What is a third party?
A third party is any person or business that provides goods and services to another entity. Third parties include law firms, accounting firms, marketing companies, consultants, software development teams, maintenance services, IT vendors, cleaning services, and thousands of other business relationships that help modern enterprises operate efficiently.
What is third-party cyber risk?
Third-party risk is the risk posed by vendors within an organization’s supply chain. While third-party risk may take a variety of forms, cyber threats are thought to be the most significant third-party risk for organizations that provide vendors with access to their data or IT environment.
Third-party cyber risk is the level of potential cybersecurity threats an organization faces from the vendors and partners within its supply chain. While there is risk associated with every vendor relationship, cyber risk is generally higher because organizations must trust each vendor’s own cybersecurity measures. Third-party cyber risk includes the potential for data breaches and attacks to an organization’s network due to vulnerabilities within a vendor’s IT environment. For many organizations, these attacks can cause financial losses, damaged reputation, and significant legal or regulatory consequences.
Because vendors, partners, and suppliers often have access to an organization’s IT environment, it’s essential to manage third-party risk to ensure that an organization’s cyber security defenses cannot breached by a threat piggybacking on legitimate communication with vendors.
What's the best way to reduce third-party cyber risk?
Three out of five data breaches originate with a vendor. As companies increasingly rely on outsourcing and cloud-based technology, third-party cyber risk is a growing concern for risk managers today. As supply chains grow and become more interconnected, that number is expected to rise.
In the past, organizations have used yearly, manual self-assessments completed by vendors to understand and mitigate third-party cyber risk. However, this approach is no longer flexible or scalable enough to manage rapidly growing vendor networks. And these periodic assessments can’t provide data that risk managers need most – real-time insight into cyber liability and risk.
As the volume and severity of threats continues to escalate, many organizations are adopting continuous monitoring technologies that deliver daily visibility into the security performance of each third-party vendor. Continuous monitoring solutions allow security teams to act swiftly to mitigate risk when a vendor’s security posture changes.
Bitsight for Third-Party Risk Management gives security teams what they need most to mitigate third-party cyber risk, including automated tools and continuous monitoring capabilities.
How continuous monitoring helps reduce risk
Internal continuous monitoring has been an invaluable tool for security operations centers as they combat attacks and manage vulnerabilities. By helping to quickly identify threats, continuous monitoring tools enable security teams to take swift action within their organization.
However, adoption of continuous monitoring for third-party risk management has been slower. In part, this is because organizations have lacked the visibility into vendors’ security measures and controls. To manage third-party risk and supply chain security, risk managers have had to rely on security assessments performed by vendors themselves, often conducted only once each year.
While self-assessments provide some help, they are conducted so infrequently that they can’t provide continuous or real-time insight into a vendor’s security posture or adherence to cyber risk best practices. Additionally, self-assessments are inevitably subjective and must be verified with objective context – a costly and time-consuming prospect.
A program for continuous monitoring can deliver clear insight into third-party risk and cyber security issues. To implement continuous monitoring, risk managers need daily updates that deliver objective, verifiable information about a vendor’s security posture. That’s where Bitsight Security Ratings can help.
Managing every type of third-party risk
While data breaches originating in the supply chain are the most visible form of vendor-related threats,
third-party risk is actually a much broader concern. Your TPRM program must address risk in six
essential areas.
- Regulatory and compliance. A vendor’s failure to comply with regulations concerning cybersecurity, financial data, labor relations, or environmental law may cause your company to become noncompliant as well.
- Finances. The action of a third-party vendor can have a financial domino effect, particularly when a vendor’s failure leads to your inability to deliver results, sell products, or meet contractual obligations.
- Reputation. When a vendor’s business reputation takes a hit, your own company may experience blowback. A vendor’s labor unrest, legal violations, dissatisfied customers, or security incidents can all have a negative impact on your own reputation.
- Operations. When vendors are vital to maintaining smooth operations, any hiccup or breakdown in vendor performance can throw a wrench in your own business operations.
- Strategic concerns. When a supplier makes risky decisions that aren’t aligned with your own business strategy, there’s a risk that their actions may hinder your ability to achieve strategic objectives.
- Cybersecurity. While your own security program may be highly effective, it’s often hard to know how well your suppliers are maintaining a strong security posture. Attackers frequently penetrate well-protected organizations by targeting weak links in the supply chain.
The right third-party risk management and exposure management solution must help you identify,
monitor, and mitigate risk in each of these areas. At Bitsight, this is our wheelhouse.
