Vendor Risk Management

Vendor Risk Management Overview

This Vendor Risk Management Policy establishes the framework for identifying, assessing, and managing risks associated with third-party vendors who provide goods, services, or access to Mavaro Systems' information and systems. The policy ensures that vendor relationships do not compromise security, privacy, or business continuity.

Vendor Intake Process

Initial Vendor Identification

Business Justification Assessment

Business need and value proposition documentation
Cost-benefit analysis including security costs
Alternative vendor evaluation
Internal capability assessment for self-provision
Strategic importance to business operations

Preliminary Risk Assessment

Data sensitivity level the vendor will access
System integration requirements and access levels
Geographic location and data residency implications
Regulatory and compliance requirements
Critical business function dependency assessment

Vendor Onboarding Steps

Vendor Registration (Week 1)
- Complete vendor intake questionnaire
- Provide business justification and requirements
- Submit initial risk assessment
- Designate primary vendor contact
Security Assessment (Week 2-3)
- Security questionnaire completion
- Required documentation submission
- Background check for critical vendors
- Technical integration security review
Risk Evaluation (Week 3-4)
- Complete vendor risk scoring
- Security control assessment
- Compliance verification
- Contract security requirements review
Approval Process (Week 4-5)
- Risk committee review and approval
- Contract negotiation with security requirements
- Final security sign-off
- System access provisioning

Due Diligence Requirements

Documentation Requirements by Risk Level

Risk Level	Required Documentation	Additional Requirements
Low Risk	Business registration, insurance proof	Basic security questionnaire
Medium Risk	+ SOC 2 Type I, security policies	Background checks, technical assessment
High Risk	+ SOC 2 Type II, penetration testing	On-site assessment, ongoing monitoring
Critical Risk	+ ISO 27001, comprehensive security program	Detailed security audit, contract requirements

Security Questionnaires

Standard Security Questionnaire

Information security policies and procedures
Employee security training and awareness
Incident response capabilities
Access control and authentication measures
Data encryption and protection methods
Business continuity and disaster recovery plans
Third-party security management
Compliance with applicable regulations

Technical Integration Assessment

API security and authentication methods
Data transmission security protocols
System architecture and security controls
Integration point security assessment
Monitoring and logging capabilities
Performance and availability guarantees

Critical Vendor Criteria

Vendor Criticality Assessment

Business Impact Factors

Service availability impact on operations
Customer data access and sensitivity
Financial impact of service disruption
Regulatory compliance requirements
Competitive advantage implications
Integration complexity and dependencies

Risk Assessment Matrix

Impact Level	Low Probability	Medium Probability	High Probability
High Impact	Medium Risk	High Risk	Critical Risk
Medium Impact	Low Risk	Medium Risk	High Risk
Low Impact	Low Risk	Low Risk	Medium Risk

Critical Vendor Identification

Automatic Critical Vendor Classification

Access to customer personal information
Processing payment card data
Critical business system dependencies
Regulatory compliance support
Key intellectual property access
Disaster recovery service providers

Business-Defined Critical Vendors

Strategic partnership agreements
Long-term exclusive relationships
High cost of vendor switching
Specialized industry expertise
Unique technological capabilities

Review Cadence

Review Schedule by Vendor Category

Vendor Category	Risk Level	Review Frequency	Review Type
Critical Vendors	All	Quarterly	Full security assessment
High Risk Vendors	Medium-High	Semi-annually	Standard security review
Standard Vendors	Low-Medium	Annually	Basic compliance check
Low Risk Vendors	Low	Every 2 years	Documentation update

Ongoing Monitoring Requirements

Continuous Monitoring

Security incident notification and response
Public security certification status
Financial stability and business continuity
Regulatory compliance status changes
Media coverage and reputation monitoring

Performance Monitoring

Service level agreement compliance
Security incident response times
Customer satisfaction and service quality
Contract compliance and adherence
Innovation and security improvement initiatives

