Organizations are increasingly partnering with an expansive network of third parties to extend and optimize their capabilities. By leveraging these external partners, organizations are better positioned to grow and compete in their respective markets. These third parties can be suppliers, contractors, vendors, business partners or joint ventures that organizations rely on to enhance their business in some respect. Working with third parties has become a crucial component to doing business in our digital, on-demand world, but it’s not without cyber risk, especially during the current rise in vulnerabilities tied to the global COVID-19 outbreak.
Introducing Third-Party Cyber Risk
The resulting relationships bring a multitude of benefits but also bring more complexity to existing risks within an organization. The most critical being cyber risk: the potential for sensitive client or intellectual proprietary information to be breached. Because many third parties involve the use of some form of technology, cyber risk can be introduced into your environment by them.
To highlight this fact, consider that a 2018 Ponemon Institute study showed 56% of the organizations surveyed had experienced a data breach caused by one of their vendors. Adding to this is the steep increase in cyber criminals looking to attack businesses of every size and type in an effort to exploit these unprecedented times in which we find ourselves.
So how can an organization adequately reduce the risk third parties pose now or any time in the future? Unfortunately, most organizations do not know how to properly assess risks, let alone determine which are most critical. Others struggle to gain accurate and actionable risk data on their vendors because most of the data collection is either a manual, time-consuming process or dependent on self-assessments and reporting from the third parties themselves. Also, as organizations grow, they struggle to efficiently scale their third-party management program to accommodate a more extensive network. Finally, security and risk personnel often can’t confidently verify that third parties processing company or customer data have sound security postures.
Managing Third-Party Cyber Risk
Managing third-party risk requires a multidimensional program championed by C-Suite leaders and board members that uses the right tools and resources. Companies often have multiple internal functions contracting with third parties, yet they must eliminate silos to ensure a coordinated, holistic view of third parties and their activities occurring on behalf of the company. Also, since not all external parties accessing your systems are known (i.e., IoT devices, AI), a single, integrated approach to understanding and managing business, information security, and fraud risks is the only way third-party risks can be effectively managed.
By consolidating data into a single comprehensive platform, organizations can easily access and update that data as threat levels and remediation efforts change—and those are evolving swiftly right now. In addition, platforms that collect data in a structured, standardized fashion and feature analytics, enable you to take action on the data you are collecting.
Studies have shown that investment in ad hoc or piecemeal approaches not only do not provide value but they actually increase costs. At the same time, investing in better solutions and delivery models will increase effectiveness while decreasing the cost of maintaining your third-party cyber risk management program.
There is no silver bullet when it comes to eliminating the cyber risk third parties introduce to your business. However, there are steps that can be taken to reduce that risk to manageable levels, even during a turbulent global business environment like we are currently experiencing. One of those is having a single third-party cyber risk management platform that should be able to do the following: