How to Vet the Cybersecurity Practices of Your Partners, Suppliers, or Platforms
Many small‑business owners hear “vet your partners, suppliers, platforms,” but often shrug and say, “Okay… but how?” This blog post answers that: what vetting really means and how to actually do it without being a tech expert. Plus, we highlight real small‑to‑medium business (SMB) stories where a vendor’s breach became someone else’s crisis—so you can see why vetting matters.
Imagine you’re doing everything right for your business—secure passwords, cloud backups, multi‑factor logins. Then, a vendor gets hacked. Suddenly, your customer data, your reputation, maybe even your finances, are on the line, and you didn’t cause it.
Many business owners assume that compliance (like signing a legal contract or checking a regulatory box) equals security. But compliance ≠ safety. Whether you're working with a payroll processor, SaaS provider, or product supplier—if they’re part of your ecosystem, their security is your responsibility. You don't get to pass the buck if something happens.
By the end of this article, you’ll know exactly what “vetting” means, why it matters, and the specific steps to do it.
Why Vetting Matters
Hidden risk: Vendors often touch customer data, internal systems, or financial tools. A failure on their end affects you.
Common reality: Studies show over one-third of data breaches originate at a vendor or partner, and in 2024 that figure jumped to 35.5%.
High stakes: For small businesses, a breach can be existential—up to 60% fail within six months of a major incident.
You could be liable: Even if you didn’t hack anyone, your business might face blame or legal consequences if your vendor’s poor hygiene spills over.
What “Vetting” Actually Means
Think of vetting like deciding who you’d trust with your front door key. It’s not about technical abbreviation tests—it’s asking smart, concrete questions that show whether they have thought ahead.
Vetting covers three layers:
Policies & Plans — Do they PREPARE for breaches?
Protections — Are they PROACTIVE in preventing threats?
Proof — Can they DEMONSTRATE they’re following through?
(As you grow, you may outsource this task to a company that specializes in providing this sort of vetting as a service.)
True Story: The Black Farmer & Small Food Suppliers Squeezed by Retailer Hacks
When UK retailers M&S and Co-op were hit by cyberattacks in 2025, small suppliers like The Black Farmer (a sausage producer) couldn’t deliver their goods. Perishables spoiled in storage, invoices went unpaid, and revenue was lost—all because a partner’s IT systems were locked down. The owner said it was like Covid, all over again.
👉 Lesson: Even if your own systems are secure, your supply chain can choke if a bigger partner gets hacked.
Step 1 – Ask About Incident Response Plans
Why it matters: Breaches will happen. If a vendor doesn’t know how they'll react, you’ll be the one scrambling.
Ask:
Do you have a documented incident response plan?
How would you alert us in case of a breach?
Who’s responsible internally and what is the notification timeframe?Red flags: “We don’t really need one.” “Our IT guy handles it.”
Green flags: A formal, tested plan; agreement to alert you (e.g., within 72 hours).
SMB tip: A vendor should explain clearly what they'd do—not just say: “We’re secure.”
Step 2 – Require Encryption Standards
Why it matters: Proper encryption makes data useless to cybercriminals if stolen.
Check for:
In-transit encryption (when it's being sent from one place to another).
At-rest encryption (when it's being stored).
Multi-factor authentication (MFA) for staff accessing sensitive systems.
Ask:
Is client or customer data encrypted at rest (when it's stored) and in transit (when it's being sent from one place to another)?
Do staff use MFA?
Red flags: “We just use passwords.” “We encrypt some data—maybe all eventually.”
Green flags: Clear encryption policy and enforced MFA.
SMB tip: You don’t need crypto knowledge—listen for clear, specific answers, not vague assurances.
True Story: Restaurants vs. Radiant Systems POS Breach
Back in 2009, several Louisiana and Mississippi restaurants sued their point-of-sale (POS) vendor, Radiant Systems, after a Romanian hacker accessed credit card data via insecure POS systems. The remote-access software installed by a reseller was left unpatched and used the same default credentials everywhere. Restaurants faced fines, reimbursements, forensics, and chargebacks—losing tens of thousands of dollars. Lawsuits claimed Radiant ignored PCI compliance warnings.
👉 Lesson: If your vendor uses default passwords or insecure remote access, you're exposed. Vet early.
Step 3 – Look for Third-Party Verification
Why it matters: Anyone can claim they’re secure. Certifications show they’ve paid for independent scrutiny.
