Vendor Fraud Risk Assessment

If I were assessing a high risk SaaS vendor here are 8 things I would ask for: 𝟭. 𝗖𝗼𝗻𝘁𝗲𝘅𝘁 𝗶𝘀 𝗞𝗲𝘆 First, I would understand what they do for my company. What data do they collect, what access do they have, what services do they provide? I would let that context steer how deep I dive. 𝟮. 𝗦𝗢𝗖 𝟮, 𝗜𝗦𝗢 𝟮𝟳𝟬𝟬𝟭, 𝗼𝗿 𝗘𝗾𝘂𝗶𝘃𝗮𝗹𝗲𝗻𝘁 I would ask for their third party audits. I would read the reports to see if they engaged a reputable firm. I would see if the scope, audit period, and controls are applicable to me. This will prevent me needing to ask for basics like copies of policies. 𝟯. 𝗣𝗲𝗻𝗲𝘁𝗿𝗮𝘁𝗶𝗼𝗻 𝗧𝗲𝘀𝘁 I would get a copy of their latest penetration test. I would look at the scope, when it was performed, who performed it, and track down any findings. It is important to make sure the pentest covers the product/network that matters to you. 𝟰. 𝗩𝘂𝗹𝗻𝗲𝗿𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗦𝗰𝗮𝗻𝘀 I would get a sample of 3 months of vulnerability scans including the latest month results. Both network and application level scans. I would make sure they have the right coverage and that there are no red flags. 𝟱. 𝗩𝗲𝘁 𝗔𝗻𝘆𝗼𝗻𝗲 𝘄𝗶𝘁𝗵 𝗔𝗰𝗰𝗲𝘀𝘀 𝘁𝗼 𝗠𝘆 𝗦𝘆𝘀𝘁𝗲𝗺𝘀 I would want to make sure that anyone with access to my systems are appropriately vetted. That likely means via a background screening and qualification requirement in contract. If they are getting remote admin access to my network I probably want to vet them myself or have my company be in on the screening. 𝟲. 𝗣𝗿𝗼𝗼𝗳 𝗼𝗳 𝗦𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆 If the company is mission critical to my business, I may request some evidence that the company is stable. Up to and including audited financials, reserving rights to the source code if the company goes bankrupt, or equivalent. This is rare, but important when applicable. If it is serious enough, you may even ask to speak with executives and get commitments directly. 𝟳. 𝗖𝗼𝗺𝗽𝗮𝗻𝘆 𝗜𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 This is just housekeeping for most companies, but I want to make sure they are insured. I am looking for the typical General Liability, E&O, Cyber, etc. at acceptable limits. 𝟴. 𝗟𝗶𝘀𝘁 𝗼𝗳 𝗧𝗵𝗶𝗿𝗱 𝗣𝗮𝗿𝘁𝗶𝗲𝘀 𝗮𝗻𝗱 𝗦𝘂𝗯-𝗣𝗿𝗼𝗰𝗲𝘀𝘀𝗼𝗿𝘀 I may ask for a list of my vendor's critical third parties. I want to be sure that they are using credible vendors that may impact me. I would pay close attention to things like technology providers, contractors, anyone who processes my data, etc. --- Anything you would add to this list?

A $340K invoice just saved one of our clients from losing $2M. Here's the fraud pattern every finance team needs to know: 👇 THE SETUP: Client receives invoice from their "regular supplier" • Logo, format, contact details = perfect match • Amount: $340K for quarterly order • Everything looks normal THE RED FLAGS: Our system caught 3 micro-deviations: ❗ Bank account changed (buried in fine print) ❗ Email domain: supplier.net instead of supplier.com ❗ Invoice number jumped 1,000+ from last sequence THE TRUTH: Sophisticated phishing ring compromised their email 6 months ago. They were patient. Monitoring. Waiting for the big order. If that $340K went through? Next targets: $480K, $890K, $2.1M orders already in pipeline. Total exposure: $3.8M WHY THIS MATTERS: Federal Bureau of Investigation (FBI) reports Business Email Compromise cost businesses $2.9B in 2024. 2025 is tracking 40% higher. Your regular supplier verifications won't catch this. They're too sophisticated. 5 DEFENSES THAT ACTUALLY WORK: 1. Phone verification for ANY bank change (Use the number from your original contract, not the email) 2. $10K threshold for dual approval (No exceptions. Ever.) 3. Vendor change request protocol (Form submission + manager sign-off, even for "small" changes) 4. Train AP on domain spoofing (supplier.com vs supplier.net vs supplier-inc.com) 5. Payment confirmation callbacks (Call vendor to confirm receipt within 24 hours) Cost to implement: $0 Time to implement: 2 hours Potential savings: Everything This is what we built Precoro to catch. After analyzing 10,000+ supplier onboarding processes, we found 73% of BEC fraud follows this exact pattern: • Compromise → Monitor → Wait → Strike when amounts are highest Most companies don't see it until the money's gone. 💬 Question for finance/procurement teams: Have you had a "close call" with a suspicious invoice or payment request? What made you catch it? 🔥 Follow for weekly fraud case breakdowns - I share real patterns from the trenches every Monday. #FraudPrevention #Cybersecurity #BusinessSecurity #ProcurementFraud #FinancialControls SAP Oracle NetSuite Philip Ideson Bertrand Maltaverne Daniel Barnes

