Vendor contract management plays a critical role in controlling operational risk across the enterprise. When managed effectively, contracts shape how your organization protects data, enforces compliance, and holds vendors accountable.
What's Inside:
- Contract Management as an Operational Risk Control
- The Vendor Contract Lifecycle, Explained
- Connecting Vendor Contract Management and TPRM
- Vendor Contract Management Best Practices
- Benefits of Unifying Vendor Contract Management and TPRM
- Automate and Strengthen Your Vendor Contract Management Program
- Next Steps: Turn Contracts into a Core Risk Control
A well-defined vendor contract management process facilitates efficient negotiation, standardization of terms, version tracking, and performance measurement. It also strengthens your organization’s ability to meet regulatory and security requirements throughout the entire vendor lifecycle.
When you connect contract management with third-party risk management (TPRM), you gain a complete picture of vendor risk — from onboarding to offboarding — and use each contract as a tool for control and accountability. This post examines common challenges in managing agreements with third parties and introduces a novel approach to viewing contracts within the context of the third-party risk lifecycle.
Contract Management as an Operational Risk Control
Every vendor relationship introduces some level of operational, compliance, or cybersecurity risk. Regulations such as HIPAA and GDPR hold your organization responsible for how vendors handle sensitive data, including personally identifiable information (PII) and protected health information (PHI).
If vendors don’t protect that data appropriately, your organization may face fines, legal exposure, and reputational harm. That’s why each contract should clearly define data handling expectations, security controls, and performance standards.
Even when a vendor meets basic requirements, gaps in monitoring or unclear terms can still lead to risk. Managing vendor contracts as part of your risk program helps you identify and control these issues early, long before they become business disruptions.
The Vendor Contract Lifecycle, Explained
Vendor contract lifecycle management covers every stage of third-party vendor contracts from origination to termination. When managed well, it provides visibility, consistency, and measurable control across all vendor relationships.
A strong vendor contract process helps you:
- Streamline contract creation and negotiation
- Track edits and maintain version control
- Align SLAs and terms across vendors
- Monitor vendor performance and compliance
- Produce management reports on contract risk
- Manage renewals and terminations with clear oversight
Every step of the contract lifecycle – from sourcing and selection to onboarding, performance monitoring, and offboarding – should entail specific and actionable practices that mitigate the risks associated with working with third parties.
Connecting Vendor Contract Management and TPRM
Most contract management systems focus on process efficiency but overlook vendor risk. Meanwhile, many procurement and risk systems fail to manage contracts effectively. Aligning these two functions provides you with complete visibility into vendor performance, compliance, and security throughout the contract lifecycle.
When contract management and TPRM work together, every contract becomes part of your broader risk control framework. This alignment helps reduce complexity, improve oversight, and strengthen resilience.
Stages of the vendor contract management lifecycle in the context of the third-party risk management (TPRM) lifecycle.
Vendor Contract Management Best Practices
Below are recommended best practices for managing vendor contracts within the broader third-party risk lifecycle.
Step 1 – Vendor Contracts & Sourcing and Selection
Contract Request – Standardize the intake process by using forms and templates. This reduces the time required to onboard a contract and improves consistency between contracts. You can leverage built-in forms and templates, or use an API to onboard existing contracts into a centralized contract lifecycle management solution.
Review and Redline – Throughout the redlining process, upload and share contract revisions into a central vendor contract management solution and utilize version control tracking so that document changes can be reviewed offline. Role-based access control will enable multiple internal and external parties to view contracts and tasks assigned to them. Clearly tracked changes ensure that teams are always working on the correct document version.
Step 2 – Vendor Contracts & Onboarding
Approval – To facilitate final contract approvals prior to onboarding, it’s important to develop customizable workflows based on contract type to automate the progression of contracts throughout their lifecycle. This is a similar process to the workflow used to progress a vendor through due diligence.
Step 3 – Vendor Contracts & SLA Performance Monitoring
Execution – Centrally track all vendor contracts and contract attributes such as type, start and end dates, value, reminders, and status. Then, assign views to important details based on role to increase visibility. This capability is in line with using a central risk register to track third-party security risks.
At the execution stage, it’s also critical to assign and track tasks with automated reminders and overdue notices against contracts. This is similar to how you would triage and track the remediation of third-party risks. Ensure clear, trackable ownership of all tasks through centralized reporting.
Role-based permissions should enable allocation of duties, access to contracts and ready/write/modify access. A granular permissions mode means users only see components relevant to them; for example, extending risk and contract reporting to senior executives.
