Many businesses today rely on a network of outside partnerships to help them scale their operations. Whether subscribing to various cloud services or building long-term relationships with logistics providers, being able to rely on credible industry partners is an important element in building a successful business.
However, although expanding a business network is often a necessity for many organizations today, this growing digital footprint can also bring with it a number of risks.
Why Are Types of Risks Common With Third-Party Vendors?
As a network of third-party vendors grows with an organization, the range of potential risks a business exposes itself to also increases. These often include:
Various Cybersecurity Issues
Not all vendors maintain the same priorities when it comes to cybersecurity. Because of this, organizations that partner with vendors whose cybersecurity practices don’t mirror their own can become victims of a cyber breach that occurs outside their own organization.
Not only could shared data be leaked through a third party’s website or server, but the scope of the attack they suffer from could give cyber attackers the credentials they need to infiltrate your own business network.
Damage to Brand Trust
The impact of a successful cyber attack isn’t just limited to the value of the stolen data or system downtime. There are also long-term negative impacts a brand can undergo when their brand trust from clients and customers becomes compromised.
Even if your business wasn’t directly involved in a cyber attack, simply being associated with certain vendors who were could still have serious implications.
Regulatory Compliance Issues
While your organization may put a high focus on ensuring it meets a variety of regulatory compliance requirements, not all vendors may be governed the same way.
For example, if your business is bound by certain healthcare industry requirements, like those found in HITRUST security frameworks, but the vendors you work with either ignore or fail to meet certain requirements, your company can be on the hook for paying a variety of non-compliance penalties.
Operational Setbacks
Many businesses today place a considerable amount of their trust in third-party vendors to keep their applications and primary operating systems operational. If a vendor experiences major outages that impact their ability to provide necessary services, businesses can start to see serious financial side effects.
How Do Security and Compliance Audits Help With Vendor Risk Management?
Conducting security and compliance audits is absolutely essential when looking to manage certain risks from third-party vendors. While being given a list of security agendas from a specific vendor can give you peace of mind, knowing whether or not vendors are actually upholding their level of responsibility in these areas is much more important.
Security and compliance audits are formal inspections conducted by neutral, certified industry professionals that help businesses understand the extent of a third party’s level of cybersecurity readiness.
By using highly vetted industry benchmarks to evaluate data security protocols and operational integrity, businesses can be provided with actual data that informs them whether or not the vendor they’re working with is right for their organization.
What are the Steps for Conducting Vendor Security Audits?
Documenting all Current Partnerships
Before a formal security audit can take place, the first step businesses will need to take is to document all of their current third-party vendor relationships. This also includes identifying the various forms of data or system access that is shared as well as the individuals involved in coordinating the relationship.
Part of this process also includes reviewing any contracts that are in place and referencing any specific terms that have been agreed to. This can include how data is collected and stored and the agreed-upon obligations of each side of the relationship.
Conducting a Vendor Risk Assessment
Since not all vendors are the same, it’s important to prioritize auditing efforts on those that can pose the largest threat to the business if certain vulnerabilities are left unchecked. This is oftentimes dictated by the volume or sensitivity of the data being accessed as well as their relative importance to the business.
A vendor risk assessment plan provides an outline for businesses, vendors, and auditors to follow during the course of the auditing process. This ensures nothing gets missed and it’s able to be completed in a timely manner.
Outlining the Scope of Audit Procedures
Understanding the scope of a security audit is important for all parties. This documents all of the procedures that will take place when checking various systems and procedures.
These steps might include identifying certain digital assets and checking their security protocols and patch versions or even working with outside penetration testing partners to conduct real-world cyberattack scenarios.
Notifying all Relevant Partners
Although security audits are important, they shouldn’t be something that comes as a surprise to your vendors. The scope and frequency of compliance checks should be something that is discussed with vendors in advance to help avoid certain levels of disruption they can cause.
Working together with your third parties when planning and executing auditing schedules helps to strengthen the relationship and can help to build trust and transparency from both sides of the equation.
Executing the Audit and Reporting
Once all partners are notified about the audit process, formal auditing procedures can commence and important data insights can be extracted. Security and compliance audits often involve a mix of off- and on-site evaluations and can also include interviews with various staff members.
After the audit is completed, auditors will compile the information collected in an easy-to-use format that can be used when prioritizing any needed adjustments.
Build Stronger Vendor Relationships
Incorporating security and compliance audits into your third-party vendor relationships is a great way to encourage more open communication regarding the importance of cybersecurity readiness. By working with qualified audit teams you can extract the vital information you need to make sure you’re choosing the right vendors to work with and that they value the same security priorities as your own.
Author
Nazy Fouladirad is President and COO of Tevora, a global leading cybersecurity consultancy. She has dedicated her career to creating a more secure business and online environment for organizations across the country and world. She is passionate about serving her community and acts as a board member for a local nonprofit organization.
Linkedin: https://www.linkedin.com/in/nazy-fouladirad-67a66821