Every business today has undergone a crisis of one type or the other. Surveys have shown that more than 2000 senior executives spanning over 43 countries have discovered that around 69% of the companies have experienced a crisis in the past five years. For a few, it might have been associated with a public relation or issue with brand reputation arising out of a flawed product or any unexpected disruption of services. For the rest, it involved workplace injury, cybersecurity threats, or any other emergencies that impacted the organization heavily.
Developing a Crisis Management Plan for Third Party Risks
By: Beaconer, May 18, 2024
Content
Irrespective of the reasons, companies around the globe often experience crises that impose a massive impact on individuals and regular operations. Such events, ignoring the situations, posed risks to the continuity of business, crisis communication abilities, and emergency preparedness. Companies facing security threats often from their associations with third or fourth-party vendors and suppliers should have proper measures in place to overcome the crisis arising out of them else it would lead to some devastating consequences.
In our post today, we will discuss the proper measures businesses can undertake to managing third party risks during the crisis. But first, let us take a closer look at the third-party risks.
Understanding Third Party Risk Management (TPRM)
Third-party vendors are the firms that have access to the sensitive data assets of your company, like the cloud computing platforms, data centers, service providers, suppliers, and payroll processes. When an organization is dealing with third or fourth-party vendors, it enables the companies to scale rapidly, enhancing processes and working diligently; however, it is often associated with risk. The third-party vendors have access to your systems and work as malicious actors at the possible point of access to the customer data, posing common cybersecurity risks.
According to a recent report, in the past couple of years, about 82% of companies have undergone one or more data breaches caused by a third party, costing an average of $7.5 million of remediation. This is why third-party security is extremely important. The right tools and measures can help identify third-party risks and minimize the chances and impact of safeguarding your company and customers from malicious threats. Failing to manage such risks appropriately can expose a company to financial, regulatory, reputational, and legal damages.
Why & When A Crisis Occurs
A crisis often occurs whenever disruptive incidents like a cyberattack lead to instant strategic implications. These often prove malicious or negligent acts, even a failure to deliver qualitative goods and services. Additionally, a crisis takes place when poorly managed incidents and fluctuations in business increase to a point that has severe outcomes for the company’s revenue and reputation. Over time, the occurrence of such incidents might lead to a crisis that is further escalated through third and fourth parties. These third—or fourth-party risks consequently spread across the work environment and lead to poor training that keeps the entire cybersecurity awareness approach dormant.
What Is a Crisis Management Plan?
A crisis management plan is a document outlining how a business deals with or manages emergencies from start to finish. It comprises varied third party risk management strategies you might use to mitigate dangers arising from external sources.
It is the plan that eradicates the potential risks arising from a crisis, mainly those that can impact a company’s success by damaging its reputation and business operations, adversely impacting its finances, or impacting its employees.
How To Prepare Your Business For A Crisis
Building a robust crisis management plan relies on complete assessment, extensive coverage of the vital domains, and strategic planning. Let’s examine the best ways to develop a robust crisis management plan to safeguard your business from possible threats to these core areas.
Identifying Every Potential Threat
Business crises vary depending on your company’s industry, size, and location. Although there are obvious threats to your firm, it is essential to consider the worst-case scenarios, allowing your team to meet the unexpected challenges that would impact your people and set your business back on track. The ideal way to do this is by performing a thorough assessment of the possible threats.
Form A Crisis Management Team
The crisis management team is your personnel who remain at the front lines of emergency responses. These important individuals are generally the heads of the department with immense leadership experience staying calm during unforeseen situations. Consider them as the initial responders, each of whom brings their unique skills to deal with the crises. It would help if you opted for a diverse range of skills while selecting your team members to deal with the crisis. Ensure that your employees and stakeholders understand whom to contact during crises.
Identify Key Stakeholders & Their Needs
Every company has specific people, groups, and even entities who have vested interests in their operations, outcomes, and reputation at times of crisis. Therefore, your crisis management plans should include how and whatever you will communicate with them whenever issues strike. Start by categorizing your stakeholders into main groups of customers, employees, shareholders, suppliers, local communities, and regulatory bodies. Then, start discerning the distinctive need for communication. For example, employees might need real-time updates on the safety processes and instructions. Customers may often search for clear and precise information related to service disruptions. Regulatory bodies may have to follow the legal reporting obligations, too.
Build A Crisis Communication Strategy
Communication is key in a crisis. Designate a spokesperson on your crisis management team to be the main point of contact for public relations, ensuring consistent and controlled communication during challenging situations. Speed is paramount in a crisis, so consider investing in a text alert messaging system to send company-wide notifications of ongoing incidents and instructions for how to proceed.
Practice Crisis Simulations
After you have a robust plan in place, start creating mock exercises for practicing your crisis management process and disaster recovery procedures. Try hosting the training days with your crisis management team to ensure they understand how to tackle different forms of crises. These tests would make instant and appropriate responses second, ensuring your messaging plan and system work as required. After every test, search for opportunities for enhancing the system for efficiency and speed, as practice can make things perfect.
Continuous Improvement For Success
Ensure that every crisis your company encounters is used as a scope for enhancing the response for the next time. To assess the potential of the crisis management process, try identifying key metrics like the crisis response time, the effect on business operations, and the engagement of stakeholders.
One of the key ways for scaling the engagement of the stakeholder as a metric for constant enhancement of the crisis response is through conducting post-crisis feedback sessions or surveys with the stakeholders. It is in this manner that you can gather insights into how they perceive the response of the company, the amount of satisfaction, and any type of suggestions for enhancements. Analysis of these key inputs offers valuable data for refining the crisis strategies and enhancing the engagement of stakeholders during future crises.
Conclusion
Every business will encounter a crisis regardless of size. However, a robust crisis management plan to manage third party risks can bring some positive results, preventing the escalation of incidents. Although not all crises threaten the safety of individuals, they pose notable risks to your reputation and operations.
Author Bio
Nagaraj Kuppuswamy
Nagaraj Kuppuswamy is the Co-founder and CEO of Beaconer, an esteemed enterprise specializing in managed third-party risk using the cloud native AI based solution. With an extensive portfolio of accolades and industry certifications, Nagaraj stands out as a seasoned expert, boasting over 16 years of dedicated involvement in the field of Cybersecurity. Throughout the course of their career, he has predominantly focused on elevating the realm of third-party risk assessment.
