Vendor Risk Management (VRM) is the process of identifying, assessing and mitigating risks that arise from working with third-party vendors, suppliers and talent partners. It is essential because vendors often have access to your systems, data and business processes, which means their vulnerabilities can quickly become your risks. Effective VRM prevents compliance failures, operational disruptions, cybersecurity threats and financial loss, helping organisations maintain continuity and protect their reputation.

The most important vendor risks to track include cybersecurity risks, financial instability, business continuity issues, operational disruptions and strategic or reputational risks. Monitoring these categories helps companies understand how vendor performance, compliance or security weaknesses could impact business operations. A structured vendor risk assessment framework, supported by qualitative and quantitative scoring, makes it easier to evaluate and prioritise high-risk suppliers.