Vendors, suppliers, contractors, and other strategic partners all add to the scope of your IT environment, including additional risks to be managed. Accounting for the vulnerabilities and threats that come with the territory through third party risk management is a necessity to keep all stakeholders involved secure.
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The Importance of Vendor Risk Management, Explained
In security terms, every piece of software or hardware that comes with a third party partnership adds to the scope of systems you need to protect. Third party risk management (TPRM) is an intentional approach to doing so. TPRM is absolutely essential to overall cyberdefense because:
- TPRM is necessary for a full and accurate scope of your IT and security landscape
- Likewise, you can’t manage threats and vulnerabilities without accounting for TPRM
- TPRM also empowers efficient incident management when risks turn into attacks
- Effective TPRM minimizes potential consequences of incidents for all parties
- TPRM also helps create a staff-wide culture of awareness and vigilance
Given the importance of third party risk management, it should be a priority for all organizations.
Reason #1: Creating an Accurate IT and Security Landscape
The first step to securing your organization’s IT environment and cybercrime and other incidents is taking accurate stock of all software, hardware, and other elements that comprise the system.
Your organization’s IT environment includes all the assets you own or manage, along with any that are operated by third parties working on your behalf or under your supervision. Devices and workstations, the network infrastructure that connects them, and the software that’s operated on and between them are all in-scope. But there are also peripheral systems and networks that those same assets come into contact with outside the work environment, such as cloud or remote deployments, irrespective of your organization’s level of control over said assets.
Beyond the assets themselves, you also need to document the cybersecurity infrastructure and architecture implemented across all systems—without TPRM, an accurate scope is impossible.
Reason #2: Managing All Threats and Vulnerabilities
Just as TPRM is necessary for a full and accurate accounting of all organizational assets, it’s also critical to understanding what risks are posed to you and your partners. Although TPRM is focused on third party risks specifically, these risks are especially critical because of their status.
In most security configurations, risk is an expression of relationships between two variables:
- Vulnerabilities, or weaknesses in cyberdefenses that could be exploited
- Threats, or methods and actors that could exploit said vulnerabilities
Third party vulnerabilities and threats are especially important because they are easier to miss entirely or not fully understand. Despite (and because of) their liminality, they are equally if not more dangerous to your organization, your partners, and any clientele shared between you.
Third Party Specific Vulnerabilities and Threats
Third party vulnerabilities begin with weaknesses on third party devices, such as out-of-date controls. Any firewall protections on in-house hardware and software need to protect vendors’ assets as well. But there are also intangible factors such as incomplete information about third party devices, networks and other platforms they connect to, and unaccounted-for users.
Threats may target third party assets specifically, or prey on loose connections between third party personnel and internal stakeholders. For example, phishing attacks disguised as emails from on-site managers may target contractors who primarily work remotely, or vice versa.
One great place to start with mitigation is patch management, or regularly scanning for available updates and ensuring they’re installed as soon as possible. Triangulating management with bandwidth needs is especially challenging with global teams, hence the need for TPRM.
Reason #3: Addressing and Neutralizing Incidents Swiftly
Even effective risk management cannot be expected to prevent 100% of incidents. It’s critical to respond to incidents that do occur to quarantine and neutralize them as swiftly as possible.
TPRM is essential for incident management, which works best as a cyclical six-step process:
- Identification – Third party assets must be scanned continuously for signs of an attack
- Logging – When an incident occurs, it needs to be indexed immediately for analysis
- Investigation – Analysts will determine the causes and solutions for the incident
- Assignment – First and third party resources are allocated and escalated as needed
- Resolution – Response teams are active until all traces of the incident are eradicated
- Continuity – Teams ensure long-term satisfaction for customers and other stakeholders
When taking third party incidents into account, heavy emphasis needs to be placed on the final step. Far more clients and customers could be impacted, which means greater resource costs.
Reason #4: Minimizing Consequences of Third Party Risks
Two direct consequences of cybercrime related to third party risks are losses of data and an inability to maintain uptime across online platforms and services. Both of these could result in financial losses for your organization and any third parties it works with. Sensitive data that is lost could mean direct theft of intellectual property or account details that could be used for fraud. Downtime results in lost business, along with costly troubleshooting and remediation.
If a vendor or contractor is dissatisfied with your handling of an incident, they could share those opinions with other potential strategic partners, limiting your talent pool for years to come. But the flip side is also true: TPRM that helps your partners minimize the impact on their operations from an incident involving both of you could strengthen your relationship and broader reputation.
Managing Regulatory Compliance Alongside Third Parties
One of the biggest impacts cyberattacks can have is on regulatory compliance. If you or your third parties work in a regulated industry or collect personal information from individuals in protected locations, there’s a good chance all business partners need to be compliant. For example, the Health Insurance Portability and Accountability Act (HIPAA) explicitly applies to covered entities and their business associates, who need to ensure compliance via contract.
A critical part of overall risk management is accounting for regulatory requirements and preventing non-compliance penalties. You should ensure that all in-scope assets meet applicable rules and that all stakeholders are prepared for regular certification audits.
Compliance-focused TPRM helps you and your partners continue to operate seamlessly within your respective verticals—and prepares you for growth within and across them in the future.
Reason #5: Nurturing a Culture of Awareness and Vigilance
Finally, TPRM is essential to awareness and training programs for staff, contractors, and all other individuals who come into contact with sensitive systems, regardless of their employer.
Keeping staff, contractors, and other stakeholders aware of their responsibilities with respect to security requires understanding the exact ways in which they interface with your systems. With the accurate scoping TPRM provides, you’ll know which devices, programs, and networks each segment of the extended workforce comes into contact with daily. Those insights can empower specific, team-driven training modules that prioritize applicable and relevant information.
For example, you may develop real-time tabletop exercises specifically for third party workers that work from privately owned devices. Continued use of shared, sensitive networks from those devices would require proof that they’re aware of—and ready to act on—their responsibilities.
Identify and Mitigate Third Party Risks Today
To return to the question above: why is vendor risk management important? Ultimately, any organization that works extensively with vendors, contractors, and other strategic partners is likely to have relatively little insight into or control over their security protocols. And underlying all of this is the very real threat of financial, reputational, and other harm to all parties involved.
RSI Security is committed to helping organizations like yours identify and mitigate third party risks. We believe discipline now will unlock greater future freedom for you and your partners.
Given the importance of vendor risk management, don’t wait—contact RSI Security today.