While onboarding third-party capabilities can optimize distribution and profits, third parties come with their own set of risks and dangers.
Organizations are increasing starting to rely on third parties to bolster their capacity for delivering important services in today’s world, where business processes are growing more complicated and dynamic.
Although integrating third-party capabilities can increase distribution and revenue, doing so has its own set of risks and perils. For instance, external vendors who share systems with a company may present security issues with serious monetary, legal, and commercial repercussions.
According to the Gartner Third Party Risk Management report, companies that are hesitant to broaden their ecosystem because they are worried about the risks, will probably be surpassed by companies that decide to take advantage of third-party relationships because they are confident in their ability to recognize and effectively manage the associated risks. Therefore, it’s imperative to efficiently manage third-party security concerns.
Risk and Compliance
An organization’s vulnerability to a number of hazards, such as operations that are disrupted or fail, data security failures, compliance failures, and a divergent view of the organization’s aims, can be increased by third parties. A company’s operations and policies must now include compliance rules since third-party risks have gotten so big.
Hazards of a third-party data breach
Increasing accessibility and data sharing can benefit organizations socially and economically while demonstrating effective public governance. Data access and exchange can, however, have some hazards. These include the risks of privacy or confidentiality violations and the infringement of other permitted private rights, such as business interests.
Protecting confidential information is essential, and the security team should require the same level of protection from any vendors or third parties they work with. Enterprises should have a system to onboard vendors that include knowledge of the third party’s cyber-risk posture and how these risks will be handled before exchanging data with them.
Companies who do not take the necessary procedures to safeguard themselves against third-party risk expose their operations to risks to both their security and compliance.
These data breaches could have a significant negative impact on the organization, including the possibility of future assaults, financial losses, the disclosure of sensitive information, and reputational damage.
Best practices to mitigate third-party risk
Working with the relevant teams inside an organization that have the most expertise about all the third parties the business engages with is crucial for more efficient third-party risk mitigation. By doing this, you may not only compile a list of these third parties but also categorize them according to the importance of the data they possess and/or if they are involved in crucial business processes. Asking questions during due diligence and security certification inspections can help firms better understand the security posture of all of their third parties.
CISOs can avoid third-party security risks by following a few strategic directives, such as:
- Recognize the information that is communicated between the company and the outside party. Such mitigations are worthwhile, taking into account if it is possible to avoid sharing susceptible data or to alter it to protect against certain misuses.
- A safer integration will result from discovering a mechanism to disable them if they are not required, as some third parties may also reveal particularly harmful functions.
- Last but not least, keeping track of who within the company has elevated access and/or access to the third party reduces the impact of an internal account compromise.
Other preventive solutions
Other strategies that businesses can use to reduce risks from third parties include:
Third-party risk management (TPRM) program
For enterprises of all sizes, the need for an efficient third-party risk management (TPRM) program has greatly increased due to the increased exposure brought on by working with third parties. Programs for third-party vendors and service provider risk management (TPRM) can assist in analyzing and controlling risks related to outsourcing. This is particularly valid for high-risk vendors that deal with confidential information, intellectual property, or other delicate data. Additionally, TPRM programs give businesses the ability to guarantee their resilience and 360-degree situational awareness of any cyber-risks.
Cyber threat intelligence (CTI) architectures
Cyber threat intelligence (CTI) architecture implementation is another preventive security strategy. The main goal of CTI is to gather and assess data about potential threats to the assets or safety of an organization, both now and in the future. Threat intelligence has the advantage of being a proactive solution, which means it can alert firms to data breaches in advance, lowering the costs associated with cleaning up after an incident. Its objective is to give organizations a complete understanding of the threats that pose the greatest risk to their infrastructure and to offer them guidance on how to protect their operations.
Security ratings also referred to as cybersecurity ratings, are quickly gaining popularity as a tool to evaluate the security postures of third parties in real time. By quickly and objectively assessing the external security posture of business partners, service providers, and third-party suppliers, they enable third-party risk management teams to do due diligence on them in minutes as opposed to weeks. Traditional risk assessment techniques like penetration testing and site inspections leave a sizable vacuum that is filled by security ratings.
Traditional approaches take a long time, are expensive, are point-in-time, and frequently rely on subjective judgments. Furthermore, it could be challenging to verify providers’ claims regarding their information security policies. By combining security ratings with current risk management techniques, third-party risk management teams can acquire unbiased, verifiable, and always up-to-date information on a vendor’s security practices.
In order to manage security holistically, third parties must be discussed at the board level and included in the overall security metrics. There are many options, but they all sadly involve using people to do the exam. To support third-party evaluations of the vendor’s privacy posture, solutions still need to develop.