Developing A Cyber Risk Management Framework For Vendors
Third-party vendors are an essential part of business today. Offering products and services that help to make organizations more competitive, many vendors have become integral to the operations of businesses large and small. In fact, a recent study finds that 60% of organizations work with more than 1,000 third-party vendors – and that number is only expected to get larger.
While third parties deliver great value, they also represent significant risk. Vendors, partners, and contractors typically have significant access to an organization’s systems and sensitive data. As cyber security threats continue to evolve, this interconnectedness creates cyber security and risk management challenges for any organization using third-party vendors.
A robust cyber risk management framework for vendors is the key to superior third-party cyber risk management. When developing a cyber security risk management process and framework, many organizations today rely on technology from Bitsight to better manage their growing third party ecosystem.
What Is A Vendor Cyber Risk Management Framework?
A cyber risk management framework for vendors outlines the processes and procedures that an organization should follow to mitigate third-party risk. A well-developed vendor cyber risk management framework provides a foundation that integrates cyber security risk management into the entire vendor lifecycle. With a framework guiding all decisions around vendor selection, onboarding, and assessment, you can gain insight into areas of highest risk and make more informed decisions to mitigate it.
Essential tasks in a vendor cyber risk management framework should include:
- Setting policies for procurement. When evaluating a large pool of vendors, a standard set of requirements will help to ensure that the vendors you select meet your security requirements. A security ratings service can be an invaluable first line of defense here, providing a consistent requirement that lets your team minimize time spent analyzing vendors that don’t meet your security standards.
- Communicating policies across business units. Ensuring that policies are clearly understood by leaders and managers of each area of the business can help to streamline vendor selection and assessment. For example, setting a minimum security rating for all vendors can help align departments and allow business units to prescreen their list of potential vendors prior to performing an in-depth assessment and requesting time from other departments.
- Establishing policies for assessment. Implementing the right policies during the assessment phases of your third-party risk management program can help to streamline efforts as you scale your program to accommodate a larger number of vendors. For example, a policy that requires a reassessment when any adverse cyber event occurs within a specific vendor tier can help to improve risk management and provide transparency about expectations for everyone involved in a vendor relationship.
- Establishing tiers of risk. To run a more efficient vendor risk management program, your cyber risk management framework may establish tiers of vendors based on the risk they represent to your organization. Vendors who work closely with secure data and processes may belong to a higher or more critical tier, while vendors representing less risk fall to a lower tier. Vendors in higher tiers can be monitored more closely and their assessments may require more detail.
- Continuously monitoring security status. Rather than conducting an annual assessment of a vendor’s security posture, you can continuously monitor the security performance of vendors to receive immediate notification when their security posture changes or dangerous activity occurs. This allows you to combat risks as soon as they arise, but also save time and resources on vendors that don’t really need assessing.
- Communicating third-party risk to stakeholders. Your vendor cyber risk management framework and the data it produces must be successfully communicated to your executive leadership and board to demonstrate success and justify budgets. Your framework must provide a common set of metrics and essential context so that that individuals without security expertise will have a sense of the risks confronting the organization and the controls and programs in place to mitigate it.
