According to a 2021 study by the Ponemon Institute, 56% of organizations experienced a security breach the previous year because they gave too much access to third parties. Even if your business follows effective cybersecurity protocols, it’s critical that you assess the security practices of all third parties before giving them access to confidential or sensitive data.
For most organizations, the number of third parties on their third-party server is growing. A report by Gartner found that 60% of businesses work with more than 1,000 third parties.
Without proper risk management, this can be a source of significant cyber risk for your business.
Always know which third parties have access to your networks and the permissions they’ve been granted. To protect your business from aggressive cyberattacks and security incidents, robust and effective cybersecurity protocols - provided by a trusted cybersecurity company - and their resulting benefits, are essential.
Let’s take a closer look at why a third-party cyber risk management program is critical to your organization's success.
Table of Contents
What Is a Third-Party Cybersecurity Risk?
Third-party cybersecurity risk refers to the possibility that a third party will breach your network and cause damage. This could be an employee of another business, an independent contractor, or even an employee at your own company.
Third-party risks are a significant concern for many organizations because they know that many of their employees regularly work with external companies. These can include third parties like vendors, contractors, clients, and even partners in joint ventures. This cybersecurity challenge is difficult for businesses to manage because it involves people from outside the organization who may not have any direct connection to the business.
Many organizations have yet to learn how much damage a third-party cybersecurity risk can cause. In fact, many breaches that occur each year are due to third-party risks rather than internal ones. Adding third parties and expanding supply chains to your network increases the number of possible entry points for cyber attackers.
A supply chain attack occurs when an attacker breaches one of the vendors in an organization's supply chain. This gives the attacker access to organizations that use that vendor. Examples of this kind of attack include the Kaseya ransomware attack, the SolarWinds hack, and the Codecov attack.
In addition to vendors, other factors can create cybersecurity vulnerabilities in your system. These include expanding supply chains, adopting cloud computing and remote work, and mounting vulnerabilities in third-party products that attackers can exploit.
Why Solid Third-Party Cybersecurity Risk Management Is Essential
A report by BlueVoyant found that 97% of respondents were negatively impacted by a cybersecurity breach in their supply chain. And the number of these breaches increased from 2.7 to 3.7 per year between 2020 and 2021, a 37% increase.
Likewise, prioritization of third-party and supply chain cyber risk management is higher than ever. Of the 1,200 organizations across six countries that participated in the survey, the rate of respondents who were concerned about this type of breach climbed from 13% to 31%.
These issues contribute to your risk of cyberattacks and data breaches:
- Third-party data and IT environments without proper security protocols.
- Vendors using less than secure methods to access your system or data.
- Vendors neglecting to encrypt your private data or send it via secure email.
Security vulnerabilities in your system can lead to significant dangers for your business. You might lose customer data, damage your reputation, and have to deal with the consequences of a breach. The impact of poor customer service on your reputation, customer churn, and strategic goals can be devastating.
If your organization is required to be compliant with laws and security protocols like HIPAA, GDPR, SOC2, or PCI-DSS, third-party security breaches could put your organization at risk for significant fines and other penalties.
Keys to Robust Third-party Cyber Risk Management
To minimize the potentially devastating impact of third-party cyber risk, you must clearly understand the vendor and cyber threat environment. This means answering questions like:
- Which parts of the system and data do third parties have access to?
- Who are the vendors?
- Who are the attackers that may compromise our vendors?
- How are they most likely to attack?
It is also essential to audit every third party's security and data privacy controls while keeping in mind regulations that affect your business.
The Third Party Cyber Risk Management (TPCRM) framework mitigates the various cyber risks associated with third-party vendors. TPCRM allows you to:
- Get a clear picture of the cybersecurity and resilience of third parties.
- Automate security assessments and best third-party due diligence practices. These can help companies reach more vendors faster and rapidly identify control and compliance gaps.
- Ensure that third parties are safeguarding your confidential and private information.
- Develop security ratings and scorecards based on vendor risk profiles.
Knowing these things when choosing vendors helps you better protect your organization, and it gives you peace of mind that third parties aren’t inviting hackers into your network through their negligence.
