Risk Management for Third Parties

Nowadays, businesses are facing all sorts of risks in their online systems, from complications with supply chains to cyberattacks. A string of unforeseen events can even lead to disruption that causes millions to resolve.

This is why risk management is a crucial part of addressing challenges like this to ensure your business continues to run seamlessly. However, minimalizing the internal risks is only a portion of the solution; companies today rely on other vendors and third parties, making it just as important to address the external hazards.

Keep reading for our explanation on why third-party risk management (TPRM) from a perspective of cybersecurity, and why it’s so vital.

What Is It?

Third-party risk management is exactly what it sounds like; managing the potential risks from third parties. This third party could be anything from software vendors to logistics partners, or even manufacturers. 

Any form of outside contractor or business that your company relies on in some capacity, is a third party, and could pose cybersecurity risks to your business if its own cybersecurity infrastructure isn’t strong enough.

The average organization uses up to 110 software-as-a-service apps, and even the most simple of supply chains involve several members. Third-party risk management looks closely at these connections with a critical eye, asking how they could disrupt operations if something goes awry, and works to find the best ways to mitigate that potential damage.

TPRM covers many different disciplines, but cybersecurity and supply chain management are some of the most important. 

Why Is Third-Party Cyber Risk Management Important?

Not only are third-party cybersecurity risks extremely common, but they can also be extremely damaging, making it vital to have third-party risk management in these cases. 

Some reports state that up to 45% of organizations experienced some form of software supply-chain attack in 2021, and the same report states that supply chain attacks are increasing by up to a staggering 430%. These kinds of attacks are characterized by an injection of malicious code into an application used by other people, which then infects all of the users, and the impact of attacks like this is enormous.

One of the largest and most devastating attacks in recent times was the SolarWinds cyber-attack; a perfect example of a supply chain attack. Despite it illustrating the importance of TPRM in the world of cybersecurity, many of the organizations that suffered an attack in 