Third-party vendors and suppliers play an important role in a business’s success. As part of the supply chain, whether it’s services or goods, companies rely on their third-party partners. This often results in a chain of connections between the business and supplier that hackers can potentially exploit. A cybersecurity breach can disrupt the supply chain, and also result in non-compliance fines and penalties.
Third-party risk management software will make it easier for businesses to identify and manage cybersecurity threats before a breach occurs. However, it’s not always easy for organizations to know which tools and software solutions are needed. There are plenty of options and since cybersecurity is not “one size fits all”, businesses need to take the approach that best suits them.
In this guide, you’ll learn what third-party risk management software is and how to know which one is right for your business.
What is Vendor Risk Management Software
Vendor risk management software basically shores up cybersecurity at the third-party supplier’s end. The reason this is important for businesses comes down to compliance, along with consumer trust. Even if a cybersecurity breach is the fault of a third-party the organization will be held accountable. This generally results in fines, penalties, and a loss of revenue.
The size and scope of a company’s integrated risk management (IRM) strategy will be determined in part by the number of outside vendors with access to the business’s network. For example, if there are five or fewer vendors, a spreadsheet will probably be enough to manage network access. Larger businesses will want to consider implementing risk management software.
Compliance with industry regulations will be easier with risk management software. It can schedule assessment tasks and tests, manage reviews, and generate reports and other documentation required to meet compliance standards. As cybersecurity threats continue to increase, the need for risk management software also grows.
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The First Steps Towards Reducing Third-Party Risks
Risk management software does vary in the cybersecurity tools it offers. If the tools necessary to protect data aren’t included, businesses will have vulnerabilities that hackers can use to gain access to personal protected information (PPI). Before a company invests in software to help manage cybersecurity risks, there are a couple of things they can do first.
Questionnaires
Even if you don’t consider questionnaires a “tool”, they are the basis for most risk management programs. A comprehensive questionnaire sent to all third-party vendors will give companies an idea of where risks exist and what steps are needed to eliminate them.
There are questionnaire templates but this should only give businesses an idea of what to include. Each industry should create its own set of questions for their third-party vendors. The reason for this is simple. Different types of data – health, financial, cardholder, etc. – require unique cybersecurity protocols.
The questionnaire should not be the only part of a risk management program. It is only a tool to help companies know what their third-party vendors need to stay compliant with cybersecurity regulations.
Security Ratings
While questionnaires are a helpful starting point, it can take weeks for companies to assess third-party suppliers’ cybersecurity practices. During this time, hackers could breach the network compromising PPI.
To speed up the process of determining what vendors need, a glance at their security ratings can be helpful. Monitoring security ratings will uncover any gaps in cybersecurity that were missed on the questionnaire. It will also speed up the assessment process.
Another benefit of monitoring third-party security ratings is that it can be done in real-time. Cybersecurity threats are constantly changing and the time it takes to send, receive, return, and assess a questionnaire could be the difference between preventing a breach and one occurring.
What To Look For In Third-Party Risk Management Software
As previously mentioned, risk management software does differ. Some are designed for large corporations and others are intended for use by small businesses. However, there are some features that all risk management programs should include.
Unlimited Management of Third-Party Associates
All vendor risk management strategies need to allow for change. Scalability is key. As businesses grow vendors will be added. Others will change or the company’s focus. Whatever the reason for the addition or change in vendors must be reflected in the software. If these changes are not allowed to be made, the company could become vulnerable to cyberattacks at the third-party network access point and beyond.
Allow Assets to Self-Report
Large corporations with hundreds of third-party vendors will want their risk management program to allow for self-reporting. If it’s up to the corporation to conduct reports on hundreds of vendors it’ll be time-consuming and expensive. Software that lets third-party suppliers upload their cybersecurity reports will make the risk management strategy more efficient. It also gives the IT team time to assess any potential threats.
Filter and Prioritize Risks
To save time and catch all potential threats, the software should be designed to filter through and classify all the risks. It should also be able to recognize areas with vulnerabilities. This way companies know where to focus their attention and patch any potential weaknesses.
Automatic Emails and Logs
If the company only has a few vendors manually sending out emails and logging the response won’t be a problem. However, if there are hundreds of vendors the risk management software should come with an automatic feature. Emails to all third-party suppliers will be sent simultaneously. A record of the delivery will also be logged automatically. This ensures that the company is meeting compliance regulations, while also saving time.
