Supply chain cybersecurity risks have played a significant role in some of the most damaging security incidents in recent years. These risks arise when service providers, contractors, or business partners have access to an organization’s technology or data. To manage these vulnerabilities, organizations can implement a third-party risk management program, which includes three critical phases: before the contract, during the contract, and contract termination. This article will explore these phases in detail and discuss the steps organizations can take to better manage cybersecurity risks.
Phase 1: Before the contract
Before entering into a contract with a third party, organizations should assess the cybersecurity risks associated with the vendor or the services they provide. Understanding how the third party will support the organization is essential. Third parties can be categorized based on their level of access, their relationship with the organization, industry-specific compliance regulations, and other metrics relevant to the contracting organization. It’s important to note that the implications of risks may vary depending on how the product or service is used. For example, using a product in a healthcare facility would have different risk considerations compared to using it in a typical office setting or a gas pipeline.
To analyze third-party risks, organizations should use questionnaires that inquire about the third party’s processes, policies, and other relevant information. It’s crucial to consider additional risk factors, such as data classifications and the geolocations of product and service components. Once the risks are assessed, organizations should document their requirements in the contract. These requirements should cover cybersecurity controls that the third party must follow, the cybersecurity features that the product or service must provide, as well as cybersecurity obligations, including responsibility for safeguarding against potential threats and notifying the organization of any suspected or confirmed cybersecurity incidents. The contract should also include provisions for the organization to verify the third party’s compliance with the requirements. Service-level agreements (SLAs) can further document the third party’s service standards and set expectations for both parties.
Phase 2: During the contract
After the contract is established, organizations need to onboard third-party personnel and systems. This involves verifying the identities of personnel and providing them with appropriate credentials to access systems and facilities, following the principle of least privilege. It is essential to protect any data transferred to and stored on third-party systems. Monitoring the third party’s behavior and conducting periodic risk assessments or audits are crucial components of due diligence in the third-party risk management lifecycle. Organizations should verify compliance with the contract’s requirements, identify changes in risk that may require adjustments to cybersecurity controls, and ensure any discovered issues are promptly addressed.
The level of due diligence required will depend on the risk profiles of the third parties involved. Higher-risk third parties may necessitate regular assessments, while lower-risk third parties may only require single or periodic assessments throughout the contract duration. It’s also important to closely track any changes in third-party personnel, especially those who change roles or leave their organization. Revoking their access to organizational data and systems should be done promptly.
Phase 3: Contract termination
As third-party relationships come to an end, organizations should implement a formal offboarding process. This process ensures that access to the organization’s data and systems is revoked entirely. Verification of the return of all organizational assets and secure destruction of any organizational data that the third party should no longer possess should be carried out.
In conclusion, the management of cybersecurity risks associated with supply chains requires organizations to implement effective third-party risk management programs. The three phases of the third-party management lifecycle – before the contract, during the contract, and contract termination – play crucial roles in managing these risks. By following the steps outlined in each phase, organizations can improve their ability to identify, assess, and address cybersecurity risks arising from their relationships with third parties.