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Controlling third-party risk is critical to any effective organizational security strategy.
Without a reliable third-party risk management plan, it would be impossible for you
to add vendors to your supply chain without exposing your company to cyber
threats.
A recent KPMG survey shows that 73% of businesses have experienced at least one
significant disruption due to third-party incidents. The best way to protect your
business from such incidents is by developing a risk management plan.
The plan begins by mapping out all the third-party providers who have access to
your organization’s data and networks. Your plan should also prioritize the risks
associated with each provider based on the supply chain and their access to your
critical data.
Our experts have identified the key rules that can help you prioritize and map your
third-party providers based on their access to sensitive data inside your organization
and their role in the larger supply chain. Read on to learn more about how you can
safeguard your business with our simple yet effective recommendations.
What does mapping third-party providers involve?
Mapping third-party providers is the process of identifying, assessing, and mitigating
cyber risks associated with third-party vendors. It involves analyzing the business
processes and data flows between an organization and its vendors to identify
potential vulnerabilities that malicious actors could exploit.
This includes evaluating the security controls implemented by each vendor and the
security policies, procedures, and practices employed by both parties. The goal is to
ensure that third-party access to an organization's systems is secure and compliant
with all applicable standards and regulations.
Mapping also involves developing a risk management strategy based on the
assessment's findings to adequately protect against future cyber threats.
Organizations can better protect their data, reputations, and bottom line by
understanding and mitigating third-party vendor cyber risks.
Types of third-party risks
Third parties pose different types of risks to your company's data and networks
depending on the assets or the data they access. The various risks that you could
face include the following:
Type 1: The provider has access to sensitive data
The first type of risk involves third-party providers who have access to your
company's sensitive or critical data. The data could include your customers'
personal information, intellectual property, and other internal communication. If
cybercriminals were to breach the systems of this third-party provider, they could
gain access to your company's data, leading to a potentially devastating data
breach.
For instance, they could steal customers' personally identifiable information and use
it to commit fraud. If they access your intellectual property, they could sell it to your
competitors or use it to create competitive products or counterfeit products that
damage your brand reputation. Furthermore, access to your company's information
could enable them to extort money or information by threatening to expose it
online.
How to mitigate type 1 risk
Here are our recommendations on how to mitigate the risks that come with vendors accessing your sensitive data:
Apply role-based access controls to databases, infrastructure, and applications you share with third-party providers. This will limit the amount of access each provider has to your data and ensure that only authorized personnel can view and modify it.
Ensure that all vendors adhere to rigorous security protocols and best practices when accessing or handling your data. This includes using robust authentication measures, encrypting sensitive data in transit and at rest, regularly patching vulnerable software, and using threat detection and response systems.
Perform regular security audits to ensure that all third-party providers comply with your data security policies. During the audit, you should evaluate each vendor's security policies, procedures, and technologies to ensure they are up-to-date with the latest security standards. Document any issues found during the audit so you can address them promptly.
Type 2: The provider has access to the company's network
The second type of risk involves providers with access to your company's entire
network. Companies usually give vendors this type of access to their networks to
facilitate collaboration, communications, and shared resources. However, with such
broad access comes the risk that malicious actors could gain access to your
company's system and use it for nefarious purposes.
Attackers may use the provider's access as a backdoor to install malware, steal data,
or gain unauthorized access to other systems. They could also use the network for
malicious activity, such as spreading spam or ransomware, launching DDoS attacks
on other companies, or selling confidential business intelligence on the black
market.
The worst thing about this type of vendor risk is the ripple effect it causes, as seen in
the famous SolarWinds attack. This attack compromised the networks of multiple
companies and government agencies due to a flaw in the SolarWinds Orion
platform, which these organizations used for IT management.
How to mitigate type 2 risk
If you want to mitigate the risks that come with vendors accessing your entire
network, your vendor risk management plan should include the following best
practices:
Adopt a zero-trust approach, which requires authentication and authorization at every step. This approach prevents attackers from using stolen credentials or bypassing security measures to gain access to your network.
Perform regular penetration tests to identify and fix vulnerabilities in your system that malicious actors could exploit. Penetration testing will protect your company's network by helping you identify attacks at early stages, such as login pages, application flaws, and other entry points.
Ensure that all vendors comply with your company's security policies before granting access to the network. This includes requiring multi-factor authentication for all logins and regular patching of software and systems.
Monitor vendor activity regularly to detect any suspicious or unauthorized access attempts. Make sure you have processes to alert you to suspicious behavior and respond quickly if any threats are detected.
Implement automated tools and processes for continuous monitoring, logging, and alerting of any anomalous activities to ensure the security of your data.
Regularly update security policies and procedures to keep vendors informed of the latest best practices in cybersecurity.
Type 3: A breach in the third-party provider technology
This type of third-party risk occurs when attackers breach a vendor's technology or
systems. The attack could lead to a loss of data and disruption of business
operations for your providers.
For instance, cybercriminals could target one of your major suppliers, taking
advantage of any weaknesses or vulnerabilities in their security systems. If the
attack is significant enough, the supplier could be forced to shut down their
operations until they resolve the issue.
The shutdown will trigger a chain of reactions that could adversely affect your
business operations. For example, if your production process largely relies on the
supplier’s materials, you could face a production halt for some time.
A production stoppage in your company can lead to a loss of revenue because your
customers won't receive their orders on time. It can also damage your reputation
and undermine customer loyalty, leading to future losses.
How to mitigate type 3 risk
To help protect against this type of vendor risk, you should take the following steps:
Verify providers' certification and controls: The goal should be to ensure that the vendors meet the certification requirements relevant to various compliance standards such as ITAR, HIPAA, PCI DSS, and ISO 27001. If a provider complies with these standards, at least they’re meeting a given IT security level and have implemented the necessary security measures to protect their systems and data.
Implement third-party risk assessments: Regularly assess your third-party vendors to ensure they follow the best security and privacy practices. This process should include reviewing their IT systems, personnel, business continuity plans, etc. The assessment will help you identify the type of monitoring and security controls that a third party needs to put in place.
Mandate security awareness training: Make sure that all vendors and subcontractors are aware of your security policies and the importance of following them. This includes requiring every vendor to undergo mandatory security awareness training regularly.
Build use cases and scenario simulations: You should build use cases and scenarios to simulate a cyberattack on the vendor. This will help you test the efficacy of the security measures adopted by your vendors and identify any gaps that need to be addressed.
Use a third-party risk management framework to perform a risk rating of your suppliers: A third-party risk management framework can help you rate your vendors based on their security posture and potential impact on your organization. This will give you an idea of which suppliers require extra attention.
Stay on top of third-party risks.
Mapping your third-party providers based on the recommended rules is essential to
ensuring that you are aware of the risks posed by each vendor. Mapping helps you
determine the best third-party risk management practices to implement depending
on their risk level. By following the steps outlined in this article, you will be able to
effectively mitigate any risks associated with your vendors and ensure that your
organization is secure.