Vendor Management vs. Vendor Risk Management: What’s the Difference?

As someone dealing with information security, you’re likely working with more vendors than ever before—and with that growth comes complexity. To handle third-party relationships effectively, it’s important to distinguish clearly between vendor management and vendor risk management (VRM).

Though closely related, each has distinct objectives, responsibilities, and stakeholders within your organization.

By making these distinctions clear, you’ll set up a practical approach that keeps your vendor relationships both productive and secure.

Vendor Management Focuses on Getting the Most from Your Suppliers

Vendor management is about selecting, onboarding, and maintaining effective, value-driven relationships with vendors.

Your primary goal with Vendor Management is ensuring vendors deliver the agreed-upon services efficiently and reliably.

Typical vendor management tasks include:

• Evaluating potential vendors based on price, service quality, expertise, and cultural fit.
• Negotiating contracts, pricing, and Service Level Agreements (SLAs).
• Monitoring ongoing vendor performance to ensure contractual commitments are met.
• Managing relationships proactively—addressing disputes, contract renewals, and deciding when to expand or end relationships.

Who Typically Owns Vendor Management?

In most organizations, vendor management responsibilities are dividend between:

• Procurement teams (contract negotiations, financial terms)
• Business unit leads (day-to-day operational oversight)

However, responsibilities may shift depending on company size and structure.

For instance:

• Smaller organizations: Often have fewer resources, so vendor management tasks might be handled directly by business unit managers or even senior management.
• Larger organizations: Usually have dedicated procurement departments or vendor management offices (VMOs) that specialize in contract negotiation and supplier relations.

Vendor Risk Management Focuses on Protecting Your Business from Third-Party Risks

In contrast, vendor risk management specifically addresses the security, compliance, and operational risks vendors introduce into your organization.

Your goal with vendor risk management is safeguarding the confidentiality, integrity, and availability of critical information and systems when working with third parties.

Vendor risk management tasks typically involve:

• Identifying and categorizing vendors based on the risks they introduce (e.g., critical, high, medium, low).
• Performing security due diligence through questionnaires, evidence gathering, and audits (e.g., reviewing ISO 27001 certificates or SOC 2 reports).
• Establishing and enforcing contractual security clauses and clearly defined audit rights.
• Continuously monitoring vendors for changes in their security posture or compliance status.

Who Typically Owns Vendor Risk Management?

Vendor risk management generally falls under:

• Information security teams
• Risk management or compliance functions

Again, the exact distribution can differ based on company size and maturity. For example:

• Small and mid-sized businesses: InfoSec managers or a small compliance team often handle vendor risk management alongside other responsibilities.
• Large or regulated companies (e.g., financial services or healthcare): Dedicated third-party risk management teams or security analysts usually oversee comprehensive and structured vendor assessments.

Who is Responsible Will Change as the Organisation Grows

• Startup (50 employees): Vendor Management: COO handles vendor negotiations and contracts directly. Vendor Risk Management: Security Manager conducts vendor security reviews annually and manages questionnaires alongside other security duties.
• Mid-sized tech company (500 employees): Vendor Management: Central procurement team negotiates contracts; IT Operations manages ongoing service delivery. Vendor Risk Management: Dedicated InfoSec team conducts regular security assessments, maintains continuous vendor monitoring through automated tools, and reports findings to senior leadership.
• Enterprise financial organization (5,000+ employees): Vendor Management: Vendor Management Office (VMO) negotiates and oversees all contracts. Business units coordinate daily operations with vendors. Vendor Risk Management: Separate Third-Party Risk Management Team manages vendor tiering, ongoing security assessments, and collaborates closely with compliance and information security groups.

Why All This Matters?

Clearly defining vendor management and vendor risk management helps you avoid overlap, confusion, and gaps in your processes.

Knowing exactly who is responsible for each area and how this responsibility might shift as your organization grows will help you streamline work, save time, and reduce security risks.

By making these distinctions clear early on, you’ll set up a practical approach that keeps your vendor relationships both productive and secure.