Cybersecurity Risks and Vulnerabilities with Third-Party Vendors 

By Chris Clements, Vice President of Solutions Architecture

As organizations, we need to prioritize third-party risk programs and take proactive ownership to protecting our organization and data. Can we load our own monitoring and security tools onto a vendor’s system? Are there usage logs that we can pull and review for unusual or overtly malicious behaviors? The Microsoft breach last year wasn’t caught by Microsoft. It was caught by a customer who was watching their usage logs and noticed something unusual. The lesson to be learned from these examples is that taking proactive steps in third-party risk management is a priority in modern business models. 

Understand Your Third-Party Vendor Portfolio 

The first step to managing risk is to understand how third-party vendors interact with your data.  

Impacts Sensitive Data: Sharing intellectual property, business details, customer records, employee data, health information, or other sensitive data with a third-party vendor poses a risk of unauthorized access by adversaries. This could result in data breaches, regulatory penalties, and harm to an organization’s reputation. 

Affects Compliance: Just as industries adhere to regulations and standards like HIPAA for healthcare or PCI DSS for payment processing, countries also have their own, such as the Brazilian Internet Act of 2014 and the European Union’s GDPR. If a third-party vendor fails to comply with these regulations, it exposes the organization to potential fines and penalties.

Affects Business Continuity: If an organization relies on a third-party vendor for a critical part of its operations, the organization may be without support in the instance of a cyber attack targeting the vendor. Depending on the severity, it may inhibit the organization’s ability to function. 

Impacts IT Infrastructure: If threat actors breach the network of a third-party service provider or exploit third-party software running on the organization’s IT or OT systems, they could infiltrate multiple client networks, leading to a cascade of breaches, data loss, and disruptions to operations.  

Impacts Software Supply Chain: If third-party software used in the organization’s product contains vulnerabilities or is compromised due to a developer’s lax security practices, it may result in product failure, leading to significant financial and reputational damage. 

Overcome Challenges in Third-Party Security Management 

To mitigate these risks, organizations should be proactive in managing their third-party vendors including:  

• Conducting thorough background checks.
  • Perform comprehensive investigations into the company’s history to unveil any previous security breaches, legal troubles, or unethical actions that could signal concerns.
  • Conduct in-depth examinations of essential executives and cybersecurity personnel, which involves scrutinizing criminal backgrounds, work experience, and validating qualifications.
  • Background screenings can expose crucial details such as turnover rates among cybersecurity staff, breaches of regulations, legal disputes, and financial difficulties that indicate substantial cyber threats.
  • Background screenings can expose crucial details such as turnover rates among cybersecurity staff, breaches of regulations, legal disputes, and financial difficulties that indicate substantial cyber threats.
  • Background screenings can expose crucial details such as turnover rates among cybersecurity staff, breaches of regulations, legal disputes, and financial difficulties that indicate substantial cyber threats.
  • Background screenings can expose crucial details such as turnover rates among cybersecurity staff, breaches of regulations, legal disputes, and financial difficulties that indicate substantial cyber threats.
  • Background screenings can expose crucial details such as turnover rates among cybersecurity staff, breaches of regulations, legal disputes, and financial difficulties that indicate substantial cyber threats.
• Reviewing vendor security protocols and monitoring their activities for any suspicious behavior. 
  • Gather information about any past cybersecurity incidents they have encountered.
  • Delve deeper into the provider’s cybersecurity preparedness using questionnaires. These should cover their cyber maturity, including details on controls, the presence of a Chief Information Security Officer (CISO), and an established escalation protocol. 
  • Standardizing your information collection process is essential for accurately assessing the external security posture of vendors. This process should align with industry standards, security policies, and established practices.
• Establishing clear contracts that outline the vendor’s responsibilities for data protection and cybersecurity and include any systems they use that will interact with your company’s digital infrastructure.
  • Document comprehensively: from the types of sensitive information accessible to vendors, to the security measures they must uphold, compliance obligations, frequency of security audits, and more.Define clear security requirements in service-level agreements, fostering open communication, and finding compromises.
  • Ensure penalties for non-compliance are commensurate with the impact on your organization.
• Understanding vendor security practices and vulnerabilities is tricky, and when security incidents occur with third parties quick and effective communication is key. Self-assessments are often biased, and the sheer number of vendors adds complexity. Establishing clear response protocols beforehand ensures seamless coordination between all parties involved.
  • Develop an internal policy that defines each party’s responsibilities and standard procedures for various scenarios in the instance of an incident.
  • Implement a vendor management policy (VMP) tailored to mitigate third-party risks within your IT infrastructure.
• Request the vendor to show evidence of compliance with existing standards and frameworks like ISO, NIST, or others relevant to their industry. 
• Additionally, for added security, conduct penetration tests on the potential vendor. If this isn’t possible, consider alternatives such as implementing a supply chain vulnerability monitoring process.

A robust third-party risk management program requires established procedures and guidelines for vendor onboarding, data collection, answer review, and remediation requests. These strategies bolster your organization’s cybersecurity posture and readiness against evolving threats, and they safeguard your assets. 

In today’s climate of cybersecurity challenges, it’s crucial for organizations to keep tabs on the risks posed by third-party vulnerabilities. Failing to manage these risks can have serious consequences, ranging from data breaches and regulatory fines to disruptions in operations and harm to organizational reputation. To protect against these dangers, organizations must take a comprehensive approach to third-party risk management. 

The road to resilience involves integrating these strategies seamlessly into the daily operations of your organization. By prioritizing third-party risk management, businesses can strengthen their defenses, uphold compliance requirements, and ultimately protect their critical assets in today’s interconnected digital world.