Navigating Vendor Risk: Why MSPs Need a Comprehensive Approach
Most MSPs focus too much on vendor features and too little on vendor risks. For Managed Service Providers (MSPs), third-party risks directly affect daily operations and client relationships.
Recent incidents like the 2021 Kaseya ransomware attack and the 2020 SolarWinds breach, each affecting over 1,000 customers, shows how severe the consequences of vendor-related issues can get.
So how to mitigate MSP Vendor Risk?
The solution is simple. All you have to do is implement a clear Schedule of Third-Party Services within your contracts. This approach defines responsibilities and sets clear expectations between MSPs, vendors, and clients.
The Challenges of Vendor Risk
MSPs usually work with numerous third-party providers to deliver their services. This creates specific challenges that require attention.
Unclear Accountability
Without a clear Schedule of Third-Party Services, clients often expect MSPs to take responsibility for everything technology-related, including vendor issues. Why? Simply because “you’re the IT experts.”
Here’s an example of vendor risk for MSPs. During the ConnectWise security incident in February 2021, unauthorized access occurred due to a vulnerability in a third-party plugin. That’s why your clients deserve to know who is responsible.
Regulatory Compliance Issues
MSPs depend on vendors that handle sensitive data, including cloud providers and cybersecurity firms. When these vendors miss compliance requirements (like GDPR or HIPAA), MSPs face regulatory penalties.
The Accellion breach in December 2020 exposed sensitive data due to a zero-day vulnerability. Without a proper Schedule of Third-Party Services, regulators might expand the culpability to the MSPs as well.
Hidden Costs and Downtime
Behind the scenes, many MSPs absorb vendor-caused costs to maintain client relationships, even when contracts protect them from liability. This unsustainable practice affects profitability more than most industry discussions acknowledge.
The recent Crowdstrike outages demonstrated how vendor failures directly impact MSP operations and client satisfaction. That’s why investing in third-party risk management can save you both your time and money.
Why a Schedule of Third-Party Services is Essential
A detailed Schedule of Third-Party Services functions as a complete list that protects your business from vendor-related issues. Here’s how this schedule works:
- Transparency: Document which vendors perform specific IT services. Your clients understand exactly who’s involved and their roles, which strengthens your relationship.
- Accountability: States who oversee each vendor relationship, specifying whether it’s your team or another party. This stops misunderstandings before they start.
- Risk Management: Points out potential vendor issues before they affect your client services.
Vendor Risk Assessment for MSPs can get quite complicated. Don’t worry. Monjur makes this easier by providing a detailed checklist for building and updating your schedule efficiently.
Introducing Monjur’s Third-Party Service Provider Checklist
Based on our work with over 580 MSPs and experience handling vendor incidents, we’ve created a Third-Party Service Provider Checklist that simplifies vendor management.
Download the Third-Party Service Providers Checklist
Vendor Risk Management for MSPs has never been easier with Monjur’s exclusive checklist.
What’s Inside the Checklist?
- Editable Format: A straightforward yes/no checklist that connects vendors to your services.
- Vendor Categories: Sorted by key services such as Cloud Hosting, Security, and VOIP.
- Integrated with Contracts: Works directly with Monjur’s Schedule of Third-Party Services.
How to Use It:
- Identify Your Vendors: Review your current list of third-party service providers.
- Document Responsibilities: Use the checklist to map vendor services to your offerings.
- Incorporate into Agreements: Add the completed checklist to your contracts for clear documentation.
Sample Checklist Template
| Service Category | Vendor | Used by Your MSP? |
|---|---|---|
| Cloud Hosting Services | AWS | [ ] Yes [ ] No |
| Cloud Hosting Services | Microsoft Azure | [ ] Yes [ ] No |
| Cybersecurity Services | Sophos | [ ] Yes [ ] No |
| Cybersecurity Services | SentinelOne | [ ] Yes [ ] No |
| Backup Services | Veeam | [ ] Yes [ ] No |
| VOIP Services | RingCentral | [ ] Yes [ ] No |
Download Your Free Third-Party Service Provider Checklist
