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In today’s interconnected business landscape, companies often rely on multiple vendors for services, from software to supplies, adding layers of cybersecurity risk. The $85 billion outsourcing industry offers cost savings, which benefits many organizations, but a vendor’s lack of robust cybersecurity can expose a company’s sensitive data to breaches. And, while many organizations invest in internal cybersecurity protection, they forget the risk extends to third-party vendors.

Best Practices for Third-Party Vendor Cyber Risk Management

A recent report reveals startling statistics about cybersecurity and third-party vendors: Only 13% of organizations continuously monitor the security risks associated with their external partners. Meanwhile, a separate report indicates that 98% of organizations worldwide are integrated with at least one third-party vendor that has suffered a breach in the past two years. These figures highlight a significant security gap in vendor cyber risk management.

Here are three cybersecurity risk management tips to consider:

Understand the Risks Associated With Utilizing the Vendor

Conducting a thorough risk assessment is crucial before entering into a contractual agreement with third-party vendors. Examine the types of data the third party will have access to and familiarize yourself with their cybersecurity protocols.

Contracts with vendors should include specific security requirements and compliance standards. Ensure your agreement has clauses that permit regular security audits. It should also delineate responsibilities in the event of a data breach.

Remember that new risks can emerge even after performing due diligence at the onset of a vendor relationship. Maintain ongoing surveillance of your vendors’ security posture. Utilize real-time dashboards, generate regular reports or continuously employ specialized third-party services to monitor vendor risk.

Verify the Vendor’s Cybersecurity Program Effectively Manages Those Risks

This is most frequently done via “due diligence questionnaires.” To streamline third-party risk management, vendors that provide third-party attestations like ISO 27001 or System and Organization Controls (SOC) reports can expedite and simplify the process. These reports provide independent validation of the security controls in place and help you identify any additional layers of suppliers. This level of detail provides greater visibility into your entire outsourcing and vendor web, helping you avoid potential blind spots.

Manage Your Risks Associated With Utilizing the Vendor

There are also simple steps your organization can take to mitigate risks. They include:

• Incident Response Plan: Have a clearly defined incident response plan that includes procedures for handling a breach involving a third-party vendor. Ensure the vendor understands your incident reporting requirements and their responsibilities in a security incident.
• Employee Training: Educate employees about the risks associated with third-party vendors and how to handle data responsibly. Many breaches happen due to human error or lack of awareness.
• Limit Access: Practice the principle of least privilege by only giving vendors access to the information they need to complete their tasks.
• Contract Termination: Ensure your contract mandates an orderly supported transition to a new vendor, including the return of all data in a structured, usable format.

By incorporating these practices into your vendor management programs, your organization can mitigate the risk associated with third-party vendors and enhance your overall cybersecurity posture.

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