Even small vendors can have an outsized impact. One over-permissioned account, a shared login, or an overlooked integration can turn a vendor issue into costly downtime, data exposure, or compliance problems.
Why Third-Party Risk Management Matters More Than Ever
For most small and mid-sized businesses, “the supply chain” isn’t just physical parts or shipping partners anymore. It’s the steady flow of digital access.
The Canadian Centre for Cyber Security points out that modern supply chains involve two-way movement of digital information, which effectively creates an extended attack surface for Canadian organizations. That matters because even if your internal security is strong, a weaker partner can become the easiest path into your environment.
Verizon’s 2025 DBIR Executive Summary also calls out third-party relationships as a major theme in how and why breaches occur. This means vendor risk is no longer an edge case. It’s a routine part of the threat landscape.
And it’s not only about the vendor’s employees. The Cyber Centre notes that software supply chain attacks can exploit the “trusted relationship” between customers and software suppliers, including through compromised updates and services that maintain ongoing connections to client networks.
What Counts as a “Third-Party”
A third-party is any external company or person who can access your business systems, data, or workflows. This includes direct access such as a login, or indirect access such as an integration that runs in the background.
A good rule of thumb: if a vendor can access your email, files, client records, payment processes, or identity systems, they’re a third-party worth vetting. And if they’re handling personal information on your behalf, the accountability doesn’t magically disappear just because it’s “with the vendor.” We cover the privacy and outsourcing angle in our PIPEDA breakdown here.
Checklist for Vetting Small Vendors
Not every vendor needs the same level of scrutiny. For example, a graphic designer who only receives finished PDFs poses far less risk than a payroll provider.
If you want a formal template to collect consistent information from vendors about security, access, and data handling, the CISA Vendor SCRM Template is a useful starting point.
Step 1: Vendor Tiers
Before you ask a single security question, classify the vendor. If you’re unsure of the risk, assign them a higher tier. Scaling back later is easier than trying to fix an under-vetted vendor relationship.
Tier 1 (High Risk)
Vendors who can access sensitive data or critical systems.
Tier 2 (Medium Risk)
Vendors with limited access that still touch business data.
Tier 3 (Low Risk)
Vendors with no meaningful access to systems or sensitive data.
Step 2: Access & Permissions
This is the most important section because most vendor risk comes down to one thing: what can they reach?
Ask the vendor:
- What systems will you need access to?
- Do you use named accounts/one login per person, or shared logins?
- What level of access is required: standard user, power user, or admin?
- Can you limit access by role, project, or time period?
Step 3: Identity Security
If a vendor’s account gets hacked, their access becomes an attacker’s access. That’s why strong identity controls are essential for Tier 1 vendors and highly recommended for Tier 2.
Ask:
- Do you enforce multi-factor authentication (MFA) for your staff?
- Do you use a password manager?
Step 4: Data & Storage
This is where third-party risk management overlaps with privacy and compliance. If a vendor stores or processes your customer or employee data, you need clarity on where it lives and how it’s protected.
Ask:
- What data will you collect, store, or process on our behalf?
- Where is the data stored (country/region)?
- What is your retention policy, and how do you delete data when we terminate services?
Step 5: Incident Readiness
Even good vendors can have incidents. The question is whether they’re prepared, and whether you’ll find out quickly if your data or access is involved.
Ask:
- Do you have an incident response plan?
- If you have a security incident, how will you determine whether our data was affected?
- How quickly will you notify us?
- Who is our point of contact during an incident?
Step 6: Subprocessors & Fourth Parties
Many vendors rely on other vendors. That’s not inherently bad, but you should know when your data could pass through additional hands.
Ask:
- Do you use subcontractors or subprocessors who may access our data?
- Can you provide a list or at least categories and purpose?
- How do you vet and monitor your third-party vendors?
A More Secure Supply Chain Starts with Your Next Vendor
Managing third-party risk doesn’t have to be complex. The key is clear: know who has access, limit that access, and ensure vendors meet basic security standards before they touch your systems or data.
If you’re unsure where to begin or how to streamline your vendor oversight, Data First Solutions can help. We’ll work with you to implement a lightweight, repeatable process, including vendor tiers, access controls, and onboarding checklists, so your business stays secure and compliant.
Contact us today to get started and gain confidence in your third-party security and compliance practices.
Article FAQ
What is third-party risk management in plain English?
Third-party risk management is the practice of checking how vendors protect your business. This is done before you give them access to your systems or data. It means you’re not relying on trust alone. You’re confirming what they can access, how they handle data, and what happens if they have an incident.
Do small vendors really create meaningful cybersecurity risk?
Yes. Vendor risk is less about company size and more about the level of access.
What’s the minimum I should require from a vendor?
At a minimum, require MFA, named user accounts (no shared logins), and least-privilege access that matches the job. If they store or process your data, you also need clear answers on where data is stored, how it’s protected, and how quickly they’ll notify you if something goes wrong.
What if a vendor refuses to answer security questions?
Treat that as a risk signal and tier them accordingly. If they’re Tier 1, consider choosing a different vendor; if you must proceed, reduce exposure with compensating controls like limited permissions, time-bound access, stronger controls on your side, and keeping the relationship “need-to-know” only.