Required Security Artifacts

SOC 2 Reports

Type I Reports

Assessment of controls at a specific point in time
Suitable for vendors with shorter operational history
12-month validity period
Minimum requirement for Medium risk vendors

Type II Reports

Assessment of controls over a period of time (typically 6-12 months)
Preferred for High and Critical risk vendors
Demonstrates operational effectiveness
18-month validity period with quarterly updates

ISO 27001 Certification

Certification Requirements

Valid ISO 27001:2013 or later certification
Scope statement covering relevant services
Annual surveillance audits
3-year certification cycle with recertification

Documentation Requirements

Certificate of registration
Statement of applicability
Risk assessment methodology
Security control implementation evidence

Penetration Testing Reports

Testing Scope and Requirements

External and internal penetration testing
Application security testing for web/mobile apps
Social engineering assessments where applicable
Network infrastructure testing

Report Requirements

Executive summary with risk ratings
Technical findings with proof of concept
Remediation recommendations
Retest confirmation of fixes

Additional Security Documentation

Policy and Procedure Documents

Information security policies
Incident response procedures
Business continuity plans
Data protection and privacy policies
Employee security training programs

Technical Security Documentation

Network architecture diagrams
Security control implementations
Encryption and key management procedures
Access control and authentication methods
Monitoring and logging capabilities

Data Residency Requirements

Geographic Data Processing Restrictions

Regional Compliance Requirements

European Union: GDPR compliance with adequacy decisions or appropriate safeguards
United States: State-specific privacy law compliance (CCPA, etc.)
Canada: Personal Information Protection and Electronic Documents Act (PIPEDA)
Other Jurisdictions: Local data protection law compliance

Data Localization Requirements

Customer data stored within specified geographic boundaries
Government access restriction compliance
Cross-border data transfer limitations
Data sovereignty and legal jurisdiction considerations

Vendor Data Location Assessment

Data Center Locations

Primary and backup data center geographic locations
Data replication and redundancy arrangements
Physical and logical data segregation
Government access and disclosure requirements

Cloud Service Provider Requirements

Multi-region deployment options
Data residency guarantees and commitments
Government access transparency reporting
Encryption key management location and control

Termination and Decommissioning

Contract Termination Procedures

Notice Requirements

Standard contracts: 30-90 day notice period
Critical services: 90-180 day notice requirement
Emergency termination provisions for security incidents
Transition assistance requirements and timeframes

Data Return and Destruction

Complete data extraction in usable formats
Secure data destruction certificates
Verification of data removal from all systems
Chain of custody documentation for sensitive data

Off-boarding Process

System Access Termination

Immediate access revocation at termination notice
Account deactivation and deletion
API key and credential invalidation
Physical access badge and token collection

Data Handling Procedures

Data inventory and classification verification
Secure data transfer using encrypted channels
Temporary data retention for transition period
Final data destruction with documentation

Relationship Closure

Final performance and compliance review
Outstanding security incident resolution
Contract closeout documentation
Lessons learned and improvement opportunities

Owner Roles and Responsibilities

Primary Stakeholder Roles

Vendor Manager

Responsibility: Overall vendor relationship management
Key Duties: Performance monitoring, contract compliance, business value assessment
Authority: Vendor performance issues, contract modifications
Reporting: Quarterly vendor performance reports

Information Security Officer

Responsibility: Vendor security risk assessment and monitoring
Key Duties: Security questionnaire review, incident response coordination
Authority: Security requirement enforcement, access restriction recommendations
Reporting: Monthly security risk dashboard

Privacy Officer

Responsibility: Data protection and privacy compliance for vendor relationships
Key Duties: Privacy impact assessments, data processing agreement review
Authority: Privacy requirement enforcement, data processing restrictions
Reporting: Quarterly privacy compliance reports

Legal Counsel

Responsibility: Contract review and legal risk assessment
Key Duties: Contract security requirements, liability and indemnification review
Authority: Legal risk acceptance decisions, contract approval
Reporting: Contract compliance and legal risk updates

