The cybersecurity team needs to devise the perfect third party risk management programs as the government and corporate stakeholders understand the key essence of vendor security. While companies are working with a multitude of third and fourth party vendors, it remains important to deploy the highly potential third party cyber risk assessment strategies to retain business stability. With all that said, effective management of vendor and supplier risk is becoming more intricate compared to the use of a single platform or software with its interconnected policy networks, employee awareness, and technological updates. Following this type of third-party security system can help prevent vendor-based cyberattacks, which account for about 60% of data breaches. Additionally, it would render the best cost-saving strategies and enable you to comply with the growing strictness of cybersecurity protocols. So, how would you identify such risks and take proper measures?
Going Beyond Questionnaires: Effective Techniques for Third Party Cyber Risk Assessment
By: Beaconer, Jul 20, 2024
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What Is Third Party Cyber Risk Management?
Third party risk management services, also known as supplier risk assessment, evaluate the risks that a third party vendor or a supplier poses to your business. This is a suitable tool when conducting supplier relationship analysis and both onsite and remote supplier evaluation. Consequently, the improving frequency of supply chain attacks entails a middleware to address the level of risk that supply chain vendors and, in turn, their products or services pose to your organization. Dealing with third parties is always a risk but inevitable since it is a usual practice in business. Hence, it will be necessary that the third party you are dealing with is secure and high-performing for your business. It’s one thing to make this commitment and quite another thing actually to do that. When dealing with third parties, what measures do you apply with regard to systems, methods of evaluation, techniques, policies, and practices of protection for your business? Third party cyber risk management strategies or TPRM software is a method of risk management that aims to identify, assess, and mitigate various types of risks connected with the use of third parties. It is an exercise that assists an organization in evaluating the threats associated with engaging a particular third party and evaluating and managing threats that may exist toward the company’s assets and data, thus enabling a company to transfer them to the third party safely.
Thus, third party risk management has many benefits for organizations. Through third party vendor availability management, organizations can avoid situations of business disruptions, hence offering early warning signs that help executives act. TPRM also helps to sustain brand image by assessing potential occurrences and minimizing IT and cyber risk in third party collaboration. It helps in responding to system susceptibilities that a supply chain might occasion. These are the areas that are vital in enhancing customers’ confidence, cutting costs, and lowering general operational or a fourth party risk.
Proven Techniques for Third Party Cyber Risk Assessment Beyond Questionnaires
Organizations require more robust methods to overcome the constraints of employing questionnaires and offer a better assessment of third party cyber risks. Unlike conventional approaches to cybersecurity evaluations, these methods add dynamism and real-time value for assessing vendors’ cybersecurity risks.
Continuous Monitoring
It is crucial to ensure that constant check mechanisms are adopted in a vendor’s environment for the purpose of monitoring its status in real time. These are useful for monitoring and measuring performance and can cover areas like traffic, security events, and compliance with policies. In Organizations, by constantly keeping an eye on the risk factor associated with a specific vendor, it becomes easy to identify new threats, unidentified individuals, attempts to trespass, and any strange activity. By doing this, effective security practice drift is prevented from happening by responding to subtle changes quickly and minimizing the time vulnerability to cyber threats takes.
Threat Intelligence Sharing
Taking part in threat intelligence sharing networks also enables organizations to tap into a wide variety of threat information and updates on the latest threats and risks associated with third party risk management. These networks can foster the exchange of important information about potential threats, vulnerabilities, and best practices between businesses, professionals, and authorities. Collective intelligence helps organizations avoid blind spots otherwise not easily exposed by questionnaires, in addition to improving threat recognition by the organization.
Onsite Assessments
The onsite assessments offer an opportunity to examine the physical security policies and structures of a vendor. These assessments include but are not limited to physically examining facilities, interviewing individuals, and assessing the technical effectiveness of security. Site visits will offer deeper insights into cybersecurity risks in a certain vendor’s operations, vulnerabilities within the ecosystem, as well as the efficiency of applied security standards. This means that instead of vendors developing their mobile apps and potentially failing to fix important security issues due to oversight, they work with professionals who are able to identify these issues and fix them.
Penetration Testing
Conducting periodic penetration tests on third party systems is another way to further identify unreported risks by merely asking through questionnaires. Pen testers conduct the test as though they are actually planning to break into a system and evaluate the vulnerabilities and ways that an attacker could gain access. This approach comes with a proper analysis of the vendor’s security measures, assists in identifying the undiscovered risks, and makes sure that the vendor has strong security against new-generation threats. The frequency of penetration testing also supports a vendor’s pledge to use best practices of security.
Security Ratings and External Audits
Using security rating services offers an unbiased assessment of third party suppliers’ security procedures by evaluating their cybersecurity posture using publicly available data. These rankings point out areas of concern and provide insightful information about a vendor’s overall security posture. Requesting external audits and certifications, like ISO 27001 or SOC 2, also guarantees that suppliers follow industry-accepted security standards. These impartial evaluations confirm a vendor’s dedication to upholding security and provide businesses with more peace of mind.
Contractual Obligations and SLAs
Vendor-specific cybersecurity requirements and liabilities need to be implemented into contracts as well as SLAs, which would enable vendors to implement defined cybersecurity standards. Expectations must be stated concerning security measures, their procedures to be followed in the case of an incident, as well as compliance. The update of such agreements on a regular basis, depending on new threats and already existing trends in the sphere, contributes to the enhancement of the company’s security. Contract compliance facilitates the realization of the legal requirements that seek to make vendors responsible for their actions as they relate to the security of the business.
Risk Scoring
Risk scoring is a quantitative process of attributing a score on a range to vendors according to the sum of risks related to them, including cybersecurity liabilities, past data breaches, and possible consequences on the business. The above scoring aids in categorizing the vendors based on their risks and, hence, targets major risks with the available resources. Therefore, with the help of risk-scoring models, organizations are able to differentiate between vendors that would require a more comprehensive assessment and those that could be closely watched with greater frequency. This way, the view of risk scores as outdated is avoided, and they retain their functionality of reflecting the present state of threats.
Benchmarking
Benchmarking is a process of undertaking an analysis of the vendor’s cybersecurity procedures and comparing them with standards set in the industry. When clients use these standards to assess vendors, then they will be in a position to compare the results to their identified norms hence pointing out the areas of laxity or weaknesses in security. Benchmarking allows one to establish a relative position on the specific vendor’s security and also assists in setting proper expectations of their cybersecurity. It also promotes order through constant advancement because vendors attempt to achieve standards within the business segment to stay relevant.
Conclusion
Today, company vendors can represent a large and diverse supply chain, making them a larger target and adding more doors to access your organization’s system by a cyber-criminal. To efficiently tackle the network of your vendors, you have to create new policies, purchase new equipment, and train for security. Since many supply chain attacks threaten to impact business acutely and intensely in terms of profitability and stability, the only way that firms can avoid vendor cyber risk is by distance and how far your programs for third party or fourth party risk management have gone in terms of automation and proactivity.
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.
