Businesses cannot function in isolation. The business world today has become more global and complex than it used to be. To better focus on their main value propositions or gain a competitive advantage, companies need to outsource several of their functions, some important and some mundane. From using third-party software to product shipping to hiring a security agency. For the smooth functioning of these services, a large exchange of information, often confidential and sensitive may take place between the two entities. These services may be invaluable to a company but also introduce a significant risk for information security. A company may be engaged with several external vendors and sometimes even 1000s, which creates a web of possible breach locations. Such mishaps can happen and may leave a company open to not only legal liabilities but also reputational and financial risks. Third-party risk management should be given due importance and companies need to understand the risks involved and need to make sure third-party vendors are meeting their contractual, security, and privacy obligations.
Third-Party Risk Management (TPRM), becomes essential to a company’s security when it engages with an outside vendor. TPRM means analyzing and controlling risks associated with engaging such vendors. This is even more crucial for high-risk vendors that may process sensitive information or make use of the intellectual property. Due diligence is required to determine the suitability of a vendor and TPRM helps to give organizations an understanding of the third parties they engage, their ability to carry out work, and the security measures they have in place. If you do not factor in this risk, you must blindly trust the abilities of third parties. This may prove to be a bad deal in the long run in case the vendor suffers from a data breach or other operational disruptions. Though the scope and requirements may vary based on the organization’s needs, and the industry it works in. With increasing breaches across industries and greater dependence on third-party vendors, both for their expertise and to save money, Third-party Risks have become a crucial consideration. Especially when disruptive events like breaches have come to an all-time high. If a third party gets adversely affected it may leave devastating and long-lasting impacts on a business.
TPRM helps you stay ahead of several risks involved in engaging an outside vendor like
- Cybersecurity risk
Every organization faces the risk of exposure or breach of sensitive and confidential data. This is also true for any vendor you choose to engage with. A good TPRM program will help you eliminate this risk by ensuring the vendor has adequate security measures in place to protect the data in the first place and continuous monitoring of such measures will encourage vendors to timely update their security.
- Operational Risk
A vendor may not be able to deliver the goods or services promised which could lead to a disruption of your organization’s business. Proper steps should be taken to ensure that a vendor will be able to meet any such issues and that your operations will not be affected. In any case, backups should be in place to ensure business continuity.
- Regulatory and compliance Risk
A third party’s conduct might bring your adherence to local laws and regulations into question, such as the GDPR.
Outsourcing has become a necessary component of a business today. Their risks cannot be ignored and therefore a suitable and practical TPRM program needs to be in place to limit liability. Industry best practices mentioned below should be kept in mind while creating a TPRM program for your organization.
- Third-party Inventory
Keeping an inventory of your third-party vendors helps you keep a track of all outside involvement and better implement any further steps you may take. But not all vendors are equally important and a tier system can be used to categorize vendors based on the supposed risk a mishap to that vendor would pose to the company. This categorization may depend on various factors like the impact of the vendor on operations or the size of the contract given to the vendor.
- Leverage automation
Automation can help companies stay on top of their vendor risk management. It could save you the time and effort required straight from onboarding to analyzing the security levels and other risks of each vendor. They also improve safety by quickly and continuously monitoring the security levels of third parties.
We at Tsaaro understand the dependency of the smooth running of a business on engaging with third parties, and also the undeniable risk of exploitation and misuse of operational, confidential data that comes with such engagement.
Our commitment to the cybersecurity domain coupled with seasoned experts will provide you with the recognition, analysis, and assessment of risks and finally enable you to gauge the efficacy of the risk assessment threshold regarding the quality and reliability of your data. Get in touch with us to manage your third-party risks and any other privacy problems you can think of.