Should You Outsource Your Cybersecurity?
With the world of work changing, there are new cybersecurity risks to consider across all your processes. For instance, with 85% of teams sending more email due to remote work, there are security questions your business needs to ask when it comes to sharing sensitive information. For example, is Gmail HIPAA compliant?
You can implement robust security controls in-house, but outsourcing cybersecurity risk management services to an external TPCRM service provider will help protect your third-party ecosystem from vulnerabilities you may not have considered.
An external cybersecurity expert can help you identify and manage third-party cyber risks to which your organization may be vulnerable. The provider will actively assess these risks, prioritize them in light of your objectives, and implement adequate controls to prevent an attack. It can also protect your critical information systems from outside access, creating a buffer between the system and cybercriminals that may attempt to hack it.
They will scrutinize third-party cyber risk throughout your business, identifying the third parties that can create long-term value. They have solutions that enable you to manage your entire third-party ecosystem in a way that streamlines and automates every relationship lifecycle.
A robust in-house third-party risk management program requires dedicated staff and the constant monitoring of potential risks. While there are free tools that allow you to scan for numerous cybersecurity issues yourself, third-party risk management in particular can require a more robust response. An external service provider can help you:
- Manage third-party risk with continuous threat monitoring.
- Implement advanced analytics, automated workflows, and machine learning.
- Design and carry out risk frameworks to protect your company from poor vendor decisions and reduce the risk of lawsuits by performing thorough vendor due diligence.
How to Protect Your Business from Cyberattacks
Cyberattacks are getting more sophisticated and frequent. Today's cybercriminals are not only trying to steal credit card numbers or bank account information, but they’re also going after customer lists, proprietary data, and other valuable intellectual property.
Cybercriminals have attacked banks and retailers, but they also target small businesses. While larger companies can afford to hire cybersecurity experts and invest in expensive software solutions, smaller companies are often left with fewer resources to protect themselves.
One of the crucial things you can do to protect your company from cyberattacks is to ensure that you have a comprehensive security strategy. Here are some ways for businesses to protect themselves:
1. Update Software and Operating Systems Regularly
Software developers constantly release product updates to fix bugs and improve functionality. As a business owner, you must update software as soon as possible — otherwise, you could be vulnerable to attack.
2. Maintain Good Passwords
Your employees should use strong passwords that include uppercase letters, lowercase letters, and numbers so they're more challenging for hackers to crack. To make things easier, purchase a password manager that allows users to create unique passwords for each website they visit without remembering them.
3. Utilize two-factor authentication (2FA)
2FA adds an extra layer of security by requiring users who log into their accounts from new devices or locations to provide additional verification information.
4. Make Sure There are Backups for Data Storage
If hackers can access your data, they will find it challenging to reaccess it because you have a backup copy stored elsewhere. If they don't know where the backup is located, they may think twice before attempting another attack on your company's servers or computers. Once they have accessed the data, it's easier to get into the system again because they'll know what passwords or security questions are required to get into specific areas of your network.
5. Ensure That Employees Understand the Importance of Security Policies
Make sure they understand the importance of following strict security policies to protect your business from cyberattacks. For example, employees should know that they shouldn't or click on links in questionable emails or open email attachments without checking them first. They should also be aware that clicking on links in social media posts can lead them into danger.
6. Use Firewalls and Antivirus Software
A firewall protects your network from unauthorized access by blocking incoming requests from unknown sources such as IP addresses or ports. Antivirus software scans files for viruses before allowing them onto your computer system or networked device.
Conclusion
For business owners, it's important to stay vigilant and address every potential threat to the business. While it’s doubtful you'll be able to stop every cyberattack, if you can mitigate the risks of cyberattacks by implementing security protocols, you can hopefully avoid some severe financial losses.
Third-party cybersecurity risk is a serious threat to companies of all sizes. Due to the negative impact a data breach can have on your business, it’s essential that you consider and address any potential risks in your third-party ecosystems. It can be easier than you may think to keep your data safe from prying eyes, but do it sooner rather than later.