Third-Party Risk: The Hidden Cybersecurity Battlefield in Modern Supply Chains In our interconnected digital ecosystem, your security posture is only as strong as your weakest vendor. Modern enterprises rely on 100s of third-party vendors, creating an exponentially expanding attack surface. Supply chain attacks have become the preferred vector for sophisticated threat actors. Instead of targeting well-defended enterprises directly, attackers exploit vulnerabilities in trusted vendors to simultaneously breach hundreds of downstream organizations. Game-Changing Examples SolarWinds (2020): Compromised software updates affected 18,000+ customers including Fortune 500 companies and government agencies, demonstrating how a single vendor breach cascades across entire sectors. MOVEit (2023): A single vulnerability led to data breaches affecting over 600 organizations globally, showcasing the massive scale of modern supply chain impacts. Why Third-Party Risk Monitoring is Critical Continuous Visibility: Traditional annual assessments are insufficient. Organizations need real-time monitoring of vendor security posture, breach notifications, and compliance status changes. Risk Amplification: When attackers target managed service providers or software vendors, the impact multiplies across all their clients. One compromised vendor can expose thousands of organizations simultaneously. Regulatory Liability: With GDPR, CCPA, and emerging supply chain regulations, organizations face increasing liability for third-party security failures. Proactive monitoring demonstrates due diligence. Building Effective Defense Continuous Assessment: Implement real-time vendor risk scoring across your entire ecosystem Zero Trust Extension: Apply least-privilege access controls to all third-party connections Incident Response Integration: Ensure your IR plans account for vendor breaches with clear communication protocols Contractual Protection: Update vendor agreements with security requirements and liability provisions The Bottom Line Organizations can no longer treat vendor risk as procurement afterthought. The question isn't whether your supply chain will be targeted — it's whether you'll detect and respond effectively when it happens. The strongest security programs extend beyond organizational boundaries to create defensible ecosystems, not just defensible enterprises. #ThirdPartyRisk #TRPM #SupplyChainAttack #CyberSecurity

How do you identify the inherent risk of an AI vendor? With AI embedded in more products than ever, risk teams need quick, practical ways to triage AI vendors—before jumping into full assessments. Here’s a lightweight framework to evaluate inherent risk, along with how answers can help categorize vendors as Low / Medium / High Risk: 1. What does the AI do? (Function & Impact) Low Risk: Internal tooling, limited automation, or decision support only. Medium Risk: External-facing, influences workflows or user actions. High Risk: Autonomous actions, decision-making, or regulatory impact (e.g., underwriting, hiring, diagnosis). 2. What data does it access or process? (Data Sensitivity) Low Risk: Public data, or no access to sensitive info. Medium Risk: Internal business data, some customer metadata. High Risk: PII, PHI, financial data, IP, or regulated datasets. 3. Where is the model hosted and how is it trained? (Infrastructure & Lineage) Low Risk: Hosted securely in enterprise-grade cloud, trained on synthetic or public data. Medium Risk: Custom model hosted externally, mixed training data. High Risk: Unknown model provenance, unclear hosting, or lack of security controls. 4. How transparent is the vendor about their AI? (Governance & Explainability) Low Risk: Clear documentation, known failure modes, strong governance. Medium Risk: Basic explanations, limited testing info. High Risk: Black box, no visibility into training, governance, or testing. This framework doesn’t replace full due diligence—but it gives you a head start in prioritizing where to spend your limited time and resources. AI risk management starts with better questions. Risk categorization starts with better context. #cyberrisk #TPRM #AIgovernance #vendorrisk #inherentrisk #thirdpartyrisk #AIsafety #riskmanagement

If you do this, you'll find fraud risks before they starts. Most fraud teams won't. Here's the scenario: You finally get budget approval. The vendor pitches their AI platform. You want to  sign the contract. I'll spend 3 hours doing this... Walk through your product as a good user Document every step Now walk through as a fraudster Ask: "What could go wrong here?" I start every new team with this exercise. We map our risk surface area. Account creation → Verify email/phone Add payment info → Test stolen cards   First transaction → Use coupon codes Refer a friend → Earn store credit Password reset → Account takeover Go through your entire product. Most teams are sitting on more useful data than they realize. Device fingerprints. IP addresses. Behavioral signals. Identity. Document metadata. Telemetry. But it's all in different systems. Disconnected. Make an inventory: → List existing signals across all systems → Map them to risk surfaces → Identify the gaps For each risk surface, figure out which combination of signals gives you the best coverage. Start with simple rules and iterate. When you know where you're vulnerable, you can prioritize engineering resources. When you connect existing signals, you avoid buying tools for problems you don't have. When you map surfaces first, you build systems that actually work. The bar is incredibly low. Most teams buy tools first, map risks second. Do the opposite. Just broke down the framework with Persona: https://lnkd.in/eYZfG2fN

Have you experienced a data breach before? Your business could be one risky vendor away from a major problem. Here’s the truth: most data breaches don’t start inside your company. They start with the people you trusted. • A vendor who didn’t patch their system. • A third-party app that had a hidden vulnerability. • Or even a shortcut someone took to save time. And when that happens, it’s not just the vendor’s reputation on the line. it’s yours. Customers won’t say, “Oh, it was their vendor’s fault.” They’ll say, “This company failed to protect my data.” That’s why managing vendor risks isn’t optional anymore. It’s survival. The good news? It doesn’t have to be complicated. You can start handling vendor risks in just 3 simple steps: 1. Know what’s at stake What data does your vendor have access to? How critical are they to your operations? 2. Ask the right questions Do they have security policies in place? Are they compliant with industry standards? Do they conduct regular audits? 3. Get it in writing Don’t just trust, verify. Ensure contracts clearly outline security expectations and responsibilities. This is exactly how smart companies are protecting themselves right now. Because in today’s world, your security is only as strong as the weakest link in your vendor chain. PS: How do you handle data breaches?