Third-Party Vendors Impact Information Security
Third parties and vendors are a necessary part of most business operations. They can help you scale your business, improve efficiency, and provide services that your organization doesn’t have the resources to do in-house. However, they can also introduce risk to your information security. The type of risk will vary depending on the type of vendor and the amount of access they have to your systems and data assets. Effective third-party and vendor management is essential to minimizing the risks of working with these external entities.
A third party is any entity outside of your organization that supplies goods or services to your company. This can include suppliers, contractors, service providers, consultants, and any other outside organization or individual that you contract with to help meet your business objectives. Cleaning and office service companies, as well as marketing and advertising agencies, are examples of third parties that often have varying levels of access to your information security and systems. This access can range from being able to move through your physical space, as in the case of cleaning and office services, to having a dedicated log-in to your corporate files, as is typically the case with marketing and advertising agencies.
Every third party that has access to your systems and data assets introduces an additional point of vulnerability for cyber attacks. They are a desirable target for malicious actors because they can steal or manipulate data, gain unauthorized access to systems, and use the third party as a platform to launch attacks against higher-value targets. These attacks can expose your organization to financial, operational, and reputational risks.
How Do Third-Party Vendors Impact Information Security?
Operational risks can occur if a critical supplier fails to deliver products or services that you depend on for revenue and customer satisfaction. This can impact your ability to fulfill commitments to customers and may damage your brand reputation. Financial risks can arise from a third party’s financial instability, such as bankruptcy or insolvency, which can threaten your ability to make payments or secure contracts. Reputational risks can result from a third party’s poor business practices or a data breach that affects your business or customers.
It is important to vet potential third-party relationships prior to onboarding. This includes assessing a vendor’s security posture, including their history of incidents and compliance with regulations, through evaluations and audits. It is also crucial to develop comprehensive contracts with third parties that clearly state the responsibilities, liabilities, and indemnification arrangements. It is also helpful to establish ongoing monitoring of your critical vendors and their third-party relationships to identify and prioritize any unacceptable risks.
Finally, it’s important to consider the fourth parties that work with your critical vendors. If a fourth party is affected by a cyber attack, supply chain disruption, or other issue, it can affect your entire supply chain and potentially your organization. Identifying these connections can be difficult, but it is essential to protect your business. This can be accomplished by conducting background and OFAC checks, reviewing articles of incorporation/business licenses, performing Secretary of State checks, and leveraging threat intelligence solutions to detect anomalous behavior.