Assessment Metrics and Reporting
The most important aspect to look for in risk management software is its reporting. This applies to both small and large businesses. Accountability is paramount when it comes to cybersecurity and compliance. Third-party risk management software needs to continuously monitor and log all third-party assets.
How Third-Party Cybersecurity Attacks Can Affect Retail Businesses
It’s not only companies that handle PPI that need vendor risk management software but retailers are also at risk from cyberattacks. This includes online and storefront retailers. They are required to meet cybersecurity industry standards since cardholder information is transmitted. What often isn’t considered are the consequences if the supply chain is hacked.
Retailers Networks Could Be Accessed
Two recent data breaches – Target and Home Depot – fully exposed the vulnerabilities that exist in most supply chains. Hackers began by targeting the companies’ third-party suppliers with phishing and other ploys to gain credentials to access the portal between the vendor and retailer. From there, the hackers moved laterally through the network, installing malware that obtained credit and debit cardholder information.
PCI DSS controls were bypassed during the 2018 Ticketmaster breach. Malicious code was injected into a third-party website which was then implemented into Ticketmaster’s system. This allowed the hackers to get by and go unnoticed by the company’s cybersecurity protocols. Cardholder data was “skimmed” as it was transmitted to Ticketmaster back to the hacker’s website.
All of these third-party cybersecurity breaches resulted in millions of dollars in fines and ongoing lawsuits. Trust between consumers and businesses has also been negatively affected.
Manufacturing and Logistics Could Be Disrupted
Retailers depend on their third-party manufacturers to supply products on time. If hackers are able to access the network this can be easily interrupted. This was seen in 2017. A virus began infecting systems around the world. First, it would lock down the files and encrypt the data, before requesting a bitcoin ransom demand. If the ransom wasn’t paid the data would be destroyed. For some organizations the loss of data was disastrous.
These cyberattacks affected small businesses, school districts, and large conglomerates. The largest global shipping container company, A.P. Moller – Maersk had to revert to manual operations after a cyberattack. During the 10 days it took to rebuild and reinstall the organization’s infrastructure, the company reported a 20 percent drop in shipping with a 250 – 300 million dollar (USD) loss.
FedEx and TNT Express also experienced cyberattacks that temporarily shut-down logistics. Even the Cadbury Chocolate Factory stopped production and filling waiting orders due to a cyberattack. This shutdown results in an estimated 140 million dollars (USD) in losses.
These disruptions will affect retailers at some point, if not immediately after the cyberattack occurs.
E-Commerce Outages Can Occur
Not every retailer has a storefront. There are countless that have online businesses. Whether it’s a personal website, or through one of the service companies, if the network is infected and goes down, the business will stop.
In 2016, e-commerce giants Overstock.com, Amazon, and Etsy were all temporarily shut-down due to a cyberattack. Online retailers that depend on and use these platforms as their storefronts were also affected financially. Without the website, it is impossible to make sales. These are only a few of the e-commerce sites that have been affected by viruses.
Tips to Improve Retail Supply Chain Cybersecurity
There are a few strategies online and storefront retailers can take to improve cybersecurity beyond following industry compliance regulations.
- Continuous monitoring of third-party vendors’ security ratings. This applies to e-commerce companies that are a platform for other sellers. Any issues that are identified should be immediately addressed.
- There are tools that retailers can use that scan for cybersecurity risks on third-party code that is used in the systems. This is a common way hackers are gaining access to the primary network.
- Retailers should have a complete and current list of all IT service providers and vendors. This allows the IT team to create backup strategies and locate any single points of failure to reduce the amount of network downtime.
- Access controls should be in place to limit third-party vendor access to personal protected data.
These are steps retailers can and should take to reduce their risk for cyberattacks. It can be done independently or with third-party risk management software.
In Conclusion
All businesses, regardless of the size, if they have third-party vendors, then risk management must be a priority. Since cybersecurity regulations have increased to prevent breaches on primary networks, hackers are targeting the often less protected third-party vendors. From there, hackers can often move throughout the system until reaching the data protected in the network. Third-party risk management software will add layers of protection and help prevent cyberattacks that can shut down networks and breach data.
When you’re ready to talk about vendor risk management software, the experts at RSI Security are here to help.