Vendors are a vital part of your business. They help to supply important resources and processes that enable you to serve your customers. When you have a good relationship with your vendors your company is able to reduce overhead, maximize profits, and maintain customer satisfaction. But even the best vendors need to be reviewed for potential risk. Vendor risk assessment can protect your enterprise in four different ways: by securing your data, protecting your profits, defending your business and preserving your reputation.
Securing Your Data
When a vendor has access to business data your company is in a vulnerable position. If the vendor doesn’t properly vet its employees or have secure processes in place to manage your data it is exposed to the possibility of theft. If this information reaches the hands of your competitors or if client personal data is obtained, your company could be exposed to a lawsuit or lose business. And vendors may not have enough insurance to cover your losses if your company data was obtained illegally and the vendor was found to be at fault. By auditing your vendor’s processes in terms of protecting client data and what their procedure is if the data is stolen will help make sure that your company is not exposed to unnecessary risk.
Protecting Your Profits
While vendors can help you save time and money they can also end up costing you money if they are not managed carefully. Vendors can help by supplying you with key components for production lines and will prevent you from needing to create all elements of a specific product in-house. They can also help with key processes such as human resources, accounting, customer service or IT. But they are not saving you money if shipments are constantly late or incomplete, if customers are complaining about the service they receive, or your computer systems are constantly experiencing issues. Investigating the background and experience of a vendor before you hire them will help reduce potential issues and costs later.
Defending Your Business
Vendors should be monitored carefully in order to make sure that they continue to perform as expected. A one-time assessment isn’t enough to make sure that your business is protected. Depending on their involvement in your business processes can help determine the level of management necessary to help make sure that everything runs smoothly and that they are delivering as needed. Vendor management is a difficult task but a necessary one to help make sure that your business operations are running smoothly.
Preserving Your Reputation
Even if it is proven that a vendor is at fault when a problem occurs, your business reputation is still at risk. Your customers and other stakeholders expect you to research your vendors carefully before you select them for business processes. The same stakeholders will also expect you to monitor your vendors and deal with any potential problems before they negatively affect your business. Protect your reputation by making sure you monitor your vendors and communicate with them regarding any potential problems before it hurts your customer service or profits.
Vendors are important and can be a great asset to your company. Buy conducting a vendor risk assessment and periodically reviewing your processes you can help make sure that vendor remains an asset to your business. Protect your data, your profits, your business and your reputation by conducting periodic vendor risk assessments.