Managing Third-Party Risk Through Vendor Management

Data privacy is a growing concern, but have you considered the role of your vendors? Gauge third-party risk and mitigate threats with vendor management.

Network security and data privacy are growing concerns for many businesses, but have you considered the role of your vendors? 6 in 10 businesses are breached via third-party vendors, and over half of small businesses close due to a security breach within six months.

If you are a business looking to increase your operational security, managing the risks of working with an outside party is essential. Enter the concept of vendor management, which is not only important for tracking contracts, communications, and performance but also for managing risk. 

Specifically, there are various ways that a trusted vendor management partner can help you gauge third-party risk and mitigate threats to your sensitive data.

Establish Security Baselines

To begin with, it’s crucial to have a standard for sharing sensitive information and data access with third-party vendors. Since potential partners may have varying degrees of vulnerability to external hackers, you need to establish a baseline of how your data should be protected. With these guidelines in place, your vendor management team can find vendors that align with your data security standards. If you aren’t sure how to create your baseline, vendor management professionals can help you follow best practices.

Confidentiality

It’s imperative to limit the amount of information each organization member can access, especially when conducting business with outside vendors. To keep your data secure, classify your organizational data according to its sensitivity and be extremely careful when allowing company-wide access to any third party. Wherever possible, your vendor managers will suggest providing a very limited scope of access to vendors and only to the specific individuals who require that access.

Limiting access will help protect your business against both malicious and accidental security breaches. Even if a vendor only accesses your systems with the best of intentions, they may unwittingly expose your business to outside threats. For instance, 91% of all phishing attacks happen when an unsuspecting victim is targeted. If your data isn’t protected and divided, it leaves your organization vulnerable. A vendor’s employee could easily open a seemingly innocuous email, infect their own device, and then unleash a virus on your entire organization the next time they openly access your network.

Integrity

Generally speaking, integrity is a standard you should live by when dealing with any partners, and in order to protect your business, you should be positive your partners feel the same. Regarding integrity in security, though, we’re talking more about the trustworthiness of your data, network, and processes.

To maintain data and system integrity, only certain parties within your organization should interact with outside vendors, and they should always use reinforced communication methods. This upholds privacy and accountability. There should also be an internal system of approvals and a clear understanding of the chain of command between you and your vendors, especially when it comes to modifying processes or files. Fortunately, your vendor management team can help put together these processes. With clear lines of communication in place, you’re less likely to end up with mistakes or attacks of opportunity when dealing with third-party teams.

Availability 

While your data should be secure, it should also be easily accessible to authorized parties. After all, if your vendors cannot access the data they need to remain productive, you’re just paying them for wasted labor hours.

Part of data availability must include guarding against data loss or outages, which can tank productivity. When setting your baseline for data security practices, ensure that your physical infrastructure, redundant data, and backup data are properly managed so that you do not lose valuable time and resources. Some figures suggest that data center outages can cost organizations as much as $8,000 a minute.

Conduct a Vendor Security Audit/Assessment

Now that you clearly understand how your business can protect its data, it’s important to conduct a vendor security audit to see if your current third-party vendors are in line with your new standards. By having your vendor management partners conduct a vendor security audit — also known as a vendor security assessment — your business can better understand if any vendors’ operations carry potential risks.

Typically, your vendor management team will carry out a vendor security audit in three steps:

Assessing the Security Risk of Your Vendors

It’s important to understand how your vendors utilize and store your data. Your vendor managers will compile your list of vendors, then compare how their security protocols stack up to your own. They’ll take note of how data is coming in and going out and ensure there are no backchannels open for potential hackers. 

Vendor managers will also keep up with how your data is maintained regularly. Any adjustments or changes in the handling of sensitive information should go through decision-makers in your organization.

If there are areas of high risk or vendors are not up to your security standards, your vendor management partners may recommend adjusting their level of access according to your level of risk.

Requesting Updates for Compliance 

To assure security and address potential risk factors, your vendor management team may also request compliance paperwork from your third-party servicers. As an organization, you may already undergo compliance assessments for internal stakeholders, potential partners, or governmental oversight. Be sure to include any vendor compliance in these reports! If you’ve noticed security gaps with your partner’s practices, documentation is important for your partner to be held accountable for addressing security concerns. 

If a vendor is unwilling or unable to develop a compliance report, it may signify a more significant problem. Transparency is essential from your vendors, especially those with access to sensitive data. If they’re guarded and dodgy when sharing compliance information or addressing their security gaps, it may be time to look elsewhere.

Regularly Enforce Audits 

Unfortunately, a one-time vendor audit won’t be enough to uphold security, as their practices could change at any time. Meanwhile, criminals are becoming increasingly tactful in their approach to targeting sensitive company data. To stay ahead, have your vendor management team keep up-to-date with any adjustments or changes to your vendors’ processes and ensure they’re still up to your standards.

On average, organizations take 197 days to identify a breach and 69 days to contain it. So oversight is key! By regularly auditing your vendors’ security protocols, professional vendor managers can make your data safer. 

Find a Vendor Management Partnership

No organization wants to risk a security breach, but many stop short of fully protecting their organizational data regarding third-party access. Rules change, procedures fall by the wayside, and an organization is left figuring out how to mitigate an attack rather than limit a threat. 

Instead of playing catch up, find experts that can help you deal with third-party vendors through vendor management. Vendor management partnerships are valuable for keeping track of your third-party relationships, maintaining the ones that bring you the most value, and optimizing ones that need improvement. 

By having an experienced partner in vendor management, you can effortlessly ensure your security baseline is followed and that you’re working with the most talented and cost-effective third-party vendors.

As your business grows, so will your roster of vendor relationships, so having the right partner to scale your business is extremely important. If you’re struggling to manage your IT service vendors or want the best “bang for your buck,” Populus Technology can help. 

Populus Technology has over 25 years of experience providing technology solutions to our partners. We help support their growth by managing partnerships and directing our clients to the best third-party vendors in the industry. We also assist organizations in updating and automating their business processes, even creating custom software solutions for unique workflows.

So if you need help managing vendors, mitigating third-party risk, or transforming your own internal processes, Populus has the solutions you need. Just contact our team today to learn more.

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