Look for:
SOC 2 reports, ISO 27001, PCI‑DSS, HIPAA, penetration tests, bug bounties.
Ask:
Do you undergo independent security audits?
Will you share a summary or date?
Red flags: “We don’t share that.” “We self‑certify.”
Green flags: Willingness to say, “Yes, we’re audited annually; we have a current SOC 2 Type II.”
SMB tip: You don’t need full reports—just confirmation that they exist, are fresh, and relevant. (These certifications can be expensive -- super early stage small businesses may not have them yet. They should be able to explain that.)
Step 4 – Evaluate Their Access to Your Data
Why it matters: Too much access = too much risk.
Ask:
What data do you collect, and why?
Which of your team members access it?
How long is it retained once our relationship ends?
Red flags: “We keep everything, just in case.”
Green flags: Access limited by role, clear purpose, and a retention policy.
SMB tip: Use the “least privilege” principle—share only what they need, not your entire backend.
True Story: Small Grocers Left Without Stock After UNFI Cyberattack
In June 2025, food distributor United Natural Foods Inc. (UNFI) suffered a cyberattack, forcing them to halt deliveries. Small grocers and co-ops who relied on UNFI suddenly had empty shelves, canceled customer orders, and lost revenue—despite having no breach of their own.
👉 Lesson: Vendor vetting isn’t just about data. It’s also about ensuring supply chain continuity.
Step 5 – Review Contracts and SLAs
Why it matters: Legal documents define accountability.
Check for:
Security obligations in writing.
Breach notification timelines.
Liability limits and responsibility clauses.
Red flags: Contract silent on data security or liability, vague language like “reasonable measures,” vendor refuses to customize terms.
Green flags: Breach notification timelines spelled out, clear liability clauses, explicit security responsibilities written in, vendor open to adding amendments.
SMB tip: Flag missing “security” or “data breach” language and ask them to include it.
Building a Repeatable Vetting Process
Make a checklist (I've included one below):
Incident Response Plan
Encryption and MFA
Third‑Party Verification
Data Access & Retention
Contractual Security Clauses
Track vendor responses in a simple log (like a spreadsheet) with dates.
Regular reviews: Recheck annually—vendor’s security can shift, certifications expire, new CEO arrives.
Start small: Ask two or three key questions first, then grow your vetting as you learn.
True Story: MediSecure — A Small Business Collapsed After a Vendor’s Breach
Australian prescription provider MediSecure, a small health tech company, was forced to shut down weeks after a third-party vendor’s systems were hacked, exposing sensitive health data. The reputational and regulatory fallout was too much for the small firm to survive.
👉 Lesson: A partner’s weakness can become your downfall. Small businesses are not “too small to be targeted.”
What If a Vendor Fails the Test?
Ask if they’re willing to improve (e.g., add encryption, MFA, incident protocols).
Negotiate terms: faster breach notification, liability carve-outs.
Walk away if the risk is too high—protecting your business is not being “difficult,” it’s smart.
Conclusion
Vetting isn’t about turning into a tech detective. It’s about asking the right, clear questions—and expecting real, documented answers. You’re building a shield, one thoughtful question at a time.
Next step: When a new vendor or platform reaches out, pick two questions from the checklist below—ask “Do you have a tested incident response plan?” or “Is data encrypted at rest and in transit?”—and see where the conversation goes. You’ll learn more than you expect—and you’re protecting your business without needing an IT degree.
✅ Vendor Cybersecurity Vetting Checklist
Use this checklist every time you evaluate a new partner, supplier, or platform.
1. Incident Response Plan
Do you have a documented incident response plan?
How quickly will you notify us if there’s a breach (24–72 hours)?
Who is responsible for managing security incidents?
2. Encryption & Access Controls
Is all sensitive data encrypted in transit?
Is data encrypted at rest?
Do you enforce multi-factor authentication (MFA) for staff access?
3. Third-Party Verification
Do you undergo independent security audits (SOC 2, ISO 27001, PCI DSS, HIPAA, etc.)?
Can you provide proof or a summary of compliance?
Do you perform penetration testing or use a bug bounty program to test your systems?
4. Data Handling
What data do you collect and why?
Who on your team can access it, and how is access limited?
How long do you retain our data after we stop working together?
5. Contracts & SLAs
Does the contract mention data security obligations?
Are breach notification timelines spelled out?
Is there clarity about liability in case of a breach?
✨ Pro Tip: Keep a simple vendor log (Google Sheet or doc) where you write down their answers and the date. Review annually because things change.
