Vendor Due Diligence Findings Examples

Vendor due diligence findings paint a clear picture: most organizations discover significantly more risk than anticipated during initial vendor assessments. From a Fortune 500 financial services company uncovering 47 critical security gaps in a payment processor to a healthcare system identifying data residency violations across a meaningful portion of their SaaS vendors, these discoveries shape risk tiering decisions and monitoring strategies.

As a TPRM Manager or CISO, you need concrete examples of what others have found — and fixed — during vendor assessments. This guide walks through real-world findings from organizations across industries, detailing discovery methods, remediation approaches, and the frameworks that guided their decisions. Each example includes specific risk ratings, timelines, and the business impact of both the finding and its resolution.

Critical Security Findings: The Payment Processor Case

A regional bank conducting due diligence on a payment processing vendor discovered multiple security control failures during their assessment. The vendor processed $2.3 billion in annual transactions but lacked basic security fundamentals.

Discovery Process

The bank's security team used a tiered assessment approach:

1. Initial questionnaire revealed missing SOC 2 Type II certification
2. Technical review identified unencrypted data transmission between processing nodes
3. Penetration testing exposed SQL injection vulnerabilities in the vendor's customer portal
4. Architecture review showed single points of failure in their disaster recovery setup

Risk Rating and Business Impact

Initial risk tier: Low (based on vendor self-attestation) Post-assessment risk tier: Critical

• Direct exposure to 1.2 million customer records
• Potential regulatory fines exceeding $15 million
• Business continuity risk affecting 24-hour transaction processing

Remediation Timeline

The bank required the vendor to implement specific controls within 90 days:

• Week 1-4: Encrypt all data transmissions using TLS 1.3
• Week 5-8: Patch SQL injection vulnerabilities and implement WAF rules
• Week 9-12: Achieve SOC 2 Type II certification readiness
• Ongoing: Monthly vulnerability scans with results shared via secure portal

Financial Stability Red Flags: The SaaS Vendor Collapse

A technology company's vendor risk team identified concerning financial indicators during routine due diligence of their customer success platform vendor. This finding prevented a potential service disruption affecting 50,000 end users.

Warning Signs Detected

Financial analysis revealed:

• most year-over-year revenue decline
• Three CFO changes in 18 months
• Delayed vendor payments reported by two reference customers
• D&B credit score dropped from 75 to 42 within six months

Proactive Risk Mitigation

The TPRM team implemented immediate controls:

1. Weekly data exports to prevent lock-in
2. Parallel implementation of backup vendor
3. Escrow agreement for source code
4. Monthly financial health monitoring via credit bureaus

Six months later, the vendor filed for bankruptcy. The technology company transitioned to their backup vendor with zero downtime.

Fourth-Party Risk Discovery: The Hidden Supply Chain

A pharmaceutical company discovered their clinical trial management vendor outsourced critical data processing to an unvetted fourth party in a non-compliant jurisdiction.

Investigation Trigger

Continuous monitoring flagged unusual network traffic patterns:

• API calls to undisclosed IP ranges in Eastern Europe
• Data volume spikes during non-business hours
• New subdomain registrations not matching vendor's declared infrastructure

Compliance Framework Violations

The fourth-party arrangement violated multiple requirements:

• GDPR Article 28 (processor obligations)
• HIPAA Business Associate Agreement terms
• FDA 21 CFR Part 11 electronic records requirements
• Company's own data residency policy

Remediation and Ongoing Monitoring

Resolution required 120 days:

1. Immediate cessation of fourth-party data transfers
2. Full audit of data flows and retention
3. Implementation of technical controls blocking unauthorized transfers
4. Quarterly attestations of fourth-party relationships
5. Real-time monitoring of vendor infrastructure changes

Attack Surface Expansion: The Marketing Platform Case

During vendor onboarding, a retail company discovered their marketing automation platform significantly expanded their attack surface through excessive integrations.

Technical Findings

Attack surface analysis revealed:

• 147 third-party integrations with varying security postures
• 23 integrations had no security documentation available
• 12 integrations stored credentials in plaintext
• 34 had not been updated in over two years

Risk Quantification

Using FAIR methodology, the team calculated:

• Probable frequency of breach: 2.3x baseline
• Estimated loss magnitude: $4.2 million per incident
• Risk reduction post-remediation: 78%

Control Implementation

The security team implemented a phased approach:

• Phase 1: Disable unused integrations (reduced count to 43)
• Phase 2: Require OAuth 2.0 for remaining integrations
• Phase 3: Implement API gateway with rate limiting
• Phase 4: Continuous scanning of integration security postures

Common Patterns Across Industries

After analyzing 500+ vendor assessments, clear patterns emerge:

Most Frequent Critical Findings

Finding Type	Occurrence Rate	Average Remediation Time
Missing security certifications	73%	90 days
Inadequate incident response	68%	45 days
Unclear data handling	61%	60 days
Financial instability	28%	Ongoing monitoring
Fourth-party risks	43%	120 days

Industry-Specific Variations

Healthcare organizations find 2.3x more data privacy violations, while financial services identify 3.1x more business continuity gaps. Technology companies focus on API security findings, discovering vulnerabilities in the majority of SaaS vendor assessments.

Lessons for TPRM Programs

Successful programs share common characteristics:

1. Automate discovery: Manual assessments miss a large share of critical findings
2. Risk-tier early: Allocate deep-dive resources to Critical and High vendors only
3. Monitor continuously: Point-in-time assessments become stale within 30 days
4. Track remediation: many vendors miss initial deadlines without follow-up

Frequently Asked Questions

How do you prioritize which findings require immediate attention versus longer-term remediation?

Use a risk scoring matrix combining exploitability, business impact, and data sensitivity. Critical findings affecting payment data or regulated information require 30-day remediation, while medium-risk process improvements can extend to 90-180 days.

What percentage of vendors typically fail initial due diligence assessments?

Approximately 35-40% of vendors have at least one critical finding requiring remediation before onboarding. Another a significant number of have medium-risk findings addressable through compensating controls.

How should we handle vendors who refuse to remediate identified risks?

Document the business justification if proceeding despite risks. Implement compensating controls like increased monitoring, reduced data sharing, or contract clauses transferring liability. Consider alternative vendors for critical services.

What's the most effective way to validate vendor remediation claims?

Require evidence including screenshots, updated audit reports, or technical validation. For critical findings, conduct re-assessments or request independent third-party verification.

How frequently should vendor assessments be updated based on these types of findings?

Critical-tier vendors need quarterly reviews, High-tier vendors require semi-annual assessments, and Medium/Low vendors undergo annual reviews. Continuous monitoring supplements these scheduled assessments.

What role does cyber insurance play when critical findings are discovered?

Cyber insurance questionnaires specifically ask about vendor risk management. Unaddressed critical findings can increase premiums by 15-a substantial portion of or trigger coverage exclusions for third-party breaches.

How do you communicate technical findings to non-technical stakeholders?

Translate findings into business impact: "SQL injection vulnerability" becomes "customer payment data at risk of theft." Use dollar amounts, downtime estimates, and regulatory fine exposure.

Should vendor contracts be modified based on due diligence findings?

Yes. Add specific SLAs for remediation, right-to-audit clauses, breach notification requirements within 24 hours, and liability caps that reflect actual risk exposure.