The issue of cybersecurity vulnerabilities and third-party vendors comes to light, once again, in a new report from the New York State Department of Financial Services (NYDFS).
According to the NYDFS report, nearly a third of 40 banks surveyed don’t require their third-party vendors to notify them in the event of an information security breach or other cyber security breach. Other findings include the following:
Third-party risk is hardly a brand new issue. Regulators have issued guidance for years requiring that banks assess and manage the risk of doing business with third parties – particularly with IT vendors. And the financial services sector is not the only industry where companies are being urged to review their third party management oversight.
The specter of hackers infiltrating major brands via some “low-risk,” low-spend, non-IT third party, as well as increased regulations and regulatory enforcement, has elevated the topic of third-party risk to the boardrooms of all corporations.
Without companywide processes and procedures to ensure that all third parties are systematically screened to verify whether or not they will have access to a company’s networks, IT systems or data, third parties can put an organization at risk of reputational impact, regulatory exposure and revenue loss. Kaspersky Lab’s “IT Security Risks Survey 2014” estimates that the average economic impact of a single data security incident was $720,000 in damages, and “one successful targeted attack could cost a company as much as $2.54 million.”
But information security pros should take solace. This problem does not fall solely on your shoulders; it is a much broader issue than IT and infosec alone. For starters, here are five questions that should be asked by colleagues across the organization:
Unless you know that a third party is being given access to your company’s data or needs to get behind your firewall, it’s almost impossible to manage the risk appropriately. It would also be helpful to understand the business rationale for giving them this level of access.
Here are four ways to identify and mitigate potential IT risks across your disparate third parties:
Risk #1: Know Who Are Your Third Parties: While it’s easy to outsource work to third parties, it’s not so easy to know who you’re actually doing business with and who is delivering the goods or services. Companies often default to completing due diligence and managing a limited number of “high-risk” or high spend third parties – or assuming that only traditional “IT vendors” pose an IT risk. Review whether your policies and technology allow you to identify, assess and manage all of your third parties for IT risk (as well as other risks of course).
Risk #2: Know Their Business: It is not enough to hire third parties to help your company. You also have to know what business they are doing on your behalf. Ask yourself this question: If today you had to pull a list of which of your vendors or business partners have access to employee or customer personally identifiable information (PII), or to your IT systems, how long would it take? If you had to contact those companies for additional information, do you have accurate contact details?
Did you know that the majority of companies lack accurate (or any) contact information for the majority (north of 75 percent) of their third parties? This means that you may have incomplete, inaccurate or outdated information about the work that your vendors and third parties are doing and where and why they are doing it. Not knowing this information increases the chances of exposing your enterprise to risks and breaches.
Risk #3: Know Their Risk: Less than half of companies regularly conduct due diligence on their third parties. While all third parties pose some level of risk, the risk and the level of seriousness differs depending on the role of the third party. For example, third parties that deal with payroll or taxes usually pose a higher risk of security to your company’s data than the cleaning crew that comes in at night. Managing your third parties based on the risks that they pose requires knowing the risks in the first place and then having policies and procedures to control those risks throughout the life the contract.
Risk #4: Know Their Access: Not knowing that a third party had access to system passwords is not a valid excuse when your client’s records are stolen. Understanding what each party has access to – and why – will ensure that you have control over their access and can limit or deny access to sensitive information as appropriate.
Third-party risk management is critical. A company’s revenues today depend on hundreds, thousands or hundreds of thousands of third parties – vendors, suppliers, contract manufacturers, brokers, distributors, resellers, channel partners and others. The majority of hackers, like most thieves, don’t try to infiltrate the highly protected areas of your company. Instead they’re stealing credentials from unprotected “low risk” third parties, such as the HVAC vendor at Target. Is your company keeping pace to avoid situations that can damage your reputation and bottom line?Greg has an exceptional track record of driving innovation and revenue within the software and technology space. Under Greg's leadership, Hiperos continues to establish itself as one of the premier solutions for 3rd party management. Prior to Hiperos, Greg was CEO at Venafi, ... View Full Bio