Approval Authority Matrix

Decision Type	Low Risk	Medium Risk	High Risk	Critical Risk
Initial Approval	Vendor Manager	Security Officer	Information Security Officer	C-Level Executive
Contract Terms	Vendor Manager	Legal Counsel	Legal Counsel + Security Officer	C-Level + Legal Counsel
Security Requirements	Vendor Manager	Security Officer	Information Security Officer	C-Level + Security Officer
Risk Acceptance	Vendor Manager	Department Head	VP Level	C-Level

Risk Scoring Methodology

Risk Scoring Factors

Technical Risk Factors (Weight: 40%)

Data sensitivity level (0-25 points)
System integration complexity (0-15 points)
Security control maturity (0-20 points)
Technical expertise requirements (0-15 points)
Incident response capabilities (0-25 points)

Business Risk Factors (Weight: 30%)

Service criticality to operations (0-30 points)
Financial impact of service disruption (0-25 points)
Vendor financial stability (0-20 points)
Contract terms and conditions (0-15 points)
Regulatory compliance requirements (0-10 points)

Operational Risk Factors (Weight: 30%)

Vendor operational maturity (0-25 points)
Support and maintenance quality (0-20 points)
Change management processes (0-20 points)
Business continuity capabilities (0-20 points)
Historical performance and reliability (0-15 points)

Risk Scoring Results

Risk Score Ranges

0-30 points: Low Risk (Green)
31-60 points: Medium Risk (Yellow)
61-80 points: High Risk (Orange)
81-100 points: Critical Risk (Red)

Risk Score Actions

Low Risk (Green): Standard approval process, annual review
Medium Risk (Yellow): Enhanced due diligence, semi-annual review
High Risk (Orange): Comprehensive assessment, quarterly review
Critical Risk (Red): Executive approval, continuous monitoring

Exception Approval Process

Exception Categories

Temporary Exceptions

Time-limited security requirement deviations
Emergency vendor access during incidents
Urgent business need with compensating controls
Planned security improvement timeline

Permanent Exceptions

Industry-standard practice variations
Vendor technical limitations with equivalent controls
Regulatory or legal requirement conflicts
Business-critical vendor with no alternatives

Exception Approval Requirements

Business Justification

Clear explanation of why exceptions are necessary
Business impact of not granting exception
Alternative solutions considered and rejected
Timeline for exception resolution (if temporary)

Risk Mitigation Measures

Compensating security controls implementation
Additional monitoring and oversight procedures
Enhanced incident response capabilities
Regular exception review and reassessment

Approval Documentation

Detailed exception request with justification
Risk assessment and mitigation measures
Approver identity and justification
Exception duration and review schedule

Exception Review Process

Request Submission: Exception request with supporting documentation
Risk Assessment: Security team evaluation of risks and mitigations
Stakeholder Review: Relevant department head consultation
Final Decision: Approval authority based on risk level
Documentation: Exception record in vendor management system
Review Schedule: Regular exception reassessment and renewal

Performance Metrics and Reporting

Key Performance Indicators

Vendor Security Performance

Security incident response times
Compliance with security requirements
Security assessment scores and trends
Remediation timeline adherence

Vendor Relationship Performance

Service level agreement compliance rates
Customer satisfaction scores
Contract compliance and adherence
Innovation and improvement initiatives

Reporting Schedule

Monthly Reports

Vendor security incident summary
Contract compliance status updates
Performance metric tracking
Upcoming contract renewal alerts

Quarterly Reports

Comprehensive vendor risk dashboard
Security assessment results and trends
Exception and approval tracking
Business impact and value assessment

Annual Reports

Vendor portfolio risk assessment
Security program effectiveness review
Vendor relationship optimization recommendations
Strategic vendor management planning

Security Policy
Incident Response Plan
Access Control Policy
Data Classification Policy
Privacy Policy
Vendor Agreement Template
Contract Management Procedures

Document Owner: Chief Information Security Officer
Review Schedule: Quarterly
Last Updated: [Current Date]
Version: 1.0