As speed of business increases, more and more organizations are looking to either buy companies or outsource more services to gain market advantage. With organizations expanding their vendor base, there is a critical need for holistic third-party risk management (TPRM) and comprehensive cybersecurity measures to assess how much risk vendors pose.
While organizations assess and manage risk on a multitude of layers, none present bigger threats to business resiliency than third-party risk and a lack of robust cybersecurity controls. Breaches and service interruptions tied to these risk areas have brought down critical systems of major organizations. In 2021, 53% of CISOs surveyed by Black Kite reported being hit by at least one ransomware attack.
It bears repeating: Cybersecurity and third-party risk are the two biggest problems facing your long-term viability. Businesses need to be able to tackle these risk vectors individually to gain a complete view of their risk profile. A cross-functional process is essential to managing the overlap between these risk areas to better protect your organization and increase workflow efficiency.
Ensuring that the cybersecurity practices of your vendors align with your organization’s standards is critical to safeguarding your systems and data. In fact, it is just as important as how stable the business is or how well it delivers products and services.
Common third-party cybersecurity risks
You need to be able to identify different facets of third-party risk. Here are a few of the most common third-party cybersecurity vulnerabilities and how you can work with your partners to mitigate them.
Data breaches: Ransomware, phishing, and direct attacks on a vendor or its systems threaten your data privacy. Additionally, poor organizational security at the vendor and inadequate enforcement of controls pose security risks to your company.
Service disruptions: Malware and distributed denial-of-service attacks may take down your vendor’s systems and/or the service they provide for your IT infrastructure. Consequently, this can leave your systems exposed or your organization unable to deliver services to customers.
Compliance risk: Regulators increasingly implicate organizations and their vendors for cybersecurity compliance. Understand the regulations you need to comply with externally and ensure that vendors are compliant with the regulations that are relevant to them.
Businesses face constant threats, but mitigating risks takes more than a single arm of defense. Lacking an integrated cybersecurity and TPRM system can leave your organization ill-prepared to anticipate, mitigate, or recover from breaches.
Addressing cybersecurity with your third parties
A cross-functional approach to TPRM and cybersecurity reduces duplicative work and lends deeper insight into enterprise risk for your organization, your vendors, and your partners. Here are some actions to consider as you shore up your TPRM efforts:
1. Bridge the gap between TPRM and cybersecurity
The integration of cybersecurity and TPRM is essential for organizations to better understand and monitor regulatory requirements, controls, and internal policies and procedures. The organization should understand that cybersecurity priorities function to identify the regulatory standards and controls that vendors are held to in TPRM. Organizations that integrate these two approaches take the two functions out of a silo to reduce overlap in workflow processing, reporting, and, more importantly, risk decision-making.
The organization must understand what access the third party has to its systems, data, and infrastructure. Beyond that, work to ensure adequate and appropriate measures and controls are in place to safeguard those systems and entry points.
2. Perform in-depth due diligence
Once an organization has established a solid internal foundation for cybersecurity controls and metrics, it can begin the due diligence process for new and existing vendors. TPRM teams should collect the most relevant information possible to understand a vendor’s inherent and residual cybersecurity risk, including their incident history and future-state outlook.
Prospective vendors should only be selected and onboarded if their cybersecurity practices align with your organization’s policies, and they should be stratified based on the level of risk they pose to your organization.
3. Practice ongoing monitoring
Point-in-time assessments are not sufficient for capturing a vendor’s ever-evolving risk posture. It is essential to regularly assess the security of your vendor population by performing ongoing monitoring to understand and gain visibility into changes in their cybersecurity controls and status. Cybersecurity ratings done during initial due diligence can provide a drill-down score of your vendor’s security, informing your assessment schedule. Determine an assessment scope and frequency based on the vendor’s overall risk rating at an annual, biennial, or triennial time frame.
Organizations that understand and implement integrated cybersecurity and TPRM systems gain a complete view of their vendor’s risk profile, comprehensively prepare for possible threats and compliance violations, and improve business results with trustworthy secure vendors.