What is the difference between a vendor and a third party vendor?

third party vendor

A manufacturing organisation providing direct goods and services is known as a vendor. If the same services and products are provided on behalf of a direct vendor, they are known as third-party vendors.

Third-party vendors always have a direct written contract, but not each vendor and organisation works with contracts. The definition of an entity as a third-party vendor depends on the organisation hiring its services.

Many third-party services are arriving with cloud hosting, computing solutions, business partners, agencies, and suppliers in this digital world. Any remote access of the company’s data by any user or business is also considered a third party vendor.

Vendor’s Examples

Here are some examples of companies or entities who are likely to be categorised under the term vendor:

  • Landscaping Association
  • Telephone provider Organisation
  • Shred group
  • Core system service provider

What are the examples of third parties?

  • Service provider
  • Marketing companies
  • Advisors organisations
  • Financial institutions
  • Telephone companies
  • Short term contractors, long term contractors
  • Consultants and advisors
  • Delivery enterprises
  • Call centre provider
  • Mortgage processor
  • Text banking service provider

What are the risks of using third party vendors? 

Third-party vendors, associates, advisers, and contractors are primarily hired to provide expert services to the customer. They might have access to internal systems and data of a sensitive nature.

Hence, weak third party vendor relationships can swipe a company’s data; they can change the system’s configuration and disrupt infrastructure. This is one of the major risk factors for any business banking on a third party vendor. Other than a data breach, non-compliance with the company’s security standards is also a concern. Also, inappropriate actions of any kind on the part of the vendor can directly generate financial and reputation risk.

Connection And Risk Managing With Third-Party Vendors

Before forming any third party vendor relationship, keep the below practices for vendor risk management in mind.

How do you manage third party vendors

Do a cybersecurity risk assessment

Always do the best cybersecurity risk management before working with third-party vendors. It’s useful for a business entity to be apprised of the risks and quantities brought on by new third-party vendors so that they can be prioritised. This allows the company to assign appropriate resources and funds. Data breaches will be less if third party relationships are stronger and more trustworthy. So there is no chance for the fourth party vendor. Risk management and risk assessments are best practices for securing our business from data breaches.

The risk management plan may include an index of all the steps for third party vendors. The third-party security must follow those rules. Sometimes, a company must purchase into the third-party vendor risk management process. Always learn about new risks. Provide vendor and third-party vendor training about the applicable laws, direct contact, saving money, and exact vendor’s work.

Constantly recognise, monitor, and conduct risk management

Constantly observing is the best practice and useful third-party vendor risk management program. It involves a threat landscape. Instant and steady checking for the cyber health of your third party vendor ensures that you have the most up-to-date security at all times.

How do you manage third-party vendors?

Know your vendor

Always make a list of the active vendors. Check that they have accurate profiles and the latest posts on the website about what they do and any potential risk and insurance requirements as per the business models for the third-party vendor relationship.

third party vendor relationship

Assess your vendor

Set operational protocols and questionnaires before any third party vendor relationships. Also, establish metrics and conditions to foresee risks and avoid risk management. We can also improve the system if we desire to automatically approve the vendor as per their responses. This can improve the quality of the survey for the vendor’s functionality and help maintain the daily operation of third-party service providers.

Remember the details of third-party vendor

Pay due diligence to all documents so that they have appropriate signatures. Preparing, sending, maintaining daily operations, and getting contracts signed electronically from the vendor can accelerate workflow and reduce legal risk.

Implement policies and due thoroughness

Create controls and store policies for third-party service providers. This can help vendors in checking all activities and various compliance. The client can then easily get training and awareness of the vendor’s new policies.

Assess risks caused by shared infrastructure

Having a user-friendly vendor management system to actively monitor and regularly audit your security and performance are of great importance.

Vendors and staff training for security practices

Staff and vendors’ training will help ensure vendors the assurance that everybody is working with the same rules and regulations, formats and requirements.

Are our vendor and third-party vendors the same?

No, vendors and third-party vendors are different. Vendors are a company themselves. And third party vendors are a company with whom the vendor has a written contract to provide a product and service on the organisation’s behalf to the customers.

It is always under the main vendor. Customers can contact the third-party vendors directly and take services and products provided by the original vendor or organisations.

What are the benefits of using a third-party vendor?

It is not possible to avoid using a third-party vendor. No matter how many departments your organisation creates, you will never possess every service you will ever need.

1. Organisation can save time

Nobody has time to maintain daily operations or hire every person necessary to run business processes. For a company to run smoothly, it is imperative to obtain certain professional services required to operate and fulfil orders for your customers on time.

2. Organisation can save money

Perhaps the biggest benefit is the cost savings. Contracting third parties for work as needed can be significantly less expensive than always having experts on the company payroll. For example, it will cost you much less to hire a technician when you need one rather than keep one on retainer.

3. Organisation get practical expertise

Your company doesn’t have time to create a new group of experts, and the duration and cost of doing so would be huge. Employing a third-party vendor for the expertise you do not have in-house will likely produce more satisfactory results.


There will always be risk involved in doing business with any vendor. Intimate access to delicate software and information to parties increases vendor risk. However, practising responsible customer-company relationship rules, securing sensitive data, being up-to-date with the changing security policies and keeping a tab on vendors’ work can help mitigate the risks involved.

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