How to Ensure Your Vendors Have Acceptable Information Security Practices in Place
Dec 23, 2025
Third-party vendors play a crucial role in helping organizations operate efficiently, scale faster, and deliver value to customers. However, with these partnerships comes a significant risk: your vendors could become the weakest link in your information security chain. Even if your internal systems are secure, a single vendor with poor cybersecurity practices can expose sensitive data, disrupt operations, and damage your reputation.
Ensuring that your vendors maintain acceptable information security practices is no longer optional — it’s a fundamental part of protecting your business. Here’s a comprehensive guide on how to do it effectively.
1. Understand Why Vendor Information Security Matters
Many high-profile data breaches have originated not from a company’s own network but from a third party with access to sensitive data or systems. Vendors such as cloud service providers, payment processors, software developers, and even cleaning services may handle confidential information or have access to your environment.
Key risks of inadequate vendor security include:
Data breaches: Exposure of customer or company data through insecure vendor systems.
Compliance violations: Non-compliant vendors can put your organization at risk of fines under regulations like GDPR, HIPAA, or ISO 27001.
Operational disruption: A cyberattack on a vendor could interrupt services you rely on.
Reputational damage: Customers and stakeholders hold you responsible for protecting their data, regardless of where the breach originated.
Recognizing these risks is the first step toward building a robust vendor security management strategy.
2. Set Clear Security Expectations from the Start
Before you even sign a contract, define your security requirements clearly. Establish minimum standards that all vendors must meet to do business with your organization. These expectations should align with your internal policies, regulatory requirements, and industry best practices.
Some baseline requirements might include:
Use of encryption for data in transit and at rest
Strong access controls and multi-factor authentication
Regular vulnerability assessments and penetration testing
Documented incident response plans
Compliance with recognized security standards (e.g., ISO 27001, SOC 2, NIST)
Including these criteria in requests for proposals (RFPs), vendor questionnaires, and contracts ensures that security is part of the conversation from day one.
3. Conduct Thorough Vendor Risk Assessments
Not all vendors pose the same level of risk. A company that processes sensitive customer data will require far more scrutiny than a vendor that supplies office supplies. Conducting vendor risk assessments helps you evaluate the security posture of each partner and allocate resources accordingly.
Key steps in a vendor risk assessment:
Identify the type of data shared: Understand whether the vendor will access, process, or store sensitive information.
Assess technical controls: Review policies on encryption, access management, patching, and incident response.
Review compliance certifications: Ask for evidence of compliance with industry standards or regulations.
Evaluate historical performance: Investigate whether the vendor has had past breaches or security incidents.
Score the risk level: Classify vendors as low, medium, or high risk and adjust oversight accordingly.
High-risk vendors should undergo deeper due diligence, such as on-site security audits or third-party penetration testing.
4. Include Security Requirements in Contracts and SLAs
A strong contract is one of your best tools for holding vendors accountable. Your vendor agreements and service-level agreements (SLAs) should include specific information security obligations and outline consequences for non-compliance.
Important clauses to include:
Data protection responsibilities: Who owns the data, how it should be handled, and how it must be protected.
Breach notification timelines: How quickly a vendor must notify you in the event of a security incident.
Audit and assessment rights: Your right to perform security audits or request third-party assessments.
Subcontractor requirements: Ensure any subcontractors used by the vendor meet the same security standards.
Termination rights: The ability to terminate the contract if the vendor fails to meet security requirements.
Clear legal language creates accountability and ensures both parties understand their responsibilities.
5. Monitor and Reassess Vendor Security Continuously
Vendor risk management is not a one-time exercise. Even vendors with strong security practices today can become vulnerable over time due to new threats, system changes, or mergers. Establish a process for ongoing monitoring and periodic reassessments.
Best practices include:
Annual or semi-annual security questionnaires: Request updated information on security controls and certifications.
Continuous security monitoring: Use third-party tools or platforms to track vendor cybersecurity posture in real time.
Review audit reports: Ask for SOC 2, ISO 27001, or other third-party audit reports annually.
Incident tracking: Keep records of any breaches or incidents involving vendors and how they were handled.
A proactive monitoring approach allows you to detect and address issues before they escalate into serious problems.
6. Foster Collaboration and Security Awareness
Security is most effective when treated as a collaborative effort rather than a checkbox. Building strong relationships with your vendors and fostering open communication can significantly improve security outcomes.
Tips to strengthen collaboration:
Share your internal security policies and updates with vendors.
Offer security awareness training or resources, especially for smaller vendors.
Encourage vendors to report potential vulnerabilities without fear of penalty.
Host periodic meetings to discuss emerging threats and best practices.
By treating your vendors as partners in security rather than external risks, you can build a more resilient supply chain.
7. Leverage Technology for Vendor Risk Management
Manual vendor security assessments can be time-consuming and prone to oversight, especially if you work with dozens or hundreds of vendors. Consider using vendor risk management (VRM) platforms or GRC (governance, risk, and compliance) tools to streamline the process.
These solutions help you:
Automate vendor onboarding and risk assessments
Track compliance documentation and certifications
Monitor vendors’ cybersecurity posture continuously
Generate reports for audits and regulatory reviews
With the right technology, you gain greater visibility, improve efficiency, and reduce the risk of security gaps across your vendor ecosystem.
Your security is only as strong as the weakest link in your supply chain. In an era where third-party relationships are essential to business success, ensuring your vendors have acceptable information security practices is a non-negotiable part of protecting your data, reputation, and bottom line.