Businesses are fast becoming dependent on third-party services in order to carry out their day-to-day operations. With the dawn of an interconnected world, no business can survive without collaboration with third-party vendors/suppliers/contractors and service providers. In the digital age, however, this collaboration increases the attack surface for hackers who can use vulnerabilities in these systems to steal essential information or launch an attack on a business. As such, third-party cybersecurity risk management is crucial.
This is an issue that is currently affecting businesses of all sizes and across all industries. Data shows that global organisations currently use an estimated 110 software-as-a-service (SaaS) applications, with the number of applications constantly increasing. The problem is that each of these vendors typically supplies services to hundreds if not thousands of clients, meaning that in the case of a software supply chain attack, hackers can infect all users by injecting malicious code into an application. As reported by technology consulting firm Gartner, at least 45% of all global organisations will be at risk of such attacks by 2025. Incidents such as these often result in companies hemorrhaging millions of dollars and experiencing a severe hit to their reputation, particularly in the case of data breaches. According to data collected by the National Cybersecurity Alliance, up to 60% of small businesses that experience cyber-attacks and data breaches tend to file for bankruptcy within six months of the incident occurring.
Given the growing threat of cybersecurity risks associated with third-party entities, businesses must create and implement effective strategies to deal with issues before they develop. Effective third-party cybersecurity risk management should begin with a comprehensive risk assessment of all potential vulnerabilities associated with each relationship. Adequate controls and safeguards must then be put in place, followed by continuous monitoring of potential vulnerabilities and threats. Here are five of the best practices that businesses should put in place to reduce risk:
Assess vendors’ security protocols: Recent reports have shown that businesses are unable to identify third-party risk until initial onboarding and due diligence have been carried out, which highlights that traditional assessment methods are failing to identify evolving cyber security threats. As such, businesses must create a new due diligence process to better identify all risk factors. Before entering into a contract with any vendor or service provider, ensure all relevant security protocols are thoroughly examined. If a vendor has a lack of transparency in their security policy, relevant questions should be asked to ensure that you are aware of the security measures they implement to protect the system. Additionally, enquire about any previous cyber security incidents experienced by the vendor and how they resolved such incidents.
Establish clear security requirements in contracts: As the security requirements of a company are largely dependent on its risk tolerance levels, businesses must clearly communicate their security expectations to vendors before entering into a contract with them. All vendor contracts and agreements should include specific and clear security requirements such as data security and privacy standards, incident response protocols, and monitoring and reporting obligations. Vendors who handle personal and sensitive information must also comply with relevant data protection laws such as GDPR or the CCPA, whilst also implementing appropriate privacy controls to protect sensitive information. Procedures for notifying relevant parties, mitigating the impact of the breach and conducting an investigation into its cause must also be outlined.
Keep up-to-date vendor lists: Businesses may often become unaware of the number of services they use and the extent of data access that vendors have. As such, it is of utmost importance to maintain an accurate vendor list and regularly review their access to data to limit exposure of sensitive data to those vendors who need it. Regularly carrying out such checks will help reduce the risk of data breaches or leaks, limit unauthorized access and/or misuse of sensitive data, and provide businesses with greater control over their systems. To demonstrate, if a vendor is given access to highly sensitive data, additional security controls may be put in place and the vendor may be required to adhere to stringent security protocols.
Implement continuous monitoring and limit access: Continuous network monitoring is critical in spotting any potential cybersecurity risks in real-time, allowing businesses to respond quickly if an incident of cyberattack through a third-party system occurs. Your team should also continuously monitor vendors for security risks, including regular security audits, penetration testing, vulnerability scanning, and ongoing risk assessment. Hiring an independent third-party auditor to provide expertise may also be beneficial in some cases. Furthermore, businesses should consider implementing robust role-based access control, ensuring only vendors with access rights are those who require it to do their job, only granting access to data for a limited period of time if necessary.
Have a response plan: Despite implementing all the necessary security precautions, no system can be guaranteed to be entirely immune to cyber security threats. Therefore, businesses must have a detailed response plan in place including steps to be taken in the event of a security breach involving a third-party vendor, clear communication protocols outlining the roles of everyone involved, and procedures for mitigating the impact of a breach.
In today’s complex business ecosystem, businesses must adopt proactive measures such as these to manage and mitigate cybersecurity threats by implementing an effective third-party cybersecurity risk management strategy. These steps will help to create a secure environment for businesses to run their operations, minimising the security vulnerabilities and threats that arise from third-party vendors, suppliers or partners. Following these best practices can help businesses improve their cybersecurity and productivity, allowing quick recovery in the event of a security breach.
About the Author:
Sananda is an independent writer and cybersecurity expert based in Coloco. Her writing is regularly published in blogs and online magazines. Sananda’s wide range of clients includes businesses of all sizes and industries. She can be reached online at sananda7ster@gmail.com or via LinkedIn at https://www.linkedin.com/in/sananda-dasgupta.