What is a Maturity Model

A maturity model is a structured framework that defines progressive stages of capability development, typically ranging from ad-hoc processes (Level 1) to optimized, continuously improving operations (Level 5). In third-party risk management, maturity models benchmark your vendor governance program against industry standards, identify capability gaps, and provide a roadmap for systematic improvement.

Key takeaways:

• Maturity models provide measurable stages from initial/reactive to optimized/predictive capabilities
• Regulatory frameworks like ISO 27001, NIST CSF, and SOX implicitly require mature risk management processes
• Assessment typically covers people, process, technology, and governance dimensions
• Higher maturity correlates with reduced vendor incidents and faster audit cycles

Maturity models transform subjective assessments of third-party risk management programs into quantifiable, actionable intelligence. By mapping current capabilities against defined maturity levels, GRC analysts gain clear visibility into program strengths, gaps, and improvement priorities.

The concept originated in software development with the Capability Maturity Model (CMM) in 1991, but has since become fundamental to risk management frameworks. Today's regulatory landscape doesn't explicitly mandate specific maturity levels, but frameworks like ISO 27001:2022 (Clause 9.1 on monitoring and measurement) and NIST Cybersecurity Framework v2.0 require demonstrable improvement over time — exactly what maturity models measure.

For compliance officers managing vendor portfolios, maturity models serve three critical functions: they establish baseline capabilities for audit defense, create board-reportable metrics for program investment, and enable peer benchmarking against industry standards. A Level 3 maturity in vendor onboarding processes, for example, means documented procedures exist, staff follow them consistently, and performance metrics track effectiveness — satisfying SOC 2 Type II requirements for vendor management controls.

Understanding Maturity Model Architecture

Third-party risk maturity models typically define five progressive levels:

Level 1 - Initial/Ad-hoc: Vendor management happens reactively. No formal processes exist. Risk assessments occur only when problems surface. Documentation is sparse or non-existent.

Level 2 - Repeatable: Basic processes emerge but depend on individual knowledge. Some teams document vendor onboarding steps. Risk assessments follow templates but lack consistency across business units.

Level 3 - Defined: Formal policies govern all vendor interactions. Standardized risk assessment methodologies apply enterprise-wide. Role-based access controls protect vendor data. Audit trails capture key decisions.

Level 4 - Managed: Quantitative metrics drive process improvements. KPIs track vendor performance, assessment cycle times, and risk remediation rates. Automated workflows enforce policy compliance.

Level 5 - Optimizing: Predictive analytics anticipate vendor risks. Continuous monitoring replaces point-in-time assessments. Machine learning models identify emerging threats before they materialize.

Regulatory Requirements and Framework Alignment

While no regulation mandates "achieve Level 3 maturity," several frameworks require capabilities that map directly to mature processes:

ISO 27001:2022 requires organizations to "determine what needs to be monitored and measured" (Clause 9.1). A Level 1 program cannot satisfy this requirement — you need at least Level 3 maturity with defined metrics and measurement processes.

NIST CSF 2.0 organizes controls into Implementation Tiers (Partial, Risk-Informed, Repeatable, Adaptive) that mirror maturity levels. The ID.SC category specifically addresses supply chain risk management maturity.

EU Digital Operational Resilience Act (DORA) Article 28 requires financial entities to maintain "sound, effective and comprehensive" ICT third-party risk strategies. Regulators interpret "comprehensive" as requiring mature, measurable processes — typically Level 3 or higher.

SOC 2 Type II audits evaluate both control design and operating effectiveness over time. Demonstrating operating effectiveness requires Level 3 maturity minimum — ad-hoc processes fail effectiveness testing.

