Vendor Operational Risk Assessment Template

Your vendor's operational failure becomes your operational failure. That AWS outage last quarter? Three of our critical vendors went dark for 6 hours because they had no multi-region failover. The ransomware attack on that logistics provider? Our supply chain ground to a halt because we never validated their backup procedures.

Operational risk assessment moves beyond security controls to examine whether vendors can actually deliver when systems fail. This template provides structured evaluation of business continuity planning, incident response capabilities, service level monitoring, and dependency management. Built from 500+ vendor assessments across financial services, healthcare, and technology sectors, it captures the evidence that matters: actual test results, not just policy documents.

Core Template Components

The operational risk assessment template divides into eight evaluation domains, each with specific control objectives and evidence requirements:

1. Business Continuity Management

Your BCM section validates whether vendors maintain tested recovery capabilities:

Control Mapping Requirements:

• Recovery Time Objective (RTO) documentation for critical services
• Recovery Point Objective (RPO) validation through test results
• Annual BCP test reports with documented failures and remediation
• Geographic redundancy architecture diagrams
• Third-party dependency mapping (their vendors matter too)

Evidence Collection Checklist:

Evidence Type	SOC 2 Reference	ISO 22301 Clause	Validation Method
BCP Test Results	CC9.1	8.5	Review last 2 tests
RTO/RPO Metrics	A1.2	8.2.3	Compare to SLA
Failover Procedures	CC7.5	8.4.4	Request demo
Communication Plans	CC2.3	8.4.1	Table-top review

2. Incident Response Capabilities

Map vendor incident response maturity against your notification requirements:

• Incident classification matrix with severity definitions
• Escalation procedures with named contacts (not generic emails)
• Mean Time to Detect (MTTD) and Mean Time to Respond (MTTR) metrics
• Post-incident review process with examples from last 12 months
• Integration points with your incident response procedures

3. Service Delivery Monitoring

Operational risk lives in the gap between promised and delivered performance:

Key Performance Indicators:

• Uptime calculations (exclude planned maintenance windows)
• Service level achievement trends over 12 months
• Capacity utilization metrics and growth projections
• Performance degradation thresholds and alerting
• Customer-impacting incident frequency

4. Change Management Controls

Uncontrolled changes cause most vendor-related outages. Assess:

• Change Advisory Board (CAB) composition and frequency
• Emergency change procedures and approval requirements
• Rollback success rates for failed changes
• Change freeze periods and exception processes
• Customer notification timelines for service-impacting changes

5. Dependency and Concentration Risk

Fourth-Party Risk Mapping: Document your vendor's critical dependencies:

• Infrastructure providers (cloud, data center, network)
• Software dependencies requiring continuous licensing
• Managed service providers with administrative access
• Geographic concentration of operations and staff
• Single points of failure in service delivery chain

6. Financial and Organizational Stability

Operational risk increases when vendors face organizational stress:

• D&B rating or equivalent financial health scores
• Customer concentration (no customer >a notable share of revenue)
• Key person dependencies and succession planning
• M&A activity that could impact service delivery
• Technology debt and modernization roadmap

7. Data Backup and Recovery

Beyond standard backup policies, validate operational recovery:

• Backup testing frequency and success rates
• Recovery testing for different failure scenarios
• Off-site backup locations and access procedures
• Data corruption detection mechanisms
• Backup retention alignment with your requirements

8. Scalability and Performance Management

• Load testing results for 2x current capacity
• Auto-scaling triggers and thresholds
• Performance monitoring dashboards and alerting
• Capacity planning methodology and forecasts
• Historical performance during peak periods

Industry-Specific Applications

Financial Services

FFIEC guidance requires enhanced operational resilience assessment for critical vendors. Add:

• Compliance with FFIEC Business Continuity Planning booklet
• Validation of dual data center operations
• Pandemic response plan testing evidence
• Regulatory notification procedures

Healthcare

HIPAA Security Rule 45 CFR 164.308(a)(7) mandates contingency planning validation:

• Protected Health Information (PHI) recovery procedures
• Downtime procedures for clinical systems
• Medical device failover capabilities
• Integration with hospital incident command systems

