Five Key Steps to Improve Third-Party Risk Management

Five Key Steps to Improve Third-Party Risk Management

Almost every company now outsources some part of its operations. However, it’s getting more challenging for businesses to ensure that third-party providers remain a pillar of strength rather than a weakness. 

According to a survey by Opus & Ponemon, firms exchange personal and sensitive information with an average of 583 third parties, posing a significant risk. Only 34% of the companies in the research said they kept a thorough inventory of third parties, and only 35% said their Third-Party Risk Management (TPRM) program was very effective.

Here are some best practices for managing third-party security risks. 

Conduct risk assessments

It’s critical for CIOs to not only comprehend their organization’s security strategy and undertake internal assessments but also to know what a third-party service provider’s security plan is. This is especially true when the information being conveyed is sensitive. 

CIOs should begin by evaluating the company’s online presence, which includes the website. Broken links and out-of-date copyrights on a website are both red flags.

Have a structure and a procedure in place for evaluating third-party risk

Instead of reviewing vendors on a case-by-case basis, the organization should have a third-party risk assessment structure in place before even beginning to research suppliers so that they know exactly what they are looking for in a third-party service provider. 

As a general rule, the framework should be a high-level reference that explains how vendor risk management will be handled in detail. This handbook will assist senior management in various lines of the company by providing actions to follow. In general, the guide will lay out day-to-day vendor risk management obligations in great detail, ensuring that no steps are missed. 

Also Read: Three Steps to Build a Robust Third-Party Risk Management Program in 2022

Reviewing any previous application vulnerability evaluations that organizations have conducted and seeing where those vendors have concerns is a good place to start. Enterprises should also check their company’s compliance policies and criteria to ensure that their provider can satisfy the high standards they have established for themselves.

Restriction of access 

Businesses should consider employing a Privileged Access Management (PAM) system to ensure that only authorized individuals have access to sensitive data. They should use two-factor authentication (2FA) to protect their important assets, making it more difficult to compromise their network even if someone’s credentials are taken. Businesses can also use one-time passwords and manual access permission to keep intruders out of their network. 

Build a profile for every vendor

Devising a risk profile for each vendor will assist firms in defining their connection and understanding the products/services they will provide—as well as their importance to the company. It will also specify what kind of physical, system, and data access the vendor will have. 

Risk profiling categorizes suppliers, allowing for more uniform vetting and a deeper understanding of the vendor population. The types and sophistication of questionnaires required to complete the vendor risk profile will be determined by the profile. 

Define roles and duties

Service-Level Agreements (SLAs) are used by businesses to specify who is liable for what in their collaboration with a third party. They must consider everything, including what types of sensitive data their third-party vendor can access and preserve, what security safeguards they should take steps to protect that data, what compliance rules they must adhere to, and how frequently they should do audits.

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