Storage and Records Management – Securely share and store contract documentation internally or externally with role-based permissions. Integrated third-party risk management and vendor contract management solutions provide unified storage and management of contracts and supporting documents and evidence by vendor. This centralized model for document and records management provides a single repository for all vendor-related content.
Auditing and Reporting – Auditable document logs should be available to provide a history of access and changes to contracts and supporting documentation for compliance reporting purposes.
Step 4 – Vendor Contract Renewal or Termination
Renewal or Disposition – At this step, you should make sure to maintain communications with all parties by centralizing vendor contract discussions. Distribute email notifications to participants when additional comments are added. Comments should be shared externally with vendors or marked for internal discussion only.
At this step it’s also important to track how the vendor is performing against their contractual obligations as noted in step 3 above. Having a centralized repository of contract attributes adds important justification for renewal (or termination) discussions. Lastly, make sure to track open tasks to closure based on contract next-step discussions.
Termination and Offboarding – If you have decided not to renew a vendor contract, leverage workflow to track open tasks or items to closure. This can include ensuring that data is destroyed, physical and logical access is revoked, and that final obligations and payments are made.
Benefits of Unifying Vendor Contract Management and TPRM
Unifying vendor contract management with vendor risk management reduces cost, complexity, and risk. Aligning vendor contract management with third-party risk management is an important investment to make for the long-term success and security of your organization.
Aligning contracts with vendor risk management best practices also helps ensure that your contracts remain compliant with core regulations, such as HIPAA and GDPR. Non-compliance can be extremely damaging, and a contractor’s failure to perform can have legal, financial, and reputational consequences for the contracting organization.
A Central Repository for All Vendor Contracts
A centralized repository for vendor attributes and controls, documents, and contract version control simplifies contract management and minimizes disruptions. This will improve the contracting experience to encourage business owner participation.
Automated Vendor Contract Workflow and Tracking
Workflow and tracking capabilities enable teams to determine the status of a contract at any point in the vendor risk lifecycle. Additionally, these capabilities help pinpoint bottlenecks and simplify the process of managing and chasing contracts, dates, and attributes.
Structure Vendor Contract Management to Eliminate Manual Processes
Storing paper files in drawers or maintaining multiple versions of documents on shared drives is an unscalable approach. Likewise, investigating each vendor with unique questionnaires leaves organizations vulnerable to inconsistent vendor requirements and controls.
Multiple Internal Teams Unified by a Single Solution
Combining contract management and vendor risk management ensures that procurement, legal, and security teams align on policies and collaborate to maintain reliable, efficient, and secure vendors.
Automate and Strengthen Your Vendor Contract Management Program
Manual contract management drains time, creates version control headaches, and leaves teams chasing edits across inboxes and shared drives. When procurement, legal, and risk teams work in silos, visibility is lost — and so is control. These inefficiencies increase the chance of missed obligations, compliance gaps, and even business disruptions.
Mitratech Contract Essentials eliminates those risks by centralizing every stage of the contract lifecycle — from onboarding to offboarding — into one secure, automated platform. You can manage, track, and govern vendor contracts with precision while maintaining complete visibility across the enterprise.
With Contract Essentials, you can:
- Accelerate procurement cycles while ensuring every vendor meets contractual and compliance standards.
- Streamline legal reviews with automated workflows that keep contracts updated and stakeholders aligned.
- Centralize vendor risk oversight so risk management teams can monitor supplier performance and compliance from one location.
Contract Essentials brings the same structure and discipline used in enterprise risk management to your contract management process. And when you connect it with the Mitratech Third-Party Risk Management Platform, you gain a unified solution that reduces cost, improves collaboration, and protects your organization from contract or vendor-related failures.
Next Steps: Turn Contracts into a Core Risk Control
Every vendor contract represents an opportunity to strengthen your organization’s defenses. By aligning contract management with third-party risk management, you can manage vendor relationships with greater confidence, consistency, and compliance.
Ready to reduce contract risk and streamline your workflows?
Download our white paper, Contract Lifecycle Management and Third-Party Risk, or request a demo today to see how Mitratech Contract Essentials can help your organization take control of its contracts—and its risk.
Editor’s Note: This post was originally published on Prevalent.net. In October 2024, Mitratech acquired the AI-enabled third-party risk management, Prevalent. The content has since been updated to include information aligned with our product offerings, regulatory changes, and compliance.
