Vendor Risk Management Definition and its need?

What is Vendor Risk Management?

Vendor risk management (VRM) is the process of identifying, assessing, and mitigating the risks associated with outsourcing services to third-party vendors. The goal of vendor risk management is to ensure that organizations are working with vendors that can provide reliable, secure, and compliant services while minimizing the risk of business disruption or financial loss.

Companies are now using vendor risk management software to monitor, assess, and manage the risks posed by vendors, suppliers, and contractors. The risk is considerably higher in the case of IT products and services when the vendors have access to confidential data. It is, therefore, extremely important that companies undertake extensive research to find out important details related to the vendor. This will help mitigate any chances of unwanted outcomes while interacting with the vendor regularly.