The subject of third party partner risk has been making news headlines for a long time now partly because of the rising number of high-profile failures in various industries. Data breaches such as the T-Mobile and Experian incident that came to the fore in October highlight the risks of doing business with third parties and the possible adverse consequences. Here are four ways you can begin to manage and mitigate third-party risks.
Understand Your Third-party Partners Ecosystem
Today, it is a common practice for corporations to work with hundreds or thousands of vendors or third-party partners. This complex network of service providers requires holistic management, which is often lacking in most enterprises. It is often difficult to know the accurate state of vendor relationships and ensure all third parties are in compliance with all regulations and guidelines because of lack of programmatic approaches for involving and managing vendors.
The only way to improve this area and consequently protect your company is to adopt a more thoughtful, holistic approach to vendor risk management. In particular, you need to establish frameworks and standards to ensure all your business lines conform to one process for on-boarding, managing, and terminating vendors. Your risk managers should also put greater emphasis on those vendor relationships that pose the greatest danger to your business. You can know those relationships that pose the greatest risks to your business by considering the amount of money you spend with each vendor, the statement of work, the types and amounts of data your vendors have in place.
Conduct Due Diligence
Being diligent with your business partner contracts can also protect your company from third-party partner risks. These contracts form a critical part of your risk management program. So you need to ensure you have the right details included in your contracts. These details will govern how your data is treated once you sign the dotted line. Conducting due diligence holds your partners accountable and sets the right level of expectation as it relates to their security posture when engaging with your business. If your current agreement does not feature the required security requirements, you may use your renewal data to revisit the agreement. And if necessary, you can bring your executive team together to ensure the appropriate measures and put in place.
You can also use a scalable and integrated GRC technology to protect your business. This technology can provide greater visibility into many issues including risks and compliance, streamline and automate third-party management processes, and roll up risk intelligence to guarantee effective decision making. Some technology solutions integrate with industry sources to validate third-party data. There are others such as insurance certificate tracking systems that collect, correct and protect third-party data.
Rank Your Third-party Partners
Since almost all security and risk departments have limited budgets and resources, it is often very challenging to manage a large set of vendors with a small team. The best ways to solve this is rank your third-party partners in order of their significance to your business. The level of involvement your business partners have with sensitive data directly influences the level of attention they should receive from your security and risk organization.
Organizations are increasingly being held responsible for the actions of their third-party partners. And since it is not acceptable to claim that an organization is unaware of compliance practices of their third-party partners, it is only logical to adopt these risk management strategies to protect your company and your own self. The ability to successfully protect your business from third-party partners starts by understanding how your organization depends on your partners and change the way you manage and evaluate them. Furthermore, it also involves investment in solutions that creates improvements in vendor risk management efforts.