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A Vendor Risk Management Policy sets clear rules for how your organization handles risks when working with external suppliers and contractors. It outlines how you'll evaluate, monitor, and manage potential threats from third-party relationships - from data security and privacy requirements under Australian Privacy Principles to financial stability checks and operational continuity plans.

The policy helps protect your business by establishing consistent vendor screening processes, defining risk tolerance levels, and creating response plans for vendor-related incidents. For Australian organizations, it's especially important given requirements from APRA's CPS 231 outsourcing standard and the Security of Critical Infrastructure Act, which mandate robust supplier oversight in many sectors.

Put a Vendor Risk Management Policy in place before onboarding any critical suppliers or when expanding your vendor network. This policy becomes essential when engaging suppliers who'll handle sensitive data, provide crucial services, or access your systems - particularly under Australian Privacy Principles and APRA regulations.

It's most valuable during vendor selection phases, contract negotiations, and when establishing new business relationships. Australian companies in regulated industries like financial services, healthcare, and critical infrastructure need this policy to meet compliance requirements, manage third-party risks effectively, and protect against supply chain disruptions. Having it ready before issues arise helps avoid rushed decisions and compliance gaps.

• Basic Policy: Focuses on essential vendor screening and monitoring processes, suitable for small to medium businesses with straightforward supply chains
• Enterprise-Grade Policy: Comprehensive framework covering complex vendor networks, international suppliers, and detailed risk matrices - typically used by large corporations
• Industry-Specific Policy: Tailored to meet sector requirements like APRA's CPS 231 for financial services or healthcare privacy standards
• Critical Infrastructure Policy: Enhanced controls for vendors supplying essential services under the Security of Critical Infrastructure Act
• Technology Vendor Policy: Specialized framework for managing IT suppliers, cloud services, and data processors under Australian Privacy Principles

• Procurement Teams: Lead the development and implementation of the Vendor Risk Management Policy, coordinating assessments and maintaining vendor relationships
• Legal Department: Reviews and ensures the policy aligns with Australian regulations, privacy laws, and industry standards
• Risk Officers: Oversee risk assessment processes and monitor ongoing compliance with policy requirements
• IT Security Teams: Evaluate technical risks and security controls of vendors who access company systems or data
• Senior Management: Approves the policy and sets risk tolerance levels
• Third-party Vendors: Must comply with policy requirements and undergo regular assessments

• Risk Assessment: Map out your vendor categories and risk levels based on data access, service criticality, and regulatory requirements
• Regulatory Review: Identify applicable Australian laws like Privacy Act, APRA standards, and industry-specific requirements
• Internal Input: Gather feedback from procurement, legal, IT, and risk teams about current vendor challenges
• Process Documentation: Detail your vendor screening, onboarding, monitoring, and offboarding procedures
• Control Framework: Define risk tolerance levels, assessment criteria, and compliance monitoring methods
• Policy Generation: Use our platform to create a customised, legally-sound policy that incorporates all essential elements

• Scope and Purpose: Clear definition of vendor types, risk categories, and policy objectives
• Risk Assessment Framework: Detailed criteria for evaluating vendor risks under Australian standards
• Due Diligence Requirements: Specific checks required for different vendor categories
• Data Protection Controls: Measures ensuring compliance with Privacy Act and APP guidelines
• Monitoring Procedures: Regular assessment schedules and performance metrics
• Incident Response Plan: Steps for managing vendor-related issues or breaches
• Governance Structure: Roles and responsibilities for policy oversight
• Compliance Requirements: Industry-specific obligations and reporting standards

A Vendor Risk Management Policy differs significantly from a Risk Management Policy in several key ways. While both address organizational risks, they serve distinct purposes and have different scopes.

• Focus and Scope: Vendor Risk Management Policy specifically targets third-party relationships and supply chain risks, while a Risk Management Policy covers all organizational risks, including internal operations, market conditions, and strategic decisions
• Assessment Criteria: Vendor policies include specific vendor vetting procedures, performance metrics, and third-party compliance requirements. Risk Management Policies use broader risk assessment frameworks for all business activities
• Regulatory Requirements: Vendor policies must align with APRA's CPS 231 outsourcing standards and Privacy Act obligations specific to third-party data handling. General risk policies focus on overall business risk compliance
• Implementation: Vendor policies require specific procedures for supplier onboarding, monitoring, and offboarding. Risk Management Policies establish organization-wide risk governance structures