Our clients are facing old and new threats, including third-party risks! Working with third parties is a significant part of business. It gives businesses the ability to scale their operations, and it can provide greater flexibility to meet new and growing demands. With most suppliers using cloud providers such as Microsoft AZURE and Amazon AWS as their computing infrastructure, a new set of risks has been introduced: cybersecurity threats.
Third parties can be a vendor, supplier, partner, contractor, or service provider that has access to internal company or customer data, systems, processes, or other privileged information. If this access isn’t managed correctly, there is a potential risk to the customer.
In 2023, there were several third-party data breaches, compromising the personal information of millions of individuals; here are some of the top third-party data breaches:
- T-Mobile in January
- LinkedIn in March
- Chick-fil-A in March
- AT&T in March
- NCR in April
- MOVEit Vulnerability Exploit in June
- Okta in October
- Dollar Tree in November
- Multiple Credit Unions in December
Close to home
Our incident response service responded to more third-party breaches in the last 3 months than security events on client networks. Among the events we helped clients navigate through recently:
- A ransomed vital records data base
- An attack that originated on a client’s third-party recruiting website
- A client’s online HRIS system
- A ransomed title company
How can this risk be managed?
Third-party risk management is an essential component of business strategy. It’s about identifying, assessing, and managing the risks associated with engaging with a third-party vendor, contractor, or any other outside party that provides a service or a product to an organization or individual. By understanding the potential security risks that come with third-party partnerships and taking proactive measures to reduce them, businesses can add value to their organization by mitigating the impacts of these risks.
Overall, the first step in third-party risk management involves identifying a company’s third-party providers. In our experience, the effort to identify and document third party vendors generates a list longer than management expects. Once a listing of third parties is complete, a quick high-level risk rating can be applied to each of them. Do they have confidential data we are obligated to protect? Are they crucial to our continued operations? Focus then on conducting a risk assessment of those you deem high risk.
Conduct a risk assessment
By conducting a thorough assessment and identifying potential risks associated with a third party, organizations can better understand the risks they may be exposed to when engaging with that third party. This step provides the foundation for developing an effective risk management strategy.
Assessing the financial stability of a third party is crucial as it helps determine the probability of the third party experiencing financial difficulties or bankruptcy, which could disrupt their ability to provide services or deliver goods. This assessment can involve reviewing the third party’s financial statements and credit reports and conducting credit checks.
Evaluating the third party’s reputation is also important, as it can indicate the level of trust and reliability associated with that third party. This assessment can involve researching news articles, customer reviews, and conducting reference checks.
Assessing the third party’s legal compliance is essential to ensure they adhere to all relevant laws and regulations. This can involve reviewing contracts, licenses, and permits and conducting compliance audits.
Evaluating the security posture of a third party is crucial to determine the level of security controls they have in place to protect sensitive data and information. This assessment can involve analyzing their security policies and procedures and conducting security assessments or audits.
Risk intelligence plays a significant role in assessing and identifying potential risks. By monitoring and analyzing data from various sources such as news feeds, social media, threat intelligence platforms, and public databases, organizations can uncover potential risks related to cybersecurity threats, compliance violations, or reputational risks. This enables organizations to prioritize risks based on their potential impact and likelihood, allowing them to allocate resources effectively.
Proactively manage risks
Overall, the first step in third-party risk management involves a comprehensive assessment and identification of potential risks associated with the third party. By leveraging risk intelligence tools and techniques, organizations can better understand and proactively manage these risks, minimizing the potential impact on their operations, reputation, and overall security posture.
To learn more, contact a member of our IT team.
