor Risk Management Checklist

Have you heard of supply chain attacks like the infamous SolarWinds incident? Hackers compromised SolarWinds by injecting malicious code into its widely-used Orion IT monitoring and management software, impacting thousands of enterprises and government agencies globally.

Such headline-grabbing events have made vendor risk management a hot topic and for good reasons. 

If a vendor has access to your network, data, or physical premises, your business might be exposed to significant risks. That’s where a Vendor Risk Management Checklist comes in handy.

• Does your vendor have remote access to your systems? 
• Do their employees regularly visit your office to perform contracted services? 

If the answer is yes, then you likely need a structured way to assess and manage these relationships.

The checklist is your go-to tool for ensuring vendors meet contractual obligations and maintain the quality and security standards your business depends on. 

So, how do you build and use one effectively?

Let’s explore together…

Purpose of Vendor Management Checklist

A vendor risk management program checklist aims to act as your safeguard, ensuring your company doesn’t unknowingly partner with a third-party vendor or supplier that could jeopardize your operations. 

Every vendor introduces third-party risks, such as operational failures, quality issues, or cybersecurity breaches. The checklist helps you identify and address potential risks before they escalate, ensuring vendors meet your standards for reliability and security.

Vendor Management Checklist 101

Managing vendors effectively starts with keeping a close eye on the essentials. 

We’ve compiled a straightforward checklist highlighting what to monitor regularly to simplify your life. 

Part A: Identifying the Right Partner
Outline goods or services needed from the vendor	Yes
Clearly define penalties and dispute resolution mechanisms in the proposal and contract.	No
Check reviews, references, and testimonials	No
Have you prioritized your selection criteria based on critical business impacts?	Yes
Review all contracts and service level agreements (SLAs)	Yes
Set up a mutually agreed upon periodic vendor performance evaluation process.	Yes
Align vendors with the organization’s internal policies (e.g., data privacy) and implementation.	Yes
Draw up contingency plans for vendor-related disruptions.	No
Develop a process for handling vendor-related conflicts or issues	Yes
Periodically evaluate and update vendor management strategies.	No
Part B: After On-boarding
Clearly define penalties and dispute resolution mechanisms in the proposal and contract.	Yes
Review all contracts and service level agreements (SLAs).	No
Periodically evaluate and update vendor management strategies.	Yes
Develop a process for handling vendor-related conflicts or issues.	No
Draw up contingency plans for vendor-related disruptions.	Yes
Align vendors with the organization’s internal policies (e.g., data privacy) and implementation.	No
Set up a mutually agreed upon periodic vendor performance evaluation process.	Yes
Plan for regular strategy and performance review meetings with the vendor.	No
Ensure vendors’ compliance with applicable legal and regulatory standards.	No
Set up a process to organize and regularly update vendor records, contracts, and communications.	Yes

Vendor and Supplier Qualification Criteria Checklist

Choosing the right vendors and suppliers can make or break your business operations. With increasing reliance on third-party providers, ensuring they meet your standards for quality, reliability, and compliance is crucial. 

Below is the checklist designed to help you evaluate potential partners based on key criteria such as competency, capacity, quality, cost, and more.

