When you onboard a third-party service, you introduce risk into your organization. This process is complicated because traditional risk identification and due diligence practices often fail to recognize new risks associated with external vendor tooling. According to Gartner research, this is not an outlier — integrating third-party tools is frequently the weakest link in an organization’s cybersecurity chain. In fact, over 80% of legal and compliance leaders acknowledge that existing risk management policies do not proactively capture these risks. A significant portion of cyberattacks involves data transmission and processing within third-party cloud systems, underscoring the severity of the issue.
The Extent of the Problem
Statistics illustrate the breadth of the problem:
- Third-party software vendors account for 23% of all cybersecurity incidents.
- It takes an average of nine months to identify and contain a breach incident. This delay is partly due to limited visibility and control over third-party IT services running in external networks.
Why Traditional Risk Management Falls Short
From the perspectives of CIOs and CISOs, these trends reveal critical insights:
- Ineffective Traditional Due Diligence: Traditional methods may protect certain areas but fail to capture the risks introduced by third-party technologies. This is partly due to cloud vendors offering limited visibility and controls, making thorough risk assessments difficult.
- Limited Vendor Controls: Cloud vendors’ limited visibility and control offerings hinder thorough risk assessment. Encouraging vendors to provide more granular visibility and control into their technology processes is crucial.
- Need for Continuous Risk Assessment: Ongoing risk assessment is necessary to identify new threat vectors and exposures to third-party services. Additional risk mitigation measures are essential to counteract prevalent threats.
It’s important to note that evolving security risks are a natural consequence of several factors from the third parties’ perspectives:
- Diverse Third-Party Networks: The third-party tooling network is highly diverse and variable.
- Reliance on External Partners: Vendors rely on external partners, tools, and services.
- Access to Sensitive Data: External tools often access large volumes of sensitive information.
The Static Nature of Due Diligence
Many organizations perform sufficient due diligence before establishing third-party vendor relationships. However, this effort often doesn’t continue throughout the partnership. The dynamic nature of third-party services, combined with the ever-evolving cybersecurity landscape, significantly impacts an organization’s risk posture.
Towards Agile Third-Party Risk Management
The static nature of traditional due diligence doesn’t support the fast-moving world of third-party technologies. To mitigate risks effectively, organizations must adopt agile practices that emphasize continuous improvements. Here’s how:
1. Revamp Third-Party Onboarding
Transform the onboarding process to focus on the most persistent and critical risks. This includes:
- Technology Choices: Consider in-house database servers versus cloud-based data lakes.
- External Factors: Industry verticals and market conditions play a role.
2. Set Up Internal Triggers
Enable internal triggers that dynamically allocate monitoring resources to critical risk vectors. This approach ensures holistic network monitoring, reducing false positives and maintaining a comprehensive view of the network.
3. Incentivize Control
Manage high-risk sources like third-party integrations by:
- Creating Shared Responsibility: Foster a sense of urgency and shared responsibility.
- Providing Necessary Resources: Audit logs, data transfers, and overall security metrics.
- Improving Vendor Relationships: Share insights on capturing risk and complying with industry-specific regulations.
4. Automate and Dismantle Silos
Automate processes and remove silos by:
- Streamlining Data Aggregation: Use scalable centralized data lake systems for real-time monitoring.
- Automating Controls: Implement automated controls based on risk magnitude, informed by both business and technology metrics.
Leveraging Risk Management Frameworks
Risk monitoring is a fundamental component of third-party risk management. Your strategy should incorporate guidelines from existing frameworks that focus on:
- Risk Assessment & Mitigation
- Monitoring
- Governance
The actionable steps of your risk management framework should aim to maximize visibility into all external vendor partnerships. This formal and standardized approach aligns with existing frameworks and enhances your cybersecurity posture.
Conclusion
Adopting an agile approach to third-party risk management not only mitigates risks associated with external vendors but also enhances customer trust and revenue opportunities. By continuously improving your risk management practices, you can better protect your organization in an increasingly complex cybersecurity landscape.
