While vendors allow organizations to efficiently outsource tasks, they can also increase the risk of breaches. A recent study found more than 60% of US organizations have faced a data breach because of vendors. CISOs are responsible not just for the data that their own company collects, but the data their third-party vendors and supply chains collect as well.
Decisions made at these adjacent organizations are frequently outside of the CISO’s direct control, but they have the potential to harm his or her company’s business and reputation nonetheless. So, what are the specific risks third-party vendors present?
Siloed information without a single source of truth
When data and processes related to third-party relationships are spread across different files and systems, it creates a foggy picture for anyone trying to gain a full understanding of the company’s third-party risk posture. Not only is critical information squirreled away in different parts of the organization, but it’s also impossible to tell how decisions about one vendor in one data center affect those in another. What’s needed is a singular place that combines all data sources to tell the full story of the company’s risk posture.
CISOs should strive to create a central system whereby the company’s risk managers can monitor all assets, risks, and threats. This central repository acts as the single “source of truth” for all stakeholders in an organization.
Rather than keeping vendor information siloed in different parts of the organization, all relevant data is kept in a single, central place where it can be easily accessed. This approach cuts down on difficulties around lack of clarity and verifiability — significant hardships when centralization is lacking.
Inefficient operations and scoring
We may be in an era of digital transformation, but inefficient, manual operations still haunt organizations with weak processes. CISOs and risk managers are particularly susceptible to falling behind when risk mitigation tracking processes are manual and labor-intensive. In these cases, managers are forced to keep a risk register updated through spreadsheets, while notifications and signoffs only happen through email. They spend the bulk of their time overseeing a glacial, manual system—time that could be better spent on analysis and prevention.
Of course, manual solutions are only tenable (for a time anyway) at small and mid-size companies. When a company reaches a certain size, manual processes become risks themselves as managers are overburdened with the responsibility of risk tracking and remediation activities.
Technology with robotic process automation can make things easier for those manning the helm of third-party risk management by cutting down on potential human errors. Organizations should use tools that can automate data collection, retention, and analysis to help scale a third-party risk program. A truly scalable system will be adaptable as the organization adds new vendors or suppliers.
Currently, standard assessments utilize spreadsheets and email to track and monitor third-party vendor risk. Static spreadsheets leave the organization frustrated with ample data that can’t be analyzed or used to inform policy and procedure. Meanwhile the third party gets annoyed by answering hundreds of forms from various organizations.
When organizations move to a global risk exchange and dynamic assessments, they save time, lower costs, reduce the burden on third parties, and allow the organization to truly manage risk.
Utilizing technology to perform third-party risk assessments allows the organization to closely monitor third-party risk without being a burden on the vendor.
No plan to address risks
Without a plan to address risks, organizations aren’t completely protecting themselves. After addressing risks, organizations should put programs in place to measure and monitor risks on an ongoing basis, evaluating ROI for each relationship, incident tracking and performance. With this information, companies can use the data to predict potential areas of risk more accurately.
Though vendors can be a source of risk for an organization, they’re also an efficient way to outsource tasks. With proper precautionary measures, vendor risk can be accurately monitored and mitigated before any issue arises. By addressing hidden dangers of third-party vendors, they’ll be productive assets to an organization.