Question	X (Status)
What is the vendor’s experience, and can they provide a brief business history?	✅
Who are the vendor’s key customers, and can they provide contact information for endorsements?	❌
What systems does the vendor have for staff training and ongoing development?	❌
Who are the key personnel managing your account, and can you meet with them?	✅
How are key positions filled, and what is the vendor’s recruitment process?	✅
Does the vendor have sufficient capacity to handle current and future orders?	❌
What operational statistics can the vendor provide to demonstrate quality and service levels?	✅
Are the necessary systems and procedures in place to ensure high-quality service?	❌
Can the vendor consistently deliver high-quality products or services throughout the contract?	✅
Does the vendor use Statistical Process Control (SPC) to maintain quality standards?	❌
Are there customer or independent endorsements confirming the quality of the product or service?	❌
What quality control measures does the vendor employ, such as TQM or similar processes?	❌
Does the vendor comply with relevant quality or regulatory standards, such as ISO or PCI DSS?	✅
Does the vendor use Non-Destructive Testing (NDT) for evaluating products or processes?	✅
How does the vendor ensure continuous improvement in quality and processes?	❌
Are the vendor’s price quotes competitive while maintaining quality and service?	✅
Can the vendor provide a full cost analysis, including profit margins and break-even points?	❌
Is the vendor’s balance sheet stable and showing sufficient assets and financing?	✅
Does the vendor’s profit and loss statement indicate financial stability?	❌
What is the vendor’s credit rating, and does it suggest financial reliability?	✅
What do customers, analysts, or colleagues say about the vendor’s financial suitability?	✅
Are the vendor’s communication channels appropriate for regular meetings and updates?	❌
Does the vendor maintain sufficient inventory to meet your requirements?	❌
Are there quality controls in place to ensure contract deliverables meet specifications?	✅
Do the vendor’s operations ensure on-time delivery in the correct quantity?	✅
Are the vendor’s procurement processes efficient and cost-effective?	❌
Does the vendor have sound health, safety, and environmental procedures?	✅
Do the vendor’s values align with building a sustainable and long-term partnership?	✅
Does the vendor understand your business drivers, such as competitive challenges or innovations?	✅

7 Steps to Evaluate Vendors

The decisions you make regarding vendors affect your business engine, market image, and profitability. Here are 7 guidelines to help you properly assess a vendor to ensure it meets your expectations.

1. Start with Online Research

Begin by gathering all available information about the vendor online. This includes:

• Company Website: Look into their offerings, leadership & team, accomplishments, beliefs, and clients
• Industry Presence: Research the vendor’s presence across geographies and areas of expertise
• Market Credibility: Review their awards, certifications, past experience etc. 
• Social Media Profiles: This will tell you about their activity level and engagement, which says a lot about their professionalism and responsiveness.

2. Check Customer Feedback

Vendor reviews are a rich source of information about the credibility and competence of a particular vendor. Here’s what to look for:

• Online Reviews: Customer feedback can usually be found in Google Reviews, Trustpilot, G2, or any other specialized forum regarding a business’s industry
• Testimonials: Where possible, look at their case/vendor references on the website, but remember that the particular vendor may color these.
• Customer References: Request the vendor’s list of regular customers, and then contact these customers to gather inputs about  the vendor and their products

3. Validate Claims

Vendors often highlight their strengths, but it’s crucial to fact-check these claims:

• Certifications: Verify certifications, such as ISO standards or compliance credentials like GDPR or PCI DSS
• Performance Metrics: If the vendor shares performance stats (e.g., on-time delivery rates or quality metrics), ask for supporting documentation
• Market Reputation: Look for press coverage, partnerships, or controversies tied to the vendor

4. Communicate Directly

A simple discussion with the vendor can help determine professionalism and cooperation. Prepare a list of specific questions to ask, such as:

• How long do you take to deliver urgent assignments?
• Can you disclose how complaints and conflicts are resolved?
• Any product developer must consider how to ensure security controls and what procedures you have to safeguard quality.
• How do you prove that you have consideration for regulatory requirements?

Observe their responses to particular questions. Do they look hesitant when responding, or do they avoid some questions? How two individuals interact can help one understand how they will face conflict within the partnership.

5. Conduct a Site Visit

If allowed and possible, one should consider visiting the vendor to assess the production capacity of the vendor’s operations. Observe:

• Work Environment: Does it look well-planned and smooth?
• Team Dynamics: Do employees know what they are doing, and are they polite?
• Processes and Equipment: Can they consistently provide you with what you need?

6. Assess Responsiveness

How a vendor engages with you in response to inquiries and investigations indicates customer service. 

It’s easy knowing how to entrust them. Are they punctual, polite, and willing to listen to your unease? Or do they seem argumentative?

7. Make a Decision

After gathering and analyzing all the information, evaluate the vendor against your selection criteria. Consider factors like:

• Alignment with your business needs and values
• Track record of reliability and performance
• Transparency and willingness to collaborate

How a vendor engages with you during the evaluation process often reflects how they’ll perform as long-term partners. So, be thorough.

Look at this video to see how Sprinto helps review vendor risks.

