The key to effective management of vendors is to understand the risk that each vendor poses, and to manage that risk over the long term. This means assessing risk, establishing controls, and monitoring the effectiveness of the controls periodically for the life of the relationship.
Regulations require organizations to monitor the state of the relationship and take responsibility for the practices of the partner. These relationships require assessment, legal agreements, and regular communication. At the heart of this practice is the idea that organizations need to view a breach at a partner as just as dangerous as a compromise in their own enterprises.
The first step in effectively managing partners is to understand what data is shared with a partner and to determine the inherent risk. The inherent risk is the worst-case scenario in which the data is compromised. This means imagining the compromise without factoring in the likelihood of it occurring. Understanding inherent risk allows an organization to understand the criticality of the vendor and determine to what degree it should invest in analyzing its security practices and protecting the data.
Once you understand the data shared, you should ask yourself whether all the data needs to be shared. Sometimes this analysis and some creative thinking can eliminate sensitive data fields and substantially reduce the risk of compromise. However, it could be that critical information needs to be shared. If so, you’ll need to ensure that the organization is going to protect the data in a compliant manner.
If the data is extremely sensitive (e.g., includes Social Security numbers, protected health information, or payment card data), you will need to find a cost-effective method for analyzing the vendor’s security and compliance controls. The options are to conduct your own assessment, contract someone to conduct an assessment, or trust someone else’s assessment.
In a future post, I’ll describe ways to assess whether the vendor is capable of meeting your requirements and the pros and cons of various assessment methods. The important point to remember is that you need to be confident that the vendor’s business model, technical controls, and legal commitments will allow you to comply the particular regulation or regulations that require you to protect the data.
Richard Mackey is vice president of consulting at SystemExperts Corp.