Proper vendor risk management is essential to protecting the company, its customers, and all proprietary information. In addition to being a sound business practice, it is also a regulatory expectation. Hence, pandemic or no pandemic, assessing the cyber risk posed by your vendors and third parties is critical.
Vendor risk management is a well-known subject amongst security and privacy professionals. Businesses that rely on vendors and third parties to perform key services have had those relationships tested in 2020. Programs for managing vendors are well-established and have run like clockwork, with many organizations needing their critical vendors to allow access for periodic on-site assessments of security, privacy, and other controls. But organizations have had to put their cyber risk assessments on hold in the past few months.
Now that on-site audits are not possible, many organizations do not have the usual visibility to analyze risk factors and validate whether their providers are doing all they have agreed to in their contracts and service-level agreements.
Third-party providers and vendors are a prime source of breaches when it comes to privacy, security, and compliance. According to Risk Based Security, the incidence of breaches involving organizations handling sensitive data for business partners and other clients rose by 35% from 2017 to 2019 and exposed 4.8 billion records last year.
CISOs are well aware of the potential for exposure among their outside partners, which is why most organizations follow the best practice of ranking their vendors from low risk to high risk. Even when organizations do not have on-site access, they still face the same risk management and regulatory obligations to ensure third parties protect their information. But getting a high level of assurance without first seeing the items can get complicated. Businesses must reassess their previous plans and modify the testing process to enable virtual assessments.
Third-Party Risk Ranking
Starting with a review of risk rankings of all third parties and vendors will help determine if their rankings have changed because of the pandemic. Companies should also examine the countries in which the vendor operates and see how those countries have been affected. It requires engaging internal stakeholders representing the user group to understand any service disruptions that might have happened.
Update Assessment Criteria
Updates will help the organization focus on risks that may have been introduced by remote workers or the vendors’ remote workers. Remote working conditions and supply chain impacts need to be analyzed closely in today’s risk assessments.
Businesses should also focus on what measures the vendor or the third party has put in place for a secure remote working environment, like security requirements for connecting to the network training or protecting sensitive information. Vendor resiliency should also be added to assessment criteria.
Collaboration tools can help organizations verify controls and manage and track training systems. Live demos of essential systems and video tours of key areas and materials can be an alternative to in-person visits. The vendor can provide insight into its change management tools and use secure portals for sharing policy documents so that businesses gain a more comprehensive picture of the vendor’s internal procedures.
Monitoring for Key Service and Compliance Metrics
Companies should pay close attention to the red flags, including SLAs and data breaches or any gaps in vendors’ business continuity. They need to look at broader time frames for higher-risk areas which can help ensure that the process being evaluated has been in place and is operating effectively for an extended duration.
Risks related to business and vendor failure are higher in the current environment, and organizations need a contingency plan for scenarios like exposure due to third-party actions and instances where a high-risk third party fails. Companies should be well prepared to address these issues by establishing strong incident response and maintaining continuity for ongoing risk assessments.
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