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 typically divided between:

  • Procurement teams for contract negotiations and financial terms.
  • Business unit leads for day-to-day operational oversight.

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

For instance:

  • Smaller organizations: Vendor management tasks might be handled directly by business unit managers or senior management.
  • Larger organizations: Dedicated procurement departments or vendor management offices (VMOs) often 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, such as critical, high, medium, or low.
  • Performing security due diligence through questionnaires, evidence gathering, and audits, such as 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: 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 sits with the COO for contract negotiation and vendor coordination. Vendor risk management sits with the security manager, who runs annual reviews and questionnaires alongside other security work.
  • Mid-sized tech company (500 employees): Central procurement negotiates contracts while IT operations manages delivery. A dedicated InfoSec team runs recurring security assessments, monitors vendor posture, and reports findings upward.
  • Enterprise financial organization (5,000+ employees): A vendor management office negotiates and oversees contracts while business units coordinate daily operations. A separate third-party risk team manages tiering, ongoing assessments, and coordination with compliance and security.

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 that responsibility should shift as your organization grows, helps 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.