Organisations are increasingly relying on third-party vendors and partners for various services and solutions. Whilst these relationships offer numerous benefits, they also introduce an expanded attack surface for cyber threats. This is where third-party risk management becomes indispensable in fortifying an organisation's cyber security posture.

What is Cyber security-centric Third-Party Risk Management?

Third-party risk management in the context of cyber security involves identifying, assessing, and mitigating cyber security risks that external entities pose to an organisation. This includes not just service providers but also suppliers, business partners, and even fourth-party vendors to whom your third-party vendors may subcontract.

Why is it important?

Third-party risk management is integral to a comprehensive cyber security strategy. Any vulnerability in a third-party system can become a vulnerability in your own system. Failure to manage these risks can lead to data breaches, financial losses, and irreversible damage to reputation.

The Cyber security Threats Posed by Third Parties

Recognising the gravity of the cyber security risks introduced by third-party affiliations is the first step in addressing them. Let's delve into these specific threats in more detail:

Data Breaches Through Third-Party Systems

Many third parties require access to an organisation’s network or databases. Should these third parties fall victim to a cyber-attack, the data they had access to is also compromised. Therefore, assessing their data protection measures is crucial.

Supply Chain Attacks

Third-party vendors often act as a bridge between multiple clients and even other vendors. Cyber attackers can exploit weak links in this interconnected chain, ultimately compromising the primary organisation's security.

Insider Threats from Third Parties

Third-party employees often have the credentials to access your systems. Malicious or negligent activities from such insiders can lead to data leaks, system failures, or other cyber incidents.

Exploitation of Software Vulnerabilities

If third parties develop software or manage systems for you, vulnerabilities in their codebase or architecture can become entry points for cyberattacks on your own systems.

Non-compliance to cyber security Standards

Your organisation may be subject to strict cyber security regulations. If a third party does not adhere to these regulations, you may face legal consequences, including hefty fines.

Best practices for cyber security-Focused Third-Party Risk Management

To address these issues, adopt the following cyber security-focused approaches:

Rigorous Cyber security Audits

Before onboarding, subject the third party to a stringent cyber security audit. This should cover data protection measures, incident response plans, and compliance with relevant cyber security standards.

Real-time Monitoring

Employ continuous monitoring tools to scrutinise third-party activities in real-time, quickly identifying and mitigating any suspicious activities that could signify a cyber security threat.

Define Cyber security Clauses in Contracts

Contracts with third parties should contain explicit clauses specifying cyber security requirements, immediate actions in case of a breach, and the rights to terminate the contract if the third party fails to meet cyber security standards.

Periodic Risk Assessments

The cyber security landscape is ever-changing. Conducting periodic risk assessments helps to ensure that third-party vendors continue to meet your cyber security requirements.

Third-party risk management is essential for maintaining robust cyber security. Being aware of the potential cyber risks and implementing stringent third-party risk management practices can save an organisation from detrimental cyber incidents, financial repercussions, and loss of trust among stakeholders.

If you are worried about cyber threats or need help in improving your organisation’s visibility please  get in touch to find out how you can protect your organisation. 

FAQs

How to effectively conduct cybersecurity audits of third-party vendors?

To effectively conduct cyber security audits of third-party vendors, organisations should start by defining clear audit objectives and scope based on the criticality of the services provided by the vendor. This process involves reviewing the vendor's security policies, procedures, incident response plans, and compliance with relevant regulations and standards. Employing a combination of questionnaires, interviews with key vendor personnel, and, if possible, on-site visits can provide a comprehensive understanding of the vendor's cyber security posture. Tools and software that automate the collection and analysis of security data from vendors can also enhance the audit process, making it more efficient and thorough.

What specific cybersecurity clauses should be included in contracts with third-party vendors?

Incorporating specific cyber security clauses into contracts with third-party vendors is essential to ensure these vendors adhere to high security standards. These clauses should clearly define the security requirements, including the adherence to specific standards (e.g., ISO 27001, NIST frameworks) and regulations (e.g., GDPR, HIPAA). They should also outline the responsibilities of the vendor in the event of a data breach, including notification procedures and liability for damages. Regular security assessments and the right to audit clauses can also be included to enable ongoing oversight of the vendor's cyber security practices.

How to manage third-party risks in cloud services specifically?

Managing third-party risks in cloud services requires a nuanced approach, as the shared responsibility model of cloud computing changes the risk landscape. Organisations should conduct thorough due diligence on cloud service providers, evaluating their security certifications (e.g., SOC 2 Type II, ISO 27017) and compliance with industry standards. It's also vital to understand the division of security responsibilities between the provider and the customer to ensure no gaps in coverage. Implementing strong access controls, encrypting data in transit and at rest, and ensuring that data residency and sovereignty requirements are met are crucial steps. Regularly reviewing and updating cloud service agreements and conducting periodic security assessments can help manage risks associated with cloud services effectively.