Data breaches cost enterprises billions of dollars every year, and it is estimated that most businesses significantly undervalue the financial risk related to cybersecurity. In today's digital landscape, many organizations are heavily reliant on third-party vendors to complete assigned tasks. Organizations have become aware of the importance of monitoring their internal cyber security posture, but the security posture of vendors is often overlooked. Unfortunately, human error is still the leading cause of cyber security breaches, and this risk is compounded when dealing with external vendors – both their staff and yours can be targeted.
Third-party vendors are bound by a contract to provide products or services on behalf of your organization. In order to complete these tasks, third-party vendors typically have access to sensitive data (e.g., employee details, customer or company information). If data access is not evaluated and managed properly, your organization could be exposed to serious cyber threats.
A vendor cyber security assessment is where you assess the security posture of a prospective vendor prior to signing the contract. This assessment helps your organization understand the level of risk associated with using a new vendor's product/service and will help you determine if vendors can meet the required standards and procedures once they are under contract. It is also essential to understand that when a third-party vendor experiences a data breach, the responsibility to bear related costs and reputational damage will fall onto your organization, not the vendor. Therefore, organizations should review their vendor security profiles on an ongoing basis as part of their IT strategy.
Best practices for vendor cyber risk management:
- Establish a vendor risk management framework
Frameworks like NIST (National Institute of Standards and Technology) and ISO (International Organization for Standardization) are often used by companies when building their IT strategy. If both you and your third-party vendor use these standards, it will help to streamline standards across both organizations.
Vendors should be rated based on their level of risk – low risk, medium risk, residual risk and high risk or critical vendors. More resources need to be allocated to high risk or critical vendors.
- Conduct a cyber security risk assessment
This assessment will help you identify and assess the risks that third party vendors bring to your organization, allowing organizations to allocate appropriate funding and resources to mitigate these new risks.
- Regularly identify, monitor and manage risk
Cyber threats are constantly evolving, and new risks are likely to pop up, so due diligence must be continuously and consistently performed. Real time visibility into the cyber health of third-party vendors will ensure that you have relevant and accurate data at all times.
- Key areas to monitor when it comes to vendor cyber security assessment:
- Information management (both for suppliers and vendors)
- Corporate and social responsibility compliance
- Local regulatory compliance (e.g. Bermuda Monetary Authority, Cayman Monetary Authority)
- IT vendor risk
- Anti-money laundering compliance (AML)
- Anti-bribery / anti-corruption compliance
- Contract risk management
- Training requirements for staff
Our qualified cyber security consultants can help activate, maintain and oversee security policies, carry out auditory and compliance liaison, establish IT controls and procedures and help guide your business’ Cyber Security Interface. Speak to our team of engineers today.