Documentation required for Vendor Report

To help you get ahead of your game in managing vendor relationships, below is the checklist of the documents that should be included in a vendor report:

• Non-Disclosure Agreements (NDAs): Laws to create legal contracts when handling conflict of interest and any other information that relates to the vendor and the client.
• Safety and Incident Reports: Details of previous safety deficiencies and the measures implemented by the vendor with security incident response plans.
• Business Licensing: Proof of legal permits such as licenses, permits, or certifications for legal operation.
• Sustainability Reports: Information on sustainable and responsible sourcing, environmental stewardship, labor, and security policies.
• Service Level Agreements (SLAs): Specific conditions about performance and standards accomplishment, deadlines, and consequences of non-performance.
• Insurance Policies: Liability insurance, worker’s compensation, and professional indemnity insurance; certified proof of such cover.
• Financial Records and Credit History: Financial statements, statements of net worth, income statements, cash flow statements, and reports on credit history.
• Disaster Recovery and Business Continuity Plans: The special measures to continue business if interruptions occur are contingency plans.
• Regulatory Compliance Documentation: Proof the firm complies with legal requirements such as data privacy, safety, and manufacturing laws.
• Tax Documentation: Tax identification numbers, registration certificates, and other completed tax return forms.
• Training Records: Training and skill development documents; certificates of professional specialized jobs.
• Environmental Compliance Reports: Records of compliance with local and international environmental laws.
• Cybersecurity Policies: Internal vendor security measures are used to handle sensitive information.
• ACH Forms for Payment Processing: Authorization forms for secure electronic fund transfers via ACH.
• Proof of Company Ownership: Documents verifying legal ownership, such as incorporation papers or partnership agreements.
• Supplier Diversity Certifications: Proof of minority-owned, woman-owned, veteran-owned, or small business status.
• Subcontractor and Outsourcing Details: Information on roles and responsibilities of subcontractors and fourth-party partners.
• Conflict of Interest Declarations: Disclosures ensure no conflicts between the vendor’s interests and your organization.
• Quality Assurance Certificates: Documentation like ISO 9001 certifications to verify quality management processes.

Manage your vendors with Sprinto

Managing vendors doesn’t have to be complicated, and with Sprinto, it isn’t. As a compliance automation platform, Sprinto simplifies maintaining compliance across 15+ security frameworks, making third-party risk management easier than ever. 

Here’s how Sprinto takes the headache out of vendor management:

• Add and Discover Vendors Quickly. Start by manually adding vendors or, if you’re using Google Workspace, let Sprinto automatically find and catalog your vendors. It’s quick and seamless.
• Kick Off Vendor Risk Assessments. In the Security Hub, just head to the vendor section and start a new risk assessment. Sprinto uses standardized naming conventions, making it easy to keep track of each assessment.
• Evaluate Risk Automatically. Sprinto offers a pre-set list of common data types that vendors typically have access to. After selecting the data type, the platform automatically suggests whether the vendor is low, medium, or high-risk.
• Handle High-Risk Vendors. For high-risk vendors, Sprinto makes attaching a due diligence report simple, helping you stay on top of your vendor management in one place.
• Easily Exempt Vendors from Assessments. Need to exclude a vendor from the assessment? No problem. Just mark them as “not-in-scope” and move on.
• Automate Ongoing Assessments. After completing your initial assessment, you can set up automated workflows to keep vendor assessments on track without additional effort.

Interested to know how this works. Set up a call with us to learn more about vendor management.

FAQs

What do you mean by vendor management?

Vendor management refers to the processes and strategies organizations use to manage their suppliers, also called vendors. It’s all about building and maintaining strong relationships, ensuring smooth operations, and monitoring performance to meet business goals.

What is the KPI in vendor management?

KPIs (Key Performance Indicators) are measurable metrics that help track a vendor’s performance. They help ensure that vendors meet their contractual obligations and expectations.

What is a vendor relationship management checklist?

A vendor relationship management checklist is a cheat sheet to keep vendor partnerships secure and smooth. It ensures you cover all the important steps from when you start working with a vendor to when you decide to part ways.

What is a vendor management compliance checklist?

A vendor management compliance checklist is your go-to guide for ensuring all your vendors follow the rules and don’t put your company at risk.