Technology/SaaS

Focus on multi-tenancy risks and platform dependencies:

• Customer isolation during incidents
• Platform-wide vs. customer-specific RTO/RPO
• API rate limiting and throttling policies
• Developer on-call rotation adequacy

Risk Tiering Implementation

Structure assessments based on vendor criticality:

Tier 1 (Critical)

• Full 45-question assessment
• Quarterly performance reviews
• Annual on-site BCP testing participation
• Real-time monitoring integration

Tier 2 (Important)

• 25-question focused assessment
• Semi-annual performance reviews
• Annual desktop BCP review
• Monthly performance reporting

Tier 3 (Standard)

• 10-question baseline assessment
• Annual performance review
• BCP attestation only
• Quarterly performance reporting

Control Validation Techniques

Move beyond checkbox compliance to operational validation:

1. Test Result Analysis: Request actual BCP test reports, not just test plans
2. Metric Verification: Cross-reference claimed uptime against service tickets
3. Reference Checks: Contact other customers about operational performance
4. Scenario Modeling: Walk through specific failure scenarios
5. Evidence Dating: Reject evidence older than 12 months

Common Implementation Mistakes

Accepting Promises Instead of Proof "We have 99.99% uptime" means nothing without monitoring data. Require:

• Historical uptime reports
• Outage post-mortems
• Performance dashboards access

Ignoring Fourth-Party Dependencies Your vendor's AWS dependency becomes your risk. Map:

• All critical third-party services
• Concentration risk (multiple vendors using same providers)
• Contingency plans for provider failures

Static Annual Assessments Operational risk changes quarterly. Implement:

• Continuous monitoring for Tier 1 vendors
• Triggered reassessments after incidents
• Performance threshold alerts

Over-Standardization One-size-fits-all templates miss critical risks:

• Customize for vendor service types
• Add industry-specific controls
• Adjust evidence requirements by tier

Integration with Risk Management Frameworks

SOC 2 Alignment

Map template sections to Trust Service Criteria:

• Availability (A1.1-A1.3): Full BCP/DR sections
• Processing Integrity (PI1.4-PI1.5): Change management controls
• Confidentiality (C1.2): Incident response procedures

ISO 27001/27017/27018

Reference specific control objectives:

• A.17.1: Information security continuity
• A.12.1.3: Capacity management
• A.16.1: Incident management

NIST Cybersecurity Framework

• Respond (RS.CO-3): Information sharing procedures
• Recover (RC.RP-1): Recovery plan execution
• Identify (ID.SC-4): Supplier risk assessment

Frequently Asked Questions

How often should I update operational risk assessments for critical vendors?

Critical vendors require quarterly operational reviews with full reassessment annually. Trigger immediate updates after any service disruption, failed BCP test, or significant organizational change at the vendor.

What evidence should I prioritize when vendors claim "everything is documented"?

Focus on test results over policies: BCP test reports from the last 12 months, actual recovery time measurements, post-incident reviews, and performance monitoring dashboards. Documentation without testing evidence indicates immature operational controls.

How do I assess operational risk for cloud-native vendors with no traditional DR site?

Evaluate multi-region architecture, availability zone redundancy, infrastructure-as-code repositories, automated failover testing, and chaos engineering practices. Request architecture diagrams showing regional dependencies and failover sequences.

Should operational assessments differ for SaaS vs on-premise vendors?

Yes. SaaS assessments emphasize platform stability, multi-tenancy isolation, and API performance. On-premise focus on your environment's resilience, vendor support SLAs, and remote diagnostic capabilities.

What's the minimum viable operational assessment for low-risk vendors?

Ten questions covering: BCP existence and test date, RTO/RPO commitments, incident notification procedures, change communication process, and primary infrastructure dependencies. Require annual attestation only.

How do I handle vendors who claim operational details are "confidential"?

Establish NDAs upfront, offer to review evidence under controlled conditions, or accept redacted test results that still show pass/fail status. Vendors refusing all evidence sharing should be flagged as high operational risk.