Security Questionnaire for Third Party Risk Assessment (Download Free Questionnaire) - Beaconer
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Security Questionnaire for Third Party Risk Assessment (Download Free Questionnaire)

Are you aware of the fact that the global average cost of data breach in 2023 was estimated at USD 4.45 million. Performing a thorough Third-Party Risk Assessment is crucial to comprehend the potential vulnerabilities linked with external partnerships. A meticulously structured questionnaire stands as an essential instrument in this process, guaranteeing comprehensive coverage and methodical assessment. The objective of this article is to furnish a framework for crafting an effective questionnaire tailored for Third-Party Risk Assessment.

Objective of Third-Party Risk Assessment

The objectives of a third-party risk assessment involve a comprehensive approach to managing risks from external engagements. These assessments aim to identify, evaluate, and mitigate potential risks affecting operations or assets. They focus on risks linked to third-party relationships, such as security vulnerabilities, compliance issues, and business disruptions. Quantifying and prioritizing these risks aids in effective mitigation strategies. With ongoing monitoring, it guarantees regulatory compliance, protects sensitive data, and facilitates preventive risk management. Overall, these objectives enhance decision-making, reduce operational disruptions, and protect the organization’s reputation by efficiently managing third-party risks.

When to use a Third-Party risk assessment

Determining when to utilize a vendor risk assessment is crucial due to the constant presence of risks. Regularly conducting vendor risk assessments is essential for effective risk management.

1)  During the RFP process

2)  Throughout the vendor lifecycle

3) When a risk event occurs

How to Create and Apply a Vendor/ Third Party Risk Assessment

1) Identify the Scope of Third-Party Risks

The objective is to highlight potential areas of concern across various domains. While typical vendor risk assessments focus on data security or regulatory compliance, they possess the flexibility to delve into wider aspects.”

Areas of concern for Third Party Risk Assessments

Specific areas of concern within third-party risk assessment are crucial considerations for organizations seeking to manage external risks effectively. These areas encompass multifaceted aspects that are critical for maintaining security, compliance, and operational continuity:

1. Cybersecurity Measures: Examining the vendor’s cybersecurity practices is vital to prevent and mitigate potential cyber threats or attacks. Strong security protocols shield the company as well as the vendor from online threats.

2. Data Security: Assessing how third-party businesses manage confidential information is a major problem. This assessment ensures that robust measures are in place to prevent breaches, leaks, or unauthorized access to critical information.

3. Regulatory Compliance: Third-party vendors must comply with industry regulations and legal requirements (Like- GDPR, HIPAA, ISO 27001, SOX, PCI DSS and FERPA etc.). Assessing their adherence to these standards helps mitigate legal risks and ensures ethical business practices.

4. Business Continuity: Evaluating the vendor’s strategies and plans for maintaining operations during disruptions or emergencies is crucial. A strong business continuity plan minimizes the impact of unforeseen events on the organization’s workflow.

5. Vendor Viability: Assessing the financial stability and reliability of third-party vendors is essential. It guarantees the vendor’s monetary security and ability to keep their word.

6. Service-Level Agreements (SLAs): Ensuring adherence to agreed-upon service standards are critical for maintaining the quality and reliability of services provided by the vendor.

7. Geopolitical Risks: Evaluating geopolitical factors impacting the vendor’s operations or location helps anticipate potential risks arising from geopolitical shifts or instability.

Addressing these areas helps mitigate risks and ensures robust security measures within the organization’s ecosystem.

2) Draft Vendor/ Third-Party Risk Assessment Questionnaire

Once you’ve defined the aspects to cover, proceed with drafting questions. Though it might appear challenging, it doesn’t have to be. You can refer to our comprehensive risk assessment questionnaire template to find common queries as a helpful guide. You can find the link to download Beaconer’s questionnaire for Third Party Risk Assessment at the bottom of this article.

The link to download Beaconer’s Third-Party Risk Assessment questionnaire is available at the conclusion of this article. Prior to that, review the domains included in our questionnaire:

Domains of our questionnaire for Third Party Risk Assessment

Beaconer’s comprehensive questionnaire integrates industry-standard frameworks such as ISO 27001 and NIST. This is the advanced version of the SIG core questionnaire, encompassing Following security domains:

1)    Risk Management

2)    Information Security Policies

3)    Organization of Information Security

4)    Human Resource Security

5)    Asset Management

6)    Access Control

7)    Physical and Environmental Security

8)    Communication & Operations Management

9)    System Acquisition, Development, and Maintenance

10) Third Party

11) Information Security Incident Management

12) Business Continuity Management

13) Compliance

14) Privacy

15) Cloud

16) Mobile Application

17) Server/Container Security

18) Vulnerability Management

3) Establish a plan of Action

Upon receiving vendor responses, it’s crucial to assess the outcomes (Link to our blog to download sample Assessment Report). In most cases, suppliers are well-versed with the vendor risk assessment and have already mitigated many prevalent concerns. Consequently, a significant portion of the assessment may not require additional actions.

Nevertheless, there might be certain responses that are suboptimal and need careful evaluation. Employing a Risk assessment matrix or Risk Scoring Model assists in gauging the level of threat associated.

Scoring System for Risk Levels:

The calculation of the Risk Factor involves a structured process. This method aims to evaluate the risk level associated with the IT system. It determines the risk associated with a given threat and vulnerability by taking into account:

1)    The probability that a threat source will take advantage of a weakness.

2)    The severity of the risk or impact if the threat source successfully exploits the vulnerability.

3)    The effectiveness of existing or planned security measures in mitigating the risk.

The matrix below delineates the overall risk levels: Extreme, High, Medium, and Low. These are derived based on assigned probabilities for different threat likelihood levels and impact values:

For Likelihood: Assigned probabilities are 1.0 (Frequent), 0.5 (Occasionally), and 0.1 (Unlikely).

For Severity levels: Values assigned are 100 (Intolerable), 50 (Unacceptable), 25 (Tolerable) and 10 (Acceptable).

The Risk-Level Matrix below demonstrates the multiplication of threat likelihood and severity levels to determine overall risk:

The Risk-Level Matrix

This method helps categorize risk levels according to severity, providing insights into potential risks to the IT system. Adjustments or additional refinement can be made based on specific risk scenarios or organizational requirements.

Download our comprehensive questionnaire for Third Party Risk Assessment:

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