Vendor Risk Assessment: The Complete Third-Party Risk Management Guide (2026)
February 21, 2026
Updated: February 22, 2026
28 min read
Risk Management
Your organisation's security is only as strong as your weakest vendor. The 2023 MOVEit breach affected over 2,600 organisations — not because they were individually targeted, but because they all used the same file-transfer vendor. The 2020 SolarWinds attack compromised 18,000 organisations through a single supply chain vector. And under modern regulations, you are liable for your vendors' failures: GDPR holds controllers accountable for processor conduct, NIS2 mandates supply chain security, and DORA requires a comprehensive register of all ICT third-party providers.
Vendor risk assessment — the systematic process of evaluating, monitoring, and managing the risks that third-party relationships introduce to your organisation — is no longer optional. Whether you call it third-party risk management (TPRM), vendor risk management (VRM), or supply chain risk management, the goal is the same: understand the risks your vendors create and reduce them to acceptable levels.
This guide provides a complete, practical framework for building and operating a vendor risk assessment programme that satisfies regulatory requirements and genuinely protects your organisation.
Quick Reference
Details
What is vendor risk assessment?
Systematic evaluation of risks introduced by third-party vendors, suppliers, and service providers
Vendor risk assessment is the process of identifying, evaluating, and mitigating risks that third-party vendors introduce to your organisation
Modern regulations (GDPR, NIS2, DORA, PCI DSS 4.0) explicitly require organisations to assess and manage vendor/supply chain risks
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A vendor tiering model is essential — not all vendors deserve equal scrutiny; focus resources on critical and important vendors
The assessment process covers 7 risk domains: security, privacy, operational, compliance, financial, reputational, and strategic
Vendor questionnaires are the primary assessment tool, but should be supplemented with evidence review, certifications, and continuous monitoring
Continuous monitoring is replacing point-in-time assessments — use security rating services, breach alerts, and financial monitoring to maintain visibility between formal reviews
DORA introduces the most prescriptive vendor risk requirements in any EU regulation, including a mandatory Register of Information for all ICT third-party providers
Building a vendor risk programme takes 3–6 months; maturing it into a continuous process takes 12–18 months
Vendors onboarded without risk assessment; contracts signed without security clauses
Integrate TPRM into the procurement workflow; no contract without risk assessment
Frequently Asked Questions
How many vendors does a typical organisation have?
Most mid-sized organisations have 100–500 third-party relationships, though many discover significantly more once shadow IT and departmental purchases are included. A Fortune 500 company may have 5,000–15,000 vendor relationships. The key is not to assess every vendor equally — use tiering to focus on the 20–30 vendors that create 80% of your risk.
Can I accept a SOC 2 report instead of sending a questionnaire?
Yes, and for many vendors this is the most efficient approach. A SOC 2 Type II report provides independent auditor assurance over the vendor's controls. However, you should still review the report carefully (check opinion, exceptions, CUECs, and scope) and supplement it with vendor-specific questions about data handling, sub-processors, and your specific concerns.
How do I handle vendors that refuse to complete a questionnaire?
This happens regularly, especially with large vendors (think Google, Microsoft, Salesforce). Options include: (1) accept their SOC 2/ISO 27001 reports plus public documentation, (2) use security rating services for external assessment, (3) review their trust/security pages and DPA, (4) for critical vendors where alternatives exist, consider switching to a more cooperative vendor. Document your assessment approach for each vendor that doesn't complete a full questionnaire.
What's the difference between vendor risk assessment and vendor due diligence?
Vendor risk assessment is the ongoing process of evaluating and monitoring vendor risk throughout the relationship lifecycle. Vendor due diligence typically refers to the initial pre-engagement evaluation. In practice, the terms are often used interchangeably, but a mature programme includes both: initial due diligence before onboarding and periodic risk reassessment throughout the relationship.
How do I prioritise vendor risk remediation?
Prioritise based on: (1) severity of the identified risk, (2) vendor tier (critical vendors first), (3) regulatory exposure (risks that create compliance violations), (4) exploitability (risks that are actively exploited in the wild), and (5) remediation effort (quick wins first to build momentum). Create a risk treatment plan with specific actions, owners, and deadlines.
Is vendor risk assessment required for ISO 27001?
Yes. ISO 27001:2022 includes five Annex A controls specifically for supplier relationships: A.5.19 (Information security in supplier relationships), A.5.20 (Addressing security within supplier agreements), A.5.21 (Managing security in the ICT supply chain), A.5.22 (Monitoring and review of supplier services), and A.5.23 (Information security for use of cloud services). A certification audit will verify your supplier risk management process.
How often should I reassess vendors?
Vendor Tier
Standard Reassessment
Trigger-Based Reassessment
Tier 1 (Critical)
Annually
Immediately on breach, incident, or material change
Tier 2 (Important)
Every 1–2 years
On breach, contract renewal, or significant change
Tier 3 (Standard)
Every 2–3 years
On breach or contract renewal
Tier 4 (Low-risk)
Not scheduled
Only if risk profile changes
What tools can automate vendor risk assessment?
The market includes dedicated TPRM platforms (OneTrust, Prevalent, ProcessUnity, Vanta), security rating services (BitSight, SecurityScorecard, UpGuard, RiskRecon), and GRC platforms with vendor modules (ServiceNow GRC, Archer, LogicGate). For small organisations, a well-structured spreadsheet with standardised questionnaires can work for the first 1–2 years.
Vendor risk assessment is not a checkbox exercise — it's a continuous programme that protects your organisation from the growing threat of supply chain attacks, vendor failures, and regulatory non-compliance. The organisations that get this right build a systematic process: know your vendors, tier them by risk, assess the critical ones deeply, contract for security, monitor continuously, and offboard cleanly.
Start with your vendor inventory. Tier your vendors. Assess your Tier 1 vendors first. Build from there.
Need help with vendor risk management? Vision Compliance builds third-party risk management programmes from scratch — vendor inventories, tiering models, assessment questionnaires, and ongoing monitoring frameworks. Whether you're preparing for NIS2, DORA, or ISO 27001, we'll help you get your supply chain risk under control. Schedule a free consultation →
Sources: Verizon 2025 DBIR, IBM Cost of a Data Breach Report 2025, GDPR (Regulation 2016/679), NIS2 Directive (EU 2022/2555), DORA (EU 2022/2554), ISO 27001:2022, PCI DSS 4.0, EDPB Guidelines on Data Processing Agreements
Ivana Ludiga·Associate·mag. iur.
Ivana Ludiga, mag. iur., is an Associate at Vision Compliance focused on data protection, GDPR implementation, and regulatory advisory. She supports compliance projects for organizations across healthcare, financial services, and technology sectors.
