In today’s hyper-connected ecosystem, every business relies on third-party vendors for cloud storage, payments, HR systems, and countless other operations. But these relationships introduce a hidden danger, vendor risk.
A single misstep in vendor management can expose your organization to data breaches, compliance violations, and operational disruptions. In fact, over 60% of data breaches are linked to third parties (according to IBM’s Cost of a Data Breach Report).
In this blog, we’ll explore the top vendor risk management mistakes organizations make, why they happen, and, most importantly, how to avoid them through proactive strategies and automation.
1. Treating Vendor Risk Management as a One-Time Activity
Many companies perform a vendor risk assessment only at onboarding and forget to review it later. But vendors evolve, they upgrade systems, change locations, or get acquired. Without continuous monitoring, you’re relying on outdated data.
The mistake: Viewing vendor risk management as a “check-the-box” compliance task.
The impact: Undetected security posture changes can create blind spots in your defenses.
How to avoid it:
Implement ongoing vendor monitoring using automation. Modern platforms like Akitra Andromeda® Vendor Risk Management, powered by Agentic AI, continuously analyze vendor risk signals, such as SOC 2 and ISO 27001 status, security questionnaire updates, and threat intelligence feeds, to alert you to real-time changes.
2. Failing to Classify Vendors by Risk Level
Not all vendors pose the same level of threat. A cloud hosting provider handling customer data is far riskier than a catering service.
Yet, organizations often apply a one-size-fits-all approach to assessments.
The mistake: Overburdening low-risk vendors while under-assessing critical ones.
The impact: Wasted resources and potential gaps in high-risk areas.
How to avoid it:
Adopt a tiered risk classification framework, categorize vendors into low, medium, or high risk based on:
- Data sensitivity, they access
- Business criticality
- Compliance scope (SOC 2, ISO 27001, HIPAA, PCI DSS, etc.)
- Geography and regulatory exposure
This allows you to allocate due diligence efforts effectively and focus on vendors that truly impact your security and compliance posture.
3. Ignoring Vendor Dependencies and Subcontractors
Your vendor’s risk doesn’t end with them; it extends to their vendors (often called fourth parties). For example, your HR software provider might use a third-party payroll processor.
The mistake: Overlooking the extended vendor ecosystem.
The impact: Hidden dependencies increase the attack surface and the complexity of compliance.
How to avoid it:
Request transparency from vendors about their sub-processors and ensure they follow similar security frameworks. Use a platform that visually maps vendor dependencies, giving you a holistic view of your vendor supply chain risk.
Platforms like Akitra Andromeda® enable dynamic mapping of vendor hierarchies, offering visibility into direct and indirect third-party relationships.
4. Using Manual Processes for Risk Assessments
Excel sheets, emails, and scattered questionnaires are still the norm in many organizations. But manual assessments are slow, inconsistent, and prone to human error.
The mistake: Relying on outdated, manual workflows.
The impact: Delays, missed deadlines, and inconsistent vendor risk scoring.
How to avoid it:
Adopt automated vendor risk assessment tools that centralize:
- Questionnaire management (e.g., SIG, CAIQ templates)
- Evidence collection
- Risk scoring and approval workflows
- Audit trails
Solutions like Akitra Andromeda® automate these repetitive steps and integrate directly with vendors’ compliance reports, drastically reducing administrative overhead while ensuring audit-ready documentation.
5. Overlooking Regulatory Compliance Requirements
Every industry faces unique compliance standards, from GDPR in Europe to HIPAA in healthcare and PCI DSS in financial services. Many businesses assume vendors handle compliance independently, but regulators see it differently.
The mistake: Assuming “vendor compliance” equals “your compliance.”
The impact: Non-compliance fines and reputational damage.
How to avoid it:
Integrate vendor compliance management into your risk program. Ensure vendors align with frameworks such as:
- SOC 2 Type II – for data security
- ISO 27001 – for information security management
- HIPAA – for healthcare data protection
- GDPR – for privacy and data rights
Automated compliance monitoring tools like Akitra Andromeda® can continuously track vendor certifications and flag expirations or deviations.
6. Neglecting to Include Vendors in Incident Response Plans
Cyber incidents rarely respect organizational boundaries. If your vendor suffers a breach, your customers may still hold you accountable.
The mistake: Not involving vendors in your incident response plan.
The impact: Delayed communication, extended downtime, and unclear responsibilities.
How to avoid it:
- Define SLAs (Service Level Agreements) and Breach Notification Protocols during onboarding.
- Conduct joint tabletop exercises with key vendors.
- Require vendors to maintain their own incident management procedures aligned with your internal plan.
This collaborative approach strengthens resilience and minimizes downstream impact during real-world incidents.
7. Failing to Engage Business Stakeholders in Vendor Oversight
Vendor risk management isn’t just an IT or compliance function. Procurement, finance, and operations all interact with vendors and must be part of the oversight loop.
The mistake: Isolating VRM within the security team.
The impact: Siloed data, misaligned priorities, and unapproved vendor onboarding.
