Learn to retarget your efforts and master program efficiency in three main areas of your third-party risk management system.
C-suite executives and business leaders are used to protecting their organization from business risks such as financial loss or competitive differentiation. But the risks posed to your organization through its supply chain – particularly cyber risk – can be just as threatening as more traditional threats.
Bringing on a new vendor might seem simple: You pick a vendor with the right capabilities and price and get the paperwork signed. But it’s rarely that simple – hence the importance of supply chain risk management.
What is supply chain risk management?
Supply chain risk management encompasses the process and steps your organization takes to mitigate risks throughout your supply chain.
But supply chain risk management is fraught with difficult decisions. Your business is bringing on vendors faster than ever before. Meanwhile, budgets across the board are shrinking, as are headcount numbers. That means that security and risk management teams are under immense pressure to onboard more vendors faster and with less cost – and manage risk throughout the vendor lifecycle.
But mitigating supply chain risk is possible if you update your organization’s processes and enact efficient solutions.
3 ways to make your supply chain risk management process more efficient
Let’s look at three ways to make your vendor lifecycle more efficient and less fraught with risk.
1. Make data-driven decisions during the procurement process
One of the most critical points in your relationship with a third-party is during the procurement process. You need an organized approach to initiating relationships and evaluating third parties so that your business works with only the best – and most secure – vendors.
As a starting point, implement a standard, consistent policy of what you expect from a third-party in terms of their cybersecurity program. Defining your risk appetite matters because it helps executives make informed and confident decisions about who you do business with and how and where security resources are allocated. It also drives more efficient risk management.
One way to establish the risk you're willing to take with your vendors in a consistent and uniform way is through a security rating. BitSight Security Ratings, which range from 250 to 900, provide an objective, external metric of a vendor’s cybersecurity posture. These ratings can be used to set an acceptable risk threshold that a third-party must achieve to be considered during the selection process. If a vendor falls below a set threshold, you can save time and effort by focusing instead on companies that have robust security controls in place.
2. Maximize efficiencies in your reassessment process
Once the contract is signed you need to make sure your vendors maintain their security standards. Typically, this involves periodic vendor risk assessments. But these only capture a snapshot of a vendor’s risk posture – they are also challenging to scale across the hundreds if not thousands of companies in your vendor portfolio.
A better way to keep tabs on your vendors’ security postures is to use BitSight’s supply chain risk management technology to continuously and automatically monitor their networks for emerging vulnerabilities or threats. With BitSight, you’ll get dashboard views into each vendor’s risk profile and receive alerts when their security ratings drop below pre-agreed risk thresholds.
BitSight also makes it easy to prioritize urgent third-party risk issues from non-urgent ones. For instance, you can tier your vendors into sub-categories based on their criticality to your business. Vendors in a higher tier will require more frequent and in-depth assessments. While vendors in a lower tier may need less scrutiny or less regular checks.
Tiering requires consultation with your legal, finance, and compliance teams, but you can fast-track the process using BitSight’s tier recommender service.
3. Successfully communicate risk
While implementing efficient processes is crucial to successfully onboarding and overseeing your third parties, the hard work can be lost if there is a disconnect with senior leadership, board members, business partners, and investors. This often occurs when stakeholders have different levels of understanding of cybersecurity, so finding simple and effective communication techniques that work for your leadership group is crucial.
Ditch technical terms and confusing security metrics and focus instead on how your organization’s supply chain risk management program supports business performance and goals. For example, presenting a slide to the board showing a vendor’s specific security rating, along with the malware type found in their IT environment might seem like a clear and concise description to a security leader. Still, it could fall beyond the understanding of the board. Senior leaders need more contextual information such as:
- How a vendor's security rating compares to industry averages.
- How your vendors, especially the most critical ones, align with your company’s risk threshold requirements.
- If a vendor’s rating dips, is this indicative of their historical performance (i.e. are their security controls historically weak?) and what caused their rating to dip?
Coming to a board meeting with this information will help empower you and your executive team to make informed decisions based on data you truly understand. Read more about how you can unite the boardroom to make effective cybersecurity decisions.
Find pathways to efficiency in supply chain risk management
As your organization works to manage supply chain risk, you must find efficiencies wherever you can. Combining the steps above with BitSight’s powerful tools can set you on the pathway to creating a fully mature program that is fully scalable while being faster and less costly.