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If you have a growing vendor network, there’s no room for inefficient, manual processes to track and evaluate vendor risks. Nowadays, many organizations are turning to vendor risk management (VRM) software to streamline vendor onboarding and risk assessment processes—and reduce the burden for their security teams.

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The latest technological leaps, including advancements in generative AI and machine learning algorithms, have also transformed what VRM software can do for you. Today, these tools offer more sophisticated capabilities like automating vendor security reviews and compliance tracking, which adds new dimensions to consider when evaluating solutions.

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To help you make an informed choice, this guide will offer insights into:

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• Key factors to consider when comparing different VRM solutions
• Tips for selecting the right software
• Best practices for adopting a new solution

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What is vendor risk management (VRM) software?

VRM software is designed to enhance the management of third-party vendor risks, mainly cybersecurity and non-compliance risks. Key functionality includes workflow automation, vendor risk scoring, and interactive dashboards that help streamline risk management activities throughout the vendor lifecycle.

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The software can enable monitoring of your attack surface, detecting vulnerabilities that could risk data breaches or unauthorized access. Additionally, some VRM software may provide broader enterprise risk management capabilities to monitor the risk profiles of all third parties, such as agencies and contractors.

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The key benefits of using VRM software include efficiency and scalability. You can standardize your due diligence processes for multiple vendors on a centralized platform without relying on spreadsheets to manually track relevant data. This enables faster decision-making and helps maintain a robust security and compliance posture across your vendor ecosystem.

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Key features and considerations when selecting VRM software

Given the complex VRM needs of businesses today, you should consider the following qualities when choosing your VRM software:

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1. Workflow automation: Most quality VRM tools offer automation solutions. Automating tedious tasks like vendor onboarding, risk scoring, and security assessments can significantly reduce manual, time-consuming work. 
2. Integration capabilities: Rich integration capabilities unify disparate procurement and security workflows. They also set the foundation for seamless automation configurations. The best VRM tools on the market offer integrations via APIs or pre-built connectors.
3. AI functionalities: According to a Deloitte study, using tools with AI functionality can facilitate a more real-time and agile approach to VRM. You may want to prioritize solutions that offer AI-powered features for due diligence, continuous risk monitoring, and data extraction. 
4. Intuitive dashboards and reports: Opt for software with customizable dashboards that offer an overview of risk metrics, controls, and vendor performance KPIs through a clean interface. It's an added perk if you can generate custom reports for different stakeholders.
5. Compliance tracking: If you or your vendors need to stay compliant with industry standards, such as GDPR, ISO 27001, and SOC 2, you may prefer tools that offer compliance checklists.
6. Vendor portal: Most users appreciate VRM software with a dedicated vendor portal for exchanging documents like compliance reports and questionnaires, as it reduces the need for back-and-forth emails.

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6 tips to help choose your ideal VRM software

Even with an idea of which features to prioritize, choosing the right software can be difficult due to the proliferation of VRM tools on the market. Here are six expert tips to help you find the ideal solution:

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1. Define your organization’s vendor management needs and objectives

Start by outlining the scope of your vendor management needs. Determine the types of vendors you work with and identify specific risks. To establish what you want to achieve with the VRM tool, you may consider asking your team questions like:

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• How do our SaaS vendors impact our overall attack surface?
• Do we need to monitor the regulatory compliance status of certain vendors?
• What VRM tasks would we like to automate?
• What integrations should we expect?

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2. Make a list of VRM solutions that align with your industry

Identify VRM solutions that cater specifically to your industry regulations and challenges. For example, if a vendor handles any kind of PII (personally identifiable information), you might need solutions that offer stringent security reviews, data processing agreement tracking, and real-time (or near real-time) tracking of data protection metrics.

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A common dilemma you may face is whether to choose legacy software or explore a newer solution. The best way forward is to consider your organization’s specific requirements. While legacy systems are popular, they may be slow to roll out new features or resolve defects. On the other hand, newer, less established VRM solutions tend to quickly adopt the latest technologies and ship or improve features faster.

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3. Evaluate each option’s pricing structures and features

While budget is an important consideration for most organizations, evaluating VRM software based on pricing alone may not be effective. You may first want to prioritize the price-to-features ratio and see whether you’re getting all the functionalities necessary to meet your VRM objectives.

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Additionally, you can assess if the pricing structure and the feature set align with your long-term strategic goals. The idea is to understand how well the solution can support your VRM program should you need to scale your workflows.

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4. Assess integration ease with your tech stack

Quality integrations are essential for building automation into your workflow and enabling seamless data exchange for your vendor management team. You should check if the software integrates smoothly with your existing tech stack, particularly with platforms like vulnerability scanners, CRM tools, and data warehouse providers.

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The lack of adequate integrations may not be a deal-breaker (especially if the tool has the feature set to support you), but you’d have to rely on manual processes to integrate siloed information or isolated workflows.

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5. Review support options

Every organization will face different complexity levels while setting up its VRM software with the desired workflows. This is why it's important to look into the kind of support you can expect with a specific VRM tool. Ideally, you should be able to get help via training resources, live chat or call, and dedicated account managers.

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You can explore user reviews for a particular solution to get insights into response times and the overall effectiveness of the support provided.

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6. Engage with vendors via demos or trials

Finally, consider taking advantage of demo options or trial periods to test out your shortlisted VRM software. This allows your team to experience the features firsthand and assess the user interface for intuitiveness and ease of use. It also helps you evaluate if your employees would need additional training to onboard the solution, as well as anticipate potential changes to your existing workflows.

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Best practices for implementing your chosen VRM solution

An organization generally needs a few weeks to incorporate a new VRM solution into its workflow. Here are a few best practices that can make the implementation process easier:

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• Predefine your software-related processes: Consider documenting VRM software-related processes, including the workflows for organizing vendor information and conducting risk assessments.
• Train team members: See if you need to plan and conduct comprehensive training sessions or provide user manuals to avoid procedural hiccups for your staff.
• Assign admins: Designate specific team members as administrators responsible for managing the software, overseeing review activities, and ensuring data integrity.
• Perform scheduled checks: Schedule routine maintenance checks, security updates, and audits to keep the system current and effective.

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What makes Vanta the best VRM software for everyone

If you’re looking for a solution that ensures effective workflow automation and collaboration among VRM teams, Vanta can be the perfect choice. The platform offers a Vendor Risk Management solution that leverages AI and industry-leading integrations to streamline vendor evaluation, risk assessment, and compliance tracking processes.

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Vanta’s VRM features include:

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• Automated vendor dashboards: Centeralize scattered VRM workflows into a single dashboard. From discovering and onboarding vendors to automatically assigning them risk scores based on industry-standard rubrics, Vanta enables you to stay consistent with your VRM program.
• Built-in resources: Vanta offers resources like vendor management policy (VMP) and risk assessment templates that help you expedite security reviews.
• Vanta AI: It can expedite numerous tedious tasks, such as extracting data from reports and completing security questionnaires on your behalf.

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Watch out free webinar to see Vanta in action.

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