How to avoid it:
Create a cross-functional VRM committee that includes representatives from IT, legal, procurement, and compliance. Use centralized dashboards (like Akitra Andromeda® Risk Hub) to share vendor insights across departments, ensuring unified visibility and decision-making.
8. Forgetting to Re-Assess Vendors During Contract Renewals
Contracts often last years, and during that time, vendors may change systems, locations, or leadership. Without periodic re-assessment, you risk renewing outdated or risky contracts.
The mistake: Skipping re-evaluation during renewals.
The impact: Blind continuation of relationships with degraded controls.
How to avoid it:
Mandate annual or bi-annual vendor reassessments based on vendor tier and performance history. Leverage automation to trigger re-assessments automatically before renewal dates, ensuring compliance without disrupting operations.
9. Lacking a Centralized Vendor Repository
Scattered documents, lost risk scores, and missing audit evidence make it hard to maintain control.
The mistake: No centralized vendor risk repository.
The impact: Inefficiency and audit failure.
How to avoid it:
Adopt a centralized VRM platform that consolidates all vendor data, assessments, contracts, certifications, and risk ratings, into a single pane of glass.
For example, Akitra Andromeda® provides a unified vendor lifecycle management dashboard that allows all vendor records to be version-controlled, searchable, and linked to ongoing risk actions.
10. Ignoring the Role of Emerging Technologies
AI-powered risk scoring, predictive analytics, and continuous monitoring are revolutionizing vendor risk management. Organizations that ignore these advancements risk falling behind.
The mistake: Not leveraging automation and AI in vendor risk management.
The impact: reactive rather than proactive risk management.
How to avoid it:
Adopt Agentic AI-driven platforms like Akitra Andromeda®, which use intelligent agents to autonomously:
- Gather and validate vendor data
- Score risks dynamically
- Generate compliance evidence
- Recommend mitigation actions
This transforms vendor risk management from a reactive task into a strategic, autonomous process.
Conclusion: Build Resilience by Learning from Mistakes
Every organization makes vendor risk management mistakes, but the best ones learn, adapt, and evolve. By avoiding these pitfalls and embracing continuous monitoring, automation, and cross-functional collaboration, you can turn your weakest link into a strategic advantage.
Platforms like Akitra Andromeda® Vendor Risk Management, powered by Agentic AI, help you, identify vendor risks faster, automate assessments and evidence collection, maintain continuous compliance, and build resilience across your entire vendor ecosystem
Security, AI Risk Management, and Compliance with Akitra!
In the competitive landscape of SaaS businesses, trust is paramount amidst data breaches and privacy concerns. Akitra addresses this need with its leading Agentic AI-powered Compliance Automation platform. Our platform empowers customers to prevent sensitive data disclosure and mitigate risks, meeting the expectations of customers and partners in the rapidly evolving landscape of data security and compliance. Through automated evidence collection and continuous monitoring, paired with customizable policies, Akitra ensures organizations are compliance-ready for various frameworks such as SOC 1, SOC 2, HIPAA, GDPR, PCI DSS, ISO 27001, ISO 27701, ISO 27017, ISO 27018, ISO 9001, ISO 13485, ISO 42001, NIST 800-53, NIST 800-171, NIST AI RMF, FedRAMP, CCPA, CMMC, SOX ITGC, and more such as CIS AWS Foundations Benchmark, Australian ISM and Essential Eight etc. In addition, companies can use Akitra’s Risk Management product for overall risk management using quantitative methodologies such as Factorial Analysis of Information Risks (FAIR) and qualitative methods, including NIST-based for your company, Vulnerability Assessment and Pen Testing services, Third Party Vendor Risk Management, Trust Center, and AI-based Automated Questionnaire Response product to streamline and expedite security questionnaire response processes, delivering huge cost savings. Our compliance and security experts provide customized guidance to navigate the end-to-end compliance process confidently. Last but not least, we have also developed a resource hub called Akitra Academy, which offers easy-to-learn short video courses on security, compliance, and related topics of immense significance for today’s fast-growing companies.
Our solution offers substantial time and cost savings, including discounted audit fees, enabling fast and cost-effective compliance certification. Customers achieve continuous compliance as they grow, becoming certified under multiple frameworks through a single automation platform.
Build customer trust. Choose Akitra TODAY!To book your FREE DEMO, contact us right here.
FAQ’S
Why are vendor risk management mistakes so common?
They occur because many companies view vendor risk as a compliance checklist rather than a continuous security function. Lack of automation and siloed processes further increase human error.
How can automation help reduce vendor risk management mistakes?
Automation platforms like Akitra Andromeda® continuously collect, analyze, and update vendor data — minimizing manual work and ensuring no vendor risk goes unnoticed.
How often should I reassess my vendors?
High-risk vendors should be reviewed quarterly or bi-annually, while low-risk vendors can be assessed annually. Automation ensures timely re-assessments without extra administrative effort.
What’s the best way to start improving my vendor risk management program?
Start by identifying critical vendors, classifying them by risk, and adopting an automated solution like Akitra Andromeda® that integrates compliance, risk scoring, and reporting in one unified platform.
