Data is the foundation of many organisations and effective data management is often essential for a company’s ability to remain competitive and profitable, but third-party risks threaten all this. Accordingly, a vast market of data management tools has emerged to help carry out essential tasks such as storing, organising and analysing data.

As these third-party tools are often granted access to sensitive and mission-critical data, organisations must ensure they are as well-secured as any of their own in-house infrastructure. Cybercriminals will often exploit poorly secured third-party software tools to circumvent their target’s own stronger defences. This means it is essential to be able to identify any software vendor that may pose a risk to the organisation.

The most straightforward way to achieve this is to carry out a security assessment for all existing vendors with access to data, as well as any prospective vendors the organisation is considering working with in the future.

A good starting point for gathering this information is to use a due diligence questionnaire. This will ask for data on key areas such as what formal security programmes are in place, how data is protected when in transit, and any activity that is being undertaken to proactively prevent breaches and identify vulnerabilities from third-party risks.

Armed with this information, the enterprise can begin to gain a view of each vendor’s systems and security efforts. To carry out a full vendor security assessment and gain the most accurate understanding of potential risks, there are a number of other steps that can be taken.

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Step 1 — inventory existing vendors

All existing vendors should be reviewed and classified in order of potential risk. Access to the most customer data, or other sensitive information such as financial records and intellectual property, is an important consideration in determining risk, combined with the security factors established by the questionnaire.

Step 2 — assign each vendor with a security rating

Once the initial inventory is complete, the next step is to take it a step further and conduct a full cybersecurity assessment for each vendor, taking the same approach as an internal assessment. Each vendor should then be assigned with a numerical security rating to make it easier to prioritise vendor risk monitoring strategies and determine which vendors require the most attention.

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Step 3 — create vendor performance metrics

Adding to the clarity provided by security ratings, firms should set clearly defined expectations with metrics that make it easy for regularly monitoring vendor performance. These metrics can also serve as Key Performance Indicators (KPIs) when establishing vendor contracts, helping to ensure that all vendors maintain the required security levels.

Step 4 — establish continuous monitoring

Regularly monitoring all third-party vendors across the ecosystem will ensure that they are following the agreed metrics and maintaining the required level of security to protect mission critical data.

Continuously monitoring will enable a more proactive approach to risk management — rather than waiting until the next vendor assessment, the organisation will be able to identify potential risks in advance. Once a potential vulnerability is identified, the enterprise can flag the issue to the vendor and work with them to resolve the problem and restore the required level of security.

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As businesses continue to expand and take on more third-party tools to help manage their data, it can become increasingly difficult to keep track of all the vendors with access to the system, who might become third-party risks. It is therefore best to implement a single platform that can provide a unified view of all the third parties on the system.

Armed with an efficient cyber security vendor risk management solution, organisations can keep track of all third-party assets across their entire IT infrastructure, no matter how large and complex it becomes.

By establishing a standard level of security capability for all third-party vendors and continuously monitoring for any new vulnerabilities, organisations can greatly mitigate the chances of threat actors using third parties as shortcuts to access essential data.