So, you’ve trained your staff on your company’s privacy obligations, you’ve stood up a team responsible for implementing and overseeing privacy compliance, you’ve published a readable, jargon-free privacy policy on your website and rolled out a suite of supporting privacy procedures, all geared towards ensuring your organisation manages the personal information entrusted to you responsibly and in compliance with the law. But have you forgotten a giant trip hazard in your risk landscape? What about your vendors who have access to your customers’ personal information?
In today’s interconnected world, outsourcing services not only makes economic sense—it also brings smarter, more efficient ways of working. However, privacy risks associated with third-party vendors can be seismic. In some instances, these risks are more significant than those under your direct control. Vendors offer a range of outsourced services, including services related to running your payroll systems, overseeing your marketing campaigns, or managing your customer call centres, all of which requires access to your customers’ personal information. If one of these vendors experiences a data breach or fails to meet their privacy compliance obligations, you’re on the hook. Under Australian Privacy Laws you are accountable for all privacy breaches and inadvertent disclosures made by your vendors.
Remember, consumer trust is not transferable. Once it’s lost, it's a long and arduous road to recovery. Even if your organisation takes privacy protections seriously, that trust can be irreparably eroded if a vendor mishandles your customers’ personal information. For this reason, you cannot consider privacy as an in-house compliance issue alone—your privacy commitments extend across the entire supply chain.
Not only is appropriate oversight the right thing to do, but vendor privacy risk management matters because:
- legal accountability is at stake. Australian Privacy Principle 11 requires organisations to take reasonable technical and organisational steps to protect personal information. This includes undertaking appropriate due diligence and monitoring of your third-party service providers, commensurate with the potential risk of privacy harms.
- complacency can damage your brand and your reputation. Data breaches by vendors can erode customer trust—even when the fault lies externally, in the wider supply chain ecosystem.
- data ecosystems are becoming more complex. With increasing use of cloud platforms, software-as-a-service (SaaS), and global outsourcing, personal information is more portable than before, creating gaps in control and visibility, and worse yet, gaps in accountability.
- privacy assurance is a competitive advantage. Consumers are more privacy-savvy today than ever before. Demonstrating that you put privacy first - that your privacy framework also extends to your vendors, can set your organisation apart.
How to Manage Vendor Privacy Risks Effectively
Where to from here? We’ve compiled a list of practical ways to embed vendors into your privacy governance framework, and in so doing, to minimise your exposure.
Align vendor onboarding with your privacy framework Your procurement, legal, and privacy teams should work together to ensure vendors are assessed not just on cost and capability, but also on their privacy posture. Include privacy checklists as part of your procurement process.
Conduct robust due diligence Good vendor management starts with vendor selection. Choose the most suitable vendor to meet your needs, one that complies with privacy obligations proportionate to their personal information handling practices. Assessing prospective vendors’ privacy programs is an essential, but often neglected, first step to choosing the right provider. For existing vendors that haven’t been properly vetted, start with a mapping exercise, identifying those that handle personal information and perform a privacy risk assessment to evaluate their compliance.
Include privacy clauses in contracts Ensure your contracts clearly articulate vendor privacy obligations, including the appropriate flow-down of your own obligations, compliance with applicable privacy legislation where practicable, and specific provisions addressing data handling standards, breach notification protocols, audit requirements and sub-processing arrangements.
Implement ongoing monitoring and due diligence Privacy compliance doesn’t end once a contract is signed. Regular reviews, assessments, and performance audits should be conducted, particularly for high-risk vendors. Vendor risk scorecards can be a useful way to track compliance over time, as can vendor compliance self-attestations, which places a larger proportion of onus on the vendor.
Prepare for incidents together Collaborate with critical vendors to develop coordinated incident response plans. Include them in data breach simulation exercises, or less formally as part of a consolidated desktop walkthrough, to ensure everyone is clear on their roles, timelines and general obligations, when responding to a data breach.
Privacy is a shared responsibility that doesn’t end at your firewall. If your vendors handle your customers' personal information, they are an extension of your organisation in the eyes of the law and the public. During Privacy Awareness Week (16-22 June 2025), take the opportunity to assess your current vendor privacy risk management practices and ask: Are we truly giving effect to our privacy commitments beyond our internal corridors?