The Hidden Risk of Vendor Sprawl: How to Build a Third-Party Risk Program
As your business grows, so does your vendor list. You start with a few tools, maybe a CRM and a cloud provider. Then come payment processors, analytics platforms, customer support tools, contractors, and SaaS integrations.
Before you know it, you're managing dozens of third parties—many with access to sensitive systems or data.
This is vendor sprawl, and it’s one of the biggest hidden risks in scaling a business.
Without a clear third-party risk management program, even one weak vendor can expose your customers, damage trust, or slow down an audit. The good news? You don’t need to be a Fortune 500 company to manage this risk well.
Here’s how to get started.
Why Vendor Sprawl Happens
Modern companies move fast. Teams choose tools that help them ship faster or work better. But most of these tools are brought in informally. They might not go through IT or security. They’re often not documented.
Over time, this leads to:
Too many vendors with unclear risk profiles
No central record of who has access to what
Unused or redundant tools still processing data
Compliance gaps during audits or due diligence
It’s not about being overly restrictive. It’s about staying in control.
Step 1: Build a Vendor Inventory
Start with visibility. You can’t manage risk if you don’t know what’s in play.
Gather a list of all vendors your company uses. Include:
Software tools (internal and customer-facing)
Infrastructure providers
Freelancers or service providers with system access
Data processors (e.g. email platforms, cloud storage)
For each, track:
Who owns the relationship internally
What type of data is shared (if any)
Whether a contract or DPA is in place
If the vendor has certifications (SOC 2, ISO 27001, etc.)
A simple spreadsheet works to begin with.
Step 2: Classify Vendor Risk Levels
Not every vendor carries the same level of risk. Focus first on those that:
Access or store customer data
Integrate with your core systems
Handle financial or HR information
Operate in regions with strict privacy laws
You can classify vendors as:
High-risk: Needs regular review, assessment, and controls
Medium-risk: Important but lower data exposure
Low-risk: No data access, minimal impact if compromised
This lets you apply the right level of oversight without slowing your team down.
Step 3: Introduce a Vendor Intake Process
To prevent future sprawl, set up a lightweight process for reviewing new vendors before they’re onboarded.
Your intake form should ask:
What data will the vendor access?
Is there a business owner assigned?
Does the vendor provide a security or privacy report?
Do you have a signed agreement in place?
For key vendors, perform a basic security review or ask for evidence like a SOC 2 report or ISO 27001 certification.
Step 4: Monitor and Review Regularly
Third-party risk management isn’t one-and-done. Build in a routine (quarterly or annually) to:
Review your vendor inventory
Remove unused or dormant vendors
Update documentation and ownership
Reassess risk levels and controls
Make sure vendor renewals aren’t just finance-driven. Security and compliance should be part of the renewal conversation too.
Step 5: Prepare for Client and Audit Requests
If you’re pursuing SOC 2, ISO 27001, or working with regulated clients, expect them to ask:
How you evaluate and monitor third-party risk
If you have DPAs in place
What controls are applied to vendor access
When vendors were last reviewed
A clean vendor inventory and documented review process shows that you’re in control—and helps you respond faster.
Final Thought
You can’t eliminate third-party risk. But you can manage it.
Building a vendor risk program doesn’t require fancy tools or a security team. It starts with visibility, ownership, and a few intentional habits. The earlier you start, the easier it is to scale.
How SAMN Consulting Helps
We help SaaS companies and growing businesses build third-party risk programs aligned with compliance standards like SOC 2, ISO 27001, and GDPR.
Our services include:
Vendor inventory setup
Risk classification frameworks
Policy and DPA templates
Integration into compliance roadmaps
Audit and customer-facing prep
📩 Reach out to get started or request a readiness assessment.
