As a business owner, minimizing risk for your company should be a top priority. While many risks lie within the realm of internal threats, sometimes the most significant pain points come from outside sources. This is where third-party risk management comes into play.
However, what exactly does third-party risk management entail? Who needs to handle it, and how do you start? There are a number of questions that need to be answered before putting this into place, but once it has been implemented, you will see an immediate positive impact on your business processes. Here’s everything you need to know about third-party risk management:
What Is Third-Party Risk Management?
Third-party risk management takes the idea of achieving safety outside of your four walls to the next level. It involves establishing a process to identify, assess, and monitor risk when it comes to dealing with third parties.
The scope of Third-Party Risk Management traditionally includes risks associated with business partners, vendors, suppliers, consultants, and other third-party relationships that have been granted access to an organization’s information resources. More recently, regulators have expanded this definition to include security risks related to cloud service providers.
What are Common Risks Introduced by Third-Parties?
- Security Risk: A third party brings security risks to your organization because attackers can abuse vulnerabilities or backdoors in this third-party’s products to access your network.
- Operational Risk: Third-party software may have bugs, which impact production systems and cause downtime.
- Legal, Regulatory, And Compliance Risk: Third-party code is often not compliant with industry standards or mandated requirements for your business.
- Reputational Risk: When one of your suppliers gets hacked, it impacts the whole brand. There is a very strong supply chain relationship between you and your supplier. If they break laws, you break them too by continuing to do business with them.
- Financial Risk: Depending on the contract terms and level of support and indemnification you have, the financial loss may be significant.
How to Manage Third-Party Risk?
With third-party risk becoming a more apparent danger in many organizations, we need to ensure we are doing everything possible to reduce the chances of being attacked at this front line of cyber defense. Here are some ideas for easy third-party management and protecting your sensitive data.
1. SSL Encryption
This is a standard for data protection and privacy on the web. Websites that have an “HTTPS” connection show that they are serious about their users’ security, especially if you see a green padlock next to it as well.
2. Cookie Settings
Cookies are a useful way for users to stay logged in across multiple sessions on your website, but they can also present a huge security issue if not managed from a third-party perspective. Most people using services such as Google Analytics or Adobe Omniture will likely have no idea about the vast amount of data these cookies store and sell back to the original companies themselves.
The last thing you want is a bad guy to come along and steal your user’s cookies to gain access to whatever they like. So, a third-party risk management program with the help of senior management, including third-party vendors, is essential.
Also Check: How To Perform A Cyber Risk Analysis?
3. Email Protection
One of the most impactful (and embarrassing) security breaches is when an attacker manages to compromise the user accounts of corporate employees with access to sensitive information or customer data. Then, use that account to send out malicious emails which totally bypass email protection controls such as anti-virus/spam, etc., totally unaware that it’s coming from a compromised source.
To avoid this, make sure you enable mail relaying through secured SMTP gateways on your network perimeter (if allowed by your ISP). If you are using hosted services for either incoming/outgoing mails ensure these are connecting via TLS encryption between sender and receiver.
4. Website Encryption
With third-party risk becoming a more apparent danger in many organizations, you need to ensure you are doing everything possible to reduce the chances attack at this front line of cyber defense. It is most important to focus on when it comes to protection against these external traffic risks.
Who Should Be Involved in Third-Party Risk Management?
This is an important question that will depend on your particular business model. For example, if you outsource certain aspects of your business to other entities, they involve in this process. You may also need lawyers or accountants to act as consultants when needed.
How Can Third-Party Risk Management Help Your Business?
One significant benefit of third-party risk management is minimizing liability for your company when outside factors are beyond your control. If another entity causes damage to someone else (either physically or financially), you won’t make sure that there is no way that your company is responsible.
What Are Some Things That You Can Control?
There are several things to consider when it comes to the elements of third-party risk management that you will have control over, including contracts with vendors, disclaimers, and indemnification clauses. You may also want to include written agreements for any subcontractors who will access your property or confidential information. A vendor risk management program is essential to consider in any third-party relationship to prevent data breaches and entail ongoing monitoring.
Third-party risk management is an essential aspect of your business. You need to protect yourself and the company you represent by understanding third-party risks, their sources, how you can mitigate them, and what steps you should take to minimize them.
This article has given you some insights into all aspects of third parties relevant to protecting your company’s interests. We hope this information helps you make better decisions about managing third-party risk moving forward!
Maryam has been teaching IT as a school teacher for over a decade, and her main subject of choice is Internet safety, especially helping parents keep their families safe and secure online. When Maryam is not teaching or writing she is a big fan of the outdoors, the complete opposite of staring at a computer screen for hours.