By Matt Lhoumeau, CEO of Concord
Fifteen years ago, I spent six miserable months digging through filing cabinets for contracts at a $6 billion telecom company. I was building an Excel spreadsheet with 52 columns and 500 rows, tracking vendor agreements we needed to renegotiate. What struck me wasn’t just the inefficiency—it was how disconnected these contracts were from our actual security operations.
Today, as cyber threats grow more sophisticated, I see cybersecurity teams making the same mistake with vendor risk management. They’re treating vendor security as a checkbox exercise rather than the critical operational process it really is.
The Vendor Security Contract Gap
Most organizations today rely heavily on third-party vendors—cloud providers, software-as-a-service platforms, managed security services, and IT contractors. According to recent studies, nearly 75% of companies that were breached reported the attacker accessed their network through a vendor, partner, or third-party relationship.
Yet when I talk to cybersecurity professionals, I hear the same frustrations I felt back in that telecom company. Vendor security assessments are conducted once during onboarding, then stored in filing cabinets (or their digital equivalent). Security questionnaires get exchanged, but the actual contract management software used to manage these relationships operates in a separate universe from the cybersecurity team.
The problem is that vendor contracts contain critical security obligations—data handling requirements, incident notification timelines, compliance certifications, access controls, and breach liability terms. But because contracts are managed separately from security operations, most cybersecurity teams have no visibility into whether vendors are actually meeting these obligations.
When Contract Blind Spots Become Security Breaches
This disconnect between contract management and cybersecurity operations creates dangerous blind spots. Contract compliance management software should be integrated with security monitoring, but most organizations treat them as separate functions.
I’ve seen organizations discover critical vendor security failures only during incident response. A cloud provider that was supposed to maintain SOC 2 compliance let their certification lapse six months earlier, but nobody knew because contract renewal tracking was handled by procurement, not security. A managed service provider that promised 24-hour breach notification took five days to report an incident because the security team didn’t have access to the actual contract terms.
The cybersecurity team conducts thorough vendor risk assessments during onboarding, rating vendors as low, medium, or high risk. But once the contract is signed, that risk assessment becomes static while the actual risk landscape changes constantly. Vendors can lose certifications, change their security practices, or even be acquired by companies with different security standards—but if this information isn’t flowing between contract management and security operations, the cybersecurity team operates on outdated assumptions.
The Real Cost of Vendor Security Theater
This fragmented approach to vendor risk creates what I call “security theater”—organizations going through the motions of vendor security management without actually reducing their risk exposure. They conduct annual assessments, require vendors to fill out security questionnaires, and maintain risk registers. But when a vendor-related security incident occurs, they discover that critical security obligations weren’t being monitored or enforced.
The financial impact extends beyond just security breaches. When vendor contracts don’t include proper security requirements, or when those requirements aren’t monitored, organizations lose leverage to hold vendors accountable for security failures. They end up bearing the full cost of vendor-related incidents instead of transferring appropriate risk through their contracts.
More importantly, this fragmented approach prevents organizations from making data-driven decisions about vendor risk. When contract data is isolated from security operations, cybersecurity teams can’t analyze patterns across their vendor portfolio. They can’t identify which types of vendors pose the highest actual risk, which contract terms are most effective at reducing risk, or which vendors consistently fail to meet their security obligations.
Bridging the Contract-Security Divide
The solution isn’t just better security questionnaires or more frequent assessments—it’s fundamentally changing how cybersecurity teams think about vendor contracts. Instead of treating contracts as legal documents that get filed away after signing, security teams need to view them as living operational documents that define ongoing security requirements.
This means integrating contract management directly into security operations. When a vendor’s compliance certification is set to expire, the security team should receive automatic alerts. When contract renewal time approaches, the cybersecurity team should have data on the vendor’s actual security performance to inform renegotiation. When a security incident occurs, the response team should have immediate access to the vendor’s contractual obligations for incident response and notification.
Modern organizations are starting to break down these silos by implementing contract management systems that can integrate with security tools and processes. Instead of conducting vendor risk assessments once during onboarding, they’re establishing continuous monitoring that combines contract compliance tracking with real-time security posture monitoring.
Making Vendor Contracts a Security Asset
The most effective approach I’ve seen treats vendor contracts as security controls themselves. Just as cybersecurity teams monitor firewall rules and access controls, they should monitor contract compliance. This means tracking whether vendors maintain required certifications, meet security training requirements, follow incident notification procedures, and adhere to data handling standards.
This integrated approach also enables more strategic vendor risk management. When cybersecurity teams have visibility into contract terms and vendor performance data, they can identify vendors that consistently exceed security requirements and negotiate preferential terms. They can also identify problematic vendors before renewals and either improve contract terms or transition to more secure alternatives.
The key is making sure that vendor security doesn’t end with the initial risk assessment. The real risk management happens during the ongoing relationship, and that’s where contracts provide the framework for accountability.
Building a Security-Aware Contract Strategy
For cybersecurity teams looking to bridge this gap, the first step is gaining visibility into existing vendor contracts. What security requirements are actually written into your vendor agreements? What enforcement mechanisms exist? How are compliance requirements being monitored?
The second step is establishing processes that connect contract milestones with security operations. Vendor contract renewals should trigger security reassessments. Changes in vendor security posture should prompt contract review. Security incidents should include evaluation of whether contract terms were followed.
Finally, cybersecurity teams need to be involved in contract negotiations, not just initial vendor assessments. Security requirements shouldn’t be an afterthought added to standard procurement contracts—they should be carefully crafted based on the actual risk the vendor represents and the organization’s specific security needs.
The vendors that pose the greatest risk to your organization aren’t necessarily the ones with the worst security practices—they’re the ones where there’s the biggest gap between contractual security obligations and actual performance. Closing that gap requires treating vendor contracts as what they really are: critical security infrastructure that needs the same attention and monitoring as any other component of your security architecture.
Matt Lhoumeau is the co-founder and CEO of Concord, a contract management platform used by over 1,500 companies worldwide. Before founding Concord, Matt worked with Nicholas Sarkozy during the 2007 French presidential campaign and later for a major telecom company, where his frustration with manual contract management inspired him to transform how businesses handle agreements.
