In an era when protecting digital assets is essential for all companies, you must find ways to identify and mitigate risks from your vendors and suppliers.
It is your partners, suppliers, and sub-contractors who enable your organization to thrive and diversify. These crucial relationships also inevitably bring the additional risk of malware, cyber-attack, and data breaches that your IT team must recognize and address.
By implementing a comprehensive set of processes aided by cutting-edge technology, it is possible to introduce third parties responsibly, create and implement risk assessment processes, monitor vendor compliance, prioritize needs, and often correct issues before they result in security incidents.
What Is Third-Party Risk Management?
No modern company operates in a vacuum. Organizations have relationships with numerous outside providers, including suppliers, vendors, sub-contractors, call centers, financial service providers, and external security firms just to name a few. In all cases, these entities have some degree of access to a company’s systems and data.
As a result, they present an added risk to the organization’s employee and customer information, financial data, and operations. These dangers can take the form of theft of credentials or intellectual property, intrusion into networks, data exfiltration, phishing, or malware.
Security teams must set out to map the web of interactions among their suppliers to come up with vendor management policies and procedures that can be tailored to each supplier or contractor.
Why You Need a Third-Party Risk Management
To maintain the health and growth of your organization, your security team must implement a robust vendors’ risk management strategy. That is because numerous entities including governmental agencies, investors, boards of directors, senior management, customers, shareholders, and regulators understand the dangers of cyber-attacks and data breaches and have heightened their expectations accordingly.
Failing to create, implement and enforce a set of third-party vendor risk management protocols can lead to negative and even fatal consequences for your company that include reputational, cyber, and operational risk, governmental scrutiny, prohibitive monetary penalties, and even criminal liability.
Third-party risk management involves identifying, analyzing, and controlling the risks that service providers pose.
Increasingly, these vulnerabilities are also extending to fourth-party vendors and even to providers that branch out from them. Because internal and customer sensitive information is at stake, your organization must practice due diligence in onboarding, assessing, and monitoring outsourced vendors.
Third-Party Risk Management’s New Approach
Traditionally, security teams assessed third-party risk by administering questionnaires, occasionally conducting on-site visits, and subjecting companies to one-time audits. They then collated the data and organized it on spreadsheets for analysis and interpretation.
This methodology, while better than no solution at all, was inefficient, time-consuming, and prone to error. Recent technological innovations have changed the landscape of third-party vendor risk management, particularly for larger organizations with an extensive network of outsourced relationships.
Software now allows a business’s security team to access the complete set of a vendor’s security ratings before concluding the onboarding process. Once they are hired, it can be used on an ongoing basis to check for any changes in the provider’s security posture and send alerts if it falls below an agreed-upon benchmark.
Furthermore, technology can enable your organization to scan your entire vendor portfolio to identify and prioritize risks in real-time. Armed with this information, you can provide feedback to your suppliers and work together to correct or reduce the risks they pose.
The best third-party risk management programs will use updated assessment and monitoring methods to gather and analyze actionable evidence so that risk can be identified and corrected in a timely and collaborative manner.