Vendor Risk Assessment Checklist

A vendor Risk Assessment, is a process that helps companies choose and monitor their business partners.

During this process, you identify and evaluate the potential risks of working with a vendor. 

Then, you decide whether the rewards of the partnerships would outweigh the risks. 

Before you can begin evaluating third parties, you need to know all of the types of risk you could face when entering into a business agreement. 

Vendor Risk Assessment Checklist

Strategy risk: Will they steal your trade secrets, ideas or intellectual property?

Financial risk: Are they financially stable?

Compliance risk: Do they follow relevant laws and regulations?

Geographic risk: Do they operate in a risky location?

Technical risk: How sound are their IT and data management processes and infrastructure?

Subsequential risk: Do they use third parties for any of their processes that could affect your company?

Resource risk: Do they have adequate resources to do what you’re paying them for?

Replacement risk: How easy would it be to replace them if they ceased operations?

Operational risk: How could their day-to-day policies and procedures put your company at risk?

Reputational risk: How will working with them affect your company’s reputation internally and externally?

Key Benefits of Vendor Risk Assessment

  • Reduce the supply chain disruption
  • Simplifying internal and external audits
  • Easy to identity the risks regarding smooth supply

There are two way of vendor risk assessment:

1. Vendor self-assessment or self reporting via questionnaire on the most critical questions.
2. Automated via data backed evaluations (third party analysis tool).

Reference Article: How to Conduct a Vendor Risk Assessment


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