As a business owner, one of the things you must consider first and foremost is risk. Starting a business is a huge risk, and throughout your time as a business owner, you will face a lot of risks from different places.
From new employees to a new office space – every part of the business needs to be assessed for the risk it can cause and it also needs to be prevented.
One of the types of risk you might not have thought about is vendor risk. Vendor risk is a type of risk you can face when entering a business agreement with a third party.
Whether it is a client or a partner, carrying out a vendor risk assessment is important to ensure the safety of your business and its assets.
Today we want to talk about some of the different types of vendor risk you might encounter as a business owner and risk to watch out for.
Strategy risk
When assessing a vendor it is important to assess their risk to your business strategy as a whole. Will these people try to steal your ideas and information for their own use?
It can be hard to tell however conflict of interest is something to watch for.
Financial risk
Taking a chance on a smaller company or individual can be a lovely thing to do, however, it is also something to watch out for.
Make sure that you run a background check on their financial stability to make sure you won’t get scammed by them.
Compliance risk
This is something in particular if you work in the financial sector – are the people you want to work with compliant? Compliance is a set of guidelines and rules put out to ensure the safe running of a business.
If your client or partner does not follow these compliance laws and guidelines it could tarnish your own reputation and this is a dangerous thing. Make sure that you check for this before you sign an agreement.
Technical Risk
One of the things to consider especially in the modern day is whether there is any technical risk to your business. Make sure that the partner or client you work with has a solid IT infrastructure and is able to accommodate a project without server issues.
You also need to ensure that they have solid security because otherwise, it could be a massive risk to you should any of your data or information get leaked or accessed by hackers.
Reputational risk
Sometimes the biggest question of a client or partner is what their reputation is and whether it will impact you down the line. Will working with them have a damaging effect on your own business either internally or externally with the public? This is an important thing to consider and you must make sure you make plans for this.
Use these tips to successfully assess risk with your vendors this year.
