Vendor Criticality Tiering Software

Tiering vendors is one of the most important processes in protecting your organization from risk. But it’s a process that’s often too objective. LogicManager’s Criticality Tiering solution package is designed to help you standardize this key part of your Vendor Management program.

What is Criticality Tiering?

Grouping vendors by tiers of criticality is a standard part of any third party or vendor risk management program. It facilitates insights into what vendors your organization is dependent on, contract spend and any issues or exceptions that have been raised on your third party vendors.

Factors that determine vendor criticality

So what type of scoring criteria should you use when evaluating vendor criticality? Here are a few common examples of vendor characteristics that can increase the level of risk they pose to your business (and therefore their criticality):

  • The ability to disrupt your business operations 
  • Their geographical location (do you conduct business internationally? Are they in an area susceptible to natural disaster?)
  • Regulatory requirements you face as a result of the relationship
  • The financial impact on your business as a result of ending the partnership
  • Access to sensitive information or physical assets

Of course, criteria varies based on your unique business needs and circumstances. Implementing LogicManager’s customizable Criticality Tiering solution package is a great place to start finding this information out.

Vendor Criticality Tiering Risks

By not assigning vendor criticality and bucketing accordingly, you are assuming all vendors pose the same risk to your organization. This could result in the misuse of valuable resources. Allocating more or less time, spend and FTEs to vendors than they need can be harmful to your bottom line.

What if you’re collecting unnecessary information on your vendors? Or perhaps worse, not enough? Without determining the criticality of your vendors before deciding how much attention to give them, you’re completing equal amounts of due diligence across the board. This either sets you up for failure in efficiency or failure to prevent risks. 

Achieve Criticality Tiering with LogicManager

Gain critical insight

Having insight into the criticality of services provided by any vendor ensures that you’re aware of all dependencies and can allocate resources as necessary. This comes into play when clients or regulators are conducting due diligence on you; you can more easily present a list of all partners and dependencies.

Work smarter, not harder

Only ask the relevant questions of the relevant vendors. Knowing the vendor criticality streamlines collecting due diligence information and vendor reviews. Once less critical vendors are identified (for example, IT vendors that don’t integrate with networks or those that have no access to sensitive data) their reviews can be more straightforward than one for a more critical vendor.

Automate your processes

Save time by using automatic workflows and logic to send additional questionnaires to critical vendors on a more frequent basis without unnecessarily contacting less critical parties. The criticality tiering process itself can also be automated; LogicManager provides standard parameters to consider as part of a vendor risk assessment and the system can aggregate all responses, exceptions and risk ratings across teams, generate a summary risk rating and automatically place the vendor in the appropriate tier.

Maintain a centralized repository

Having an all-in-one, centralized repository of vendors is an important starting point for a mature third party risk management program. From there, you’ll be able to easily reference and compare vendors, making the criticality tiering process a smoother one.

Leverage a flexible taxonomy

LogicManager’s taxonomy hierarchy structure is completely customizable and enables strategic grouping. Deem vendors as Low, Medium, Moderate, High, Critical or Severe; no matter what, you control the naming conventions. This configurability also ensures that important data points like type of service provided, industry or data sensitivity are still captured on a per-vendor basis.

Draw key connections

Vendors can be linked or referenced to different repositories managed in the LogicManager system, from applications to business units and more. This lets you quickly see if you need to allocate more resources to higher risk vendors, or vendors that provide services to multiple departments or business units. If any incidents were to occur with vendors or the other solution areas tied to the vendors, you are able to base your response on the criticality of the vendor.

LogicManager’s Criticality Tiering Solution

Here’s what you can expect to add to your vendor management program by implementing LogicManager’s Criticality Tiering solution package: 

  • Out-of-the-Box Relationship Automation Rules can be built to streamline the process of onboarding new vendors. These rules allow you to set up criteria that when met will automatically move the vendor to the correct tiering folder in LogicManager.
  • Tiering vendors also aids in the ongoing vendor due diligence process. Typically, vendors of a higher criticality have due diligence performed on them more frequently and more in-depth questionnaires collected.
  • Leverage our reporting capabilities:
    • Due Diligence Table Report: This can be used to view due diligence information on vendors sorted by their criticality.
    • Count of Vendors by Folder: This displays the number of vendors in each criticality bucket.
    • Relationships Field History Report: View this to see if any vendors have changed criticality historically, and see the fields that were updated that caused the change.
    • Vendor Inventory by Risk Rating: Easily view the risk ratings that led to the assigned criticality.

Request a Free Demo Of LogicManager’s
Vendor Criticality Tiering Tools

LogicManager’s Criticality Tiering solution package will improve any vendor management program, but if you want to see exactly how it can strengthen yours, request a free demo today!