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SaaS Vendor Risk Assessment in 3 Steps

SaaS applications are the new supply chain and, practically speaking, SaaS is the modern vendor. Here are three straightforward steps to manage this new vendor risk.

November 13, 2023

5 Min Read

By Galit Lubetzky Sharon, Co-Founder & CEO, Wing Security


Software-as-a-Service (SaaS) is increasingly shaping the operational landscape of modern businesses. From business-critical human resources (HR) and financial platforms to artificial intelligence (AI) tools and customer relationship management (CRM) systems, SaaS applications are the backbone of contemporary business operations. This transition from in-house legacy systems to external solutions allows organizations to strategically allocate resources and unlock efficiency and agility.

However, SaaS applications introduce myriad vulnerabilities and open doors into sensitive company data. These can easily be exploited by malicious actors, underscoring the critical need for security and IT teams to maintain effective SaaS vendor risk management practices. As businesses entrust more of their critical functions to external SaaS vendors, security and IT teams are charged with securing their organizations against the growing wave of SaaS-related security threats.

Managing SaaS vendors is essential for organizations to secure their supply chain and protect against potential third-party threats. Security and IT teams are exploring modern ways to scrutinize their SaaS applications and third-party vendors. This is where vendor risk assessments are highly beneficial.

What Is Vendor Risk Assessment?

Vendor risk assessment involves evaluating and analyzing potential risks associated with third-party vendors and service providers. It aims to identify and understand various risks, including cybersecurity vulnerabilities, compliance gaps, operational challenges, and reputational concerns, that third-party services may introduce. It is not much different from onboarding a new employee: Just as you don't hire new employees without background checks and screening processes, you should not onboard SaaS applications without, at minimum, a basic risk assessment.

By enforcing vendor risk assessment, organizations can proactively mitigate many security risks and protect the integrity of their SaaS application supply chain. Given that many organizations use hundreds or thousands of applications, the best approach is to automatically give the majority of applications a basic assessment and do deeper investigations for business-critical applications that directly impact the business, such as the company CRM or HR platform.

The following tips can help organizations seeking to do essential risk assessment on their SaaS vendors. All can be automated with SaaS security posture management (SSPM).

1. Gain Visibility Into Your Organization's SaaS Usage

The rise of SaaS has created a shadow IT problem. As employees encounter specific business needs, they often independently source SaaS solutions without involving the IT department. This leads to adoption of unsanctioned and unauthorized applications that may not align with the organization's security protocols.

The decentralized nature of SaaS diminishes centralized oversight and control, making it difficult for IT and security teams to monitor and manage the diverse range of applications employees use. The absence of comprehensive visibility into the spectrum of SaaS applications being used can create compliance gaps and data governance issues, thereby exposing the business to regulatory risks and potential legal implications. IT teams can address this modern shadow IT problem with an SSPM tool. SSPM non-intrusively and automatically discovers all SaaS applications connected to the organization, uncovering SaaS shadow IT within minutes.

2. Assess the Security Risks Associated With Each SaaS Application

After gaining a comprehensive understanding of the SaaS landscape, security teams should evaluate each application's security risk level by:

  • Examining the vendor's adherence to security and privacy protocols.

  • Analyzing the vendor's size and geographical location.

  • Distinguishing between private and public companies and assessing the transparency of their security status.

This type of comprehensive analysis helps preserve SaaS security and plays a significant role in an enterprise's vendor risk-assessment procedures. Given that SaaS functions as a third-party vendor and a critical part of an organization's supply chain, SaaS vendor evaluation is an integral component of overall vendor risk management. Organizations must remain vigilant in addressing third-party risks, regardless of their scale, to maintain a secure and resilient business environment. Because SaaS usage is vast and dynamic, it underscores the strategy to do an automatic, basic assessment on most applications and investigate business-critical ones more thoroughly.

3. Manage User Permissions Effectively

Security breaches often occur due to granting excessive privileges and permissions to users or by users to specific applications. To mitigate this risk, adhere to industry best practices, including:

  • Implementing the least-privilege principle: Grant users only the permissions required to carry out their designated tasks. Avoid allocating broad, overarching permissions that may result in data exposure or unauthorized actions to maintain a robust security framework.

  • Conducting regular permission reviews: Establish a systematic process for periodically reviewing and updating user permissions and roles, particularly for core business applications. Given that employees' roles and responsibilities may evolve, it's imperative to adjust permissions accordingly to support data security and adherence to organizational protocols.

  • Prioritizing administrative roles: Assessing employee roles and privileges across multiple applications can be daunting and time-consuming. By focusing on evaluating various administrative roles and automating approval of low-permission roles, you can significantly streamline the process, enhancing efficiency and resource optimization.

By adopting a proactive approach to vendor risk management and implementing comprehensive strategies for overseeing SaaS usage, organizations can fortify their digital infrastructure, optimize operational efficiency, and maintain a secure and resilient business environment. Modern SSPM solutions can provide all the above in an automated, continuous way at minimal cost.

About the Author

A retired colonel from the elite 8200 Unit, Galit has vast, hands-on experience designing, developing, and deploying some of the Israeli Defense Forces' most vital defensive and offensive cyber platforms as well as leading large and strategic operations. She was an integral part of developing the IDF's first cyber capabilities and continued improving and enhancing these capabilities throughout her career. She is the recipient of numerous accolades including the prestigious Israeli Defense Award.

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