Third-Party Risk Management (TPRM): How to Assess Vendor Security

Most organizations invest heavily in securing their own environments. Firewalls are configured, identities are locked down, and incident response plans are rehearsed. Yet many of the most damaging breaches don’t start internally. They start with a trusted third party.

Cloud providers, payroll processors, marketing platforms, IT service partners, and niche SaaS tools are deeply embedded in daily operations. Each vendor becomes an extension of your environment, often with access to sensitive data or critical systems. Attackers know this. Rather than targeting well-defended organizations directly, they increasingly look for weaker links in the supply chain.

That reality makes Third-Party Risk Management (TPRM) a core security function, not a compliance afterthought. Done properly, TPRM protects customer data, supports regulatory obligations, and reduces the likelihood that a vendor issue turns into a business crisis.

A simple example here. You can secure your building with cameras and locks, but if a contractor has open access and poor security, your defenses are easily bypassed.

Vendors commonly manage:

• Customer sensitive and personal data
• Information on Finance and payment-related
• Intellectual property
• Limited or system-level access

When a vendor is compromised, accountability often flows back to the company that interacts with them. Regulations like GDPR, DPDPA, HIPAA, and PCI-DSS made this very clear. Beyond regulatory fines, vendor-related incidents harm customer trust and interrupt operations, and sometimes occur after systems are returned.

A well-established vendor security evaluation checklist brings consistency and defensibility to assessments. Without this, reviews manage to depend on assumptions or false information.

A vendor security assessment includes:

Governance and Policies

• Documented privacy and security policies
• Up-to-date policy reviews and regular updates

Clear compliance ownership and assigned security

Technical Controls

• Encryption for data at rest and in transit
• Role-based access control
• Multi-factor authentication (MFA)
• Backup and recovery processes

Compliance and Assurance

• Relevant certifications like ISO 27001 or SOC 2
• Regulatory alignment
• Independent audit reports

Incident Management

• Defined incident response procedures
• Breach alerts timelines
• Transparency around prior incidents

Operational Practices

• Use of subcontractors or sub-processors
• Data hosting locations and cross-border transfers
• Employee screening and security training

Experts know that questionnaires alone are not enough. High-risk responses should be validated with evidence.

Not all vendors are at the same level of risk. Treating them equally wastes time and diverts attention from what is truly important.

Risk scoring considers:

• Handling data sensitivity
• Level of system access
• Criticality to business operations
• Regulatory and compliance exposure
• Maturity of vendor security

Based on these factors, vendors are usually classified as low, medium, or high risk. A low-risk vendor with no data access needs only a basic review, while a high-risk vendor supporting core systems supports deeper assessment and tighter controls.

This method helps security teams focus their effort where they deliver the most value.

Contracts are one of the most effective tools for managing third-party risk—when written correctly. Security expectations should never be implied.

Key sections include:

• Requirements on Data protection and confidentiality
• Minimum standards on security control
• Defined breach alert timelines
• Right to audit or request security evidence
• Incident cooperation duties
• Controls over subcontractors
• Data return or securely deleting when terminating the contract

Precise contractual language minimizes confusion and disputes during incidents, when speed and accountability are critical.

A common TPRM failure is treating vendor assessment as a one-time task. Vendor risk develops as companies grow, adopt new technologies, and engage additional partners.

Effective ongoing monitoring includes:

• Regular assessments for medium- and high-risk vendors
• Updated security questionnaires
• Verification of restored certifications and audit reports
• Checking for public breach disclosures
• Tracking incident and performance trends

Continuous monitoring makes sure supply chain defenses reflect current risk, not previous year’s expectations.

Third-party risk management is effective when embedded into purchasing and onboarding processes, rather than being locked on later.

Mature programs include:

• Inventory related to a centralized vendor
• Transparent ownership of vendor relationships
• Integration with incident response and planning
• Collaboration across security, legal, procurement, and IT teams
• Executive-level visibility into high-risk vendors

Addressing vendor security early reduces risk before access is granted.

Even well programs are failing due to:

• Overreliance on general questionnaires
• Ignoring subcontractor threats
• Forgetting small but company-critical vendors
• Poor documentation of threat decisions
• Weak configuration between vendor risk and business impact

Avoiding these pitfalls keeps the program practical and defensible.

In today’s interconnected environment, third-party risk equals business risk. Companies can no longer depend on trust alone or assume contracts provide sufficient protection.

By implementing well-maintained third-party risk management, applying risk-based prioritization, strengthening contractual controls, and monitoring vendors continuously, companies can knowingly reduce supply chain exposure.

The goal isn’t to avoid vendors, but to engage with them securely and responsibly. Strong vendor risk management transforms third parties from hidden liabilities into trusted partners.

Managing third-party risk requires more than questionnaires and checklists, it demands a structured, risk-based approach aligned with real business dependencies. Azpirantz helps organizations design and implement practical Third-Party Risk Management (TPRM) programs that identify, assess, and monitor vendor risk across the lifecycle. From vendor classification and security assessments to contractual safeguards and continuous monitoring, Azpirantz focuses on controls that are defensible, auditable, and regulator-ready. By integrating TPRM into procurement, compliance, and security workflows, organizations gain clearer visibility into supply chain risk and stronger assurance that vendor relationships do not become hidden security gaps.

*This content has been created and published by the Azpirantz Marketing Team and should not be considered as professional advice. For expert consulting and professional advice, please reach out to [email protected].