Last Updated on January 16, 2024
For many organizations, managing vendor risk is time-consuming, expensive, and diverts scarce resources from other critical tasks. As a result, many companies have ad hoc, inconsistent or weak vendor due diligence programs.
Outsourcing vendor due diligence reviews and security questionnaires to an expert third-party can be a quick and cost-effective approach to bring you and your customers peace of mind.
This article shares the cost range for vendor due diligence reviews and explains the factors that could influence your final cost.
Why is vendor due diligence important?
Businesses of all shapes and sizes are increasingly reliant on third-party vendors to deliver business-critical services, including storing, transferring, and/or processing sensitive data. But outsourcing key business processes to vendors can introduce substantial cybersecurity risk, which many companies struggle to evaluate and manage.
As data breach reports consistently show, your information security posture may be only as strong as the security of your weakest vendor. Likewise, your ability to manage your vendor risk exposure is only as strong as your vendor due diligence program.
When vendor issues impact your business and brand, your organization ultimately bears the responsibility and the consequences—such as compliance penalties, recovery costs, and reputational damage. This makes vendor due diligence a basic aspect of operational and financial responsibility to your stakeholders, and the backbone of your third-party risk management (TPRM) activities.
How much does a vendor due diligence review cost?
Costs for 90% of our clients fall between these figures:
- On the low end, $200 to $500 per vendor for automated reviews conducted using Pivot Point Security’s Accelerated Vendor Due Diligence (AVDD) solution. An automated or semi-automated approach is usually the least expensive option.
- In the middle of the cost range are fully manual reviews, which range from $2,500 to $3,500 per review.
- On the high end, expect to pay $15,000 to $20,000 for a comprehensive, onsite audit of an especially critical vendor.
What are the key cost drivers for vendor due diligence reviews?
Your actual costs for vendor due diligence will depend on several factors. These include:
- Degree of automation
Using an automated platform like Pivot Point’s AVDD can reduce per-vendor review costs significantly. Manual review of artifacts and questionnaire responses to augment automation adds to the cost.
- Vendor risk
Critical vendors require a “deeper due diligence dive” and hence more time and cost.
- Questionnaire complexity
When using questionnaires to assess vendor practices, more comprehensive questionnaires usually take more time and cost to evaluate.
- Onsite or offsite audits
Onsite audits obviously entail more time and cost than remote evaluations.
- Number of reviews
Thanks to economies of scale, the per-review cost generally drops as the number of reviews conducted increases. In other words, you’ll likely get a per-review price break for 100 vendor reviews versus just 1 or 2.
Examples of vendor review scenarios and costs
These example scenarios illustrate how various drivers influence the cost of vendor due diligence reviews:
- The least expensive vendor due diligence reviews (at $200-$500 per review) are those conducted with a fast, reliable automated solution like Pivot Point’s AVDD.
- Checking the results of an automated solution with manual review of vendor artifacts and survey responses increases the cost to about $1,000 per review.
- Leveraging third-party expertise to conduct vendor reviews end-to-end without using automation generally costs about $2,500-$3,000 per review.
- More complex reviews of high-risk, highly critical vendors (e.g., using a full Standardized Information Gathering (SIG) questionnaire and tools) typically cost between $6,000-$7,000 per review.
- A comprehensive onsite audit of a critical vendor’s security controls (e.g., using Standardized Control Assessment (SCA) methodology) usually costs $15,000 to $20,000.
Pivot Point Security provides vendor due diligence services to help organizations assess the security posture of their third-party vendors. Leveraging automation and best practices, our expert team will work with you to develop a vendor review process (e.g., vendor due diligence questionnaires, audit program), and implement policies and procedures to create a robust and consistent vendor risk management program.
To discuss your current vendor risk management program and ways to improve its efficiency and effectiveness, contact Pivot Point Security.
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