Vendor Risk Management

Under the DPDP Act, Vendor Risk Management refers to the practices used by organizations to evaluate and govern risks associated with vendors, suppliers, and third parties involved in processing personal data.

Organizations often rely on vendors for services such as cloud platforms, analytics, customer support, payment processing, and technology solutions. When vendors process personal data on behalf of a Data Fiduciary, organizations need appropriate oversight to ensure that personal data is handled securely and responsibly.

Effective vendor risk management helps organizations understand what personal data is shared with vendors, why it is processed, what safeguards are implemented, and whether vendor relationships align with DPDP obligations. It supports accountability by enabling organizations to manage Data Processor relationships and monitor privacy risks across the data ecosystem.

In practice, gaps emerge when:

• Organizations do not maintain visibility into all vendors handling personal data.
• Vendor privacy and security assessments are inconsistent.
• Data sharing purposes are not clearly documented.
• Vendor controls are not reviewed periodically.
• Organizations cannot track third-party processing activities.

Organizations address these challenges by maintaining vendor inventories, conducting privacy risk assessments, documenting Data Processor relationships, reviewing contracts, and monitoring vendor compliance activities. Within Privy, capabilities such as vendor risk workflows, data mapping, privacy assessments, and compliance reporting help organizations manage third-party privacy risks.