Sorting Vendors into Tiers

Previously, we reviewed some ideas around vendor discovery and laid out an example workflow and process. We also defined some tools and approaches to use for the task.
 
Once you have the vendors in your supply chain identified, and have obtained and cataloged the relevant data, the next step we suggest is to tier the vendors into levels to make it easier to classify vendors into “object groups”. Once we have the vendors sorted into tiers, we will discuss how to assign required controls to each tier in an easy to manage manner. This greatly simplifies the processing of future vendors that are added to the supply chain, since you need only identify the tier they fit into and then use the control requirements for that tier as your basis for evaluation and risk assessment. 
 
Vendor tiering, done properly, also makes assigning vendors to a given tier trivial in the long term. Our approach, as you will see, provides very clear criteria for the levels, making it easy to add new vendors and simple to manage vendors who change status as the supply chain and product lines evolve.
 
In our suggested model, we have four tiers, comprised as follows (using a product manufacturer as an example, obviously, other types of firms may require alternate specific criteria, but this should serve to lay out the model for you use as a baseline):
 
  • Critical Risk Vendors
    • Criteria: Mission critical “information intellectual property” (IIP) assets are shared with this vendor, where the assets represent a significant portion of the market differentiator or research and development of a product line OR the vendor’s IT operations are critical to our just in time manufacturing or delivery model – that is – ANY outage of the vendor’s IT operations would cause an outage for us that would impact our capability to deliver our products to our customers
      • Examples: Compromise of the IIP data would allow duplication of our product(s) or significant replication of our research; Outages or tampering with the vendor IT operations would impact manufacturing line operations, etc.
  • High Risk Vendors
    • Criteria: Non-critical IIP assets are shared with this vendor such that if said assets were compromised, they would represent damage to our long term product & brand strategies or research and development. Actual product replication would not be enabled, but feature replication might be possible. Outages of vendor’s IT operations at this level, if protracted, could impact our research and development or ability to deliver our products to our customers.
      • Examples: Breach of this vendors network could expose the design specs for a specific part of the product. Compromise of the vendor could expose our future marketing plan for a product and some of the differentiating features that we plan to leverage. If the vendor’s IT operations were disabled for a protracted time, (greater than /48, 72 or 96/ hours), our capability to deliver products could be impacted.
  • Routine Risk Vendors
    • Criteria: Non-critical IIP assets may be shared with this vendor tier, and compromise of that IIP may be damaging to our reputation. The IIP, if compromised, would not allow duplication of our product lines, research or differentiators of our products. In addition to reputational impacts, share of data that could impact our sales pipeline/process and/or other secondary systems or processes may be expected if breaches occur at this level. Regulatory or legally protected IIP also resides at this level.
      • Examples: Organizations where customer data, sales & marketing data, employee identification information, etc. are shared (outsourced payment, outsourced HR, etc.) are good examples here. This is the level of risk for any vendor that you share IIP with, in any form, that does NOT immediately empower delivery of your products or impact your longer term R&D efforts or market differentiators… 
  • Low Risk Vendors
    • Criteria: This tier is for vendors that we share NO IIPwith, in any form, and vendors that could not directly impact our product delivery via an IT operations outage in any way. These vendors, should they experience a breach, would result in little to no impact on the reputation or capabilities of our firm to operate.
      • Examples: Caterers, business supply companies, temporary employment agencies, hardware and software vendors for not manufacturing systems, commodity product or component dealers, packaging material suppliers, transport companies, etc.
 
Building such a tiered approach for your vendors creates an easy to manage way to prioritize them. The tiered approach will also be greatly useful in mapping groups of controls to the requirements for each tier. We will cover that in a future post, shortly.