Practical Application in Vendor Risk Management

Consider a financial services firm assessing its vendor onboarding maturity:

Current State (Level 2):

• Procurement team emails risk questionnaires to new vendors
• Responses stored in shared folders with inconsistent naming
• Security reviews happen when someone remembers to request them
• No tracking of assessment completion rates or cycle times

Target State (Level 4):

• Automated platform triggers risk assessments based on vendor criticality tiers
• Standardized questionnaires map to regulatory requirements (FFIEC, OCC guidance)
• Risk scoring algorithms flag high-risk responses for manual review
• Dashboards track 15-day average assessment completion, 95% on-time rate
• Quarterly reports compare risk ratings against actual incidents

The migration path includes:

1. Document current processes (even informal ones)
2. Standardize assessment templates and scoring rubrics
3. Implement workflow automation for routine assessments
4. Establish KPIs aligned with regulatory expectations
5. Create feedback loops linking assessments to actual vendor performance

Common Maturity Model Frameworks

CMMI for Development v2.0 provides the foundation many TPRM models build upon. Its process areas map well to vendor management (Supplier Agreement Management, Risk Management).

COBIT 2019 includes maturity levels for each governance objective. The EDM03 (Ensure Risk Optimization) and APO10 (Manage Vendors) objectives directly address third-party risk maturity.

Shared Assessments Program offers a Vendor Risk Management Maturity Model (VRMMM) specifically designed for financial services. It evaluates 9 domains including vendor selection, ongoing monitoring, and off-boarding.

Building Your Maturity Assessment

Effective maturity assessments examine four dimensions:

People: Skills, training, roles, and responsibilities. A Level 3 organization has dedicated vendor risk managers with defined competencies. Level 5 organizations rotate staff through vendor management roles for cross-training.

Process: Documented procedures, approval workflows, exception handling. Level 2 might have some documented processes. Level 4 has measured, optimized processes with continuous improvement cycles.

Technology: Tools, automation, integration capabilities. Level 1 uses spreadsheets. Level 3 implements dedicated GRC platforms. Level 5 integrates real-time vendor monitoring with enterprise risk systems.

Governance: Policies, oversight, reporting structures. Level 2 has basic policies. Level 4 has board-level risk committees reviewing vendor risk metrics quarterly.

Industry-Specific Considerations

Financial Services: Regulatory guidance (OCC Bulletin 2013-29, FFIEC guidance) expects "mature" risk management without defining levels. In practice, examiners look for Level 3-4 capabilities: documented processes, consistent execution, measurable outcomes.

Healthcare: HIPAA requires "reasonable and appropriate" safeguards for business associates. HHS interprets this as risk-based controls with documented rationale — Level 3 maturity minimum for covered entities with significant vendor relationships.

Technology: SOC 2 and ISO 27001 audits increasingly evaluate control maturity, not just presence. A Level 2 "we do risk assessments" claim fails under scrutiny. Auditors expect evidence of consistent application and continuous improvement.

Frequently Asked Questions

How often should we reassess our TPRM maturity level?

Conduct formal maturity assessments annually, with quarterly progress reviews against improvement targets. Major organizational changes (mergers, regulatory actions, significant incidents) should trigger immediate reassessment.

What's the typical timeline to advance one maturity level?

Organizations typically require 12-18 months to advance one full level, assuming dedicated resources and executive support. Moving from Level 1 to 2 can happen within 6 months, but Level 3 to 4 often takes 24 months due to technology and cultural changes required.

Which maturity level satisfies most regulatory requirements?

Level 3 (Defined) generally satisfies baseline regulatory expectations across industries. Level 4 (Managed) provides comfortable margins for highly regulated sectors like banking and demonstrates "leading practice" to auditors.

Can we achieve high maturity without expensive GRC platforms?

Reaching Level 3 is possible with disciplined use of standard tools (SharePoint, Excel with macros). Level 4 and above typically require dedicated platforms for workflow automation, real-time dashboards, and API-based integrations.

How do maturity models relate to risk ratings?

Maturity measures your program's capabilities; risk ratings measure individual vendor threats. A Level 5 program can still have high-risk vendors, but identifies and manages them more effectively than a Level 2 program.

Should different business units have different maturity targets?

Core TPRM processes should maintain consistent maturity enterprise-wide. However, business units with critical vendor dependencies (IT, clinical services) might target higher maturity for specific capabilities like continuous monitoring or incident response.