Why Should Organizations Assess Vendors?

Today’s business trends indicate that organizations are embracing the digital revolution and are relying increasingly on vendors to fulfill their business needs and give themselves a competitive edge. As this reliance grows, so do the privacy risks. A recent Deloitte poll revealed 70 percent of respondents indicated a moderate to a high level of dependency on external entities that might include third, fourth, or fifth parties. The cross-sharing of consumers’ personal data across various vendor software raises security and privacy concerns. 

Global privacy regulations, such as the California Consumer Protection Act (CPRA) and the General Data Protection Regulation (GDPR), were enacted to ensure stricter standards for handling consumers’ personal data. These regulations require organizations to assess vendor privacy risks thoroughly. A failure to do so can expose them to massive fines, reputational damage, and potential criminal liability. Therefore, unless a business can demonstrate all controls were in place and that it is “not in any way responsible for the event or actions giving rise to the damage,” it will be held liable for any damage caused by non-compliant vendor processors. 

This becomes increasingly alarming as more and more organizations are becoming reliant on vendors. Therefore, it is paramount that organizations run a thorough assessment of these vendors and analyze their risks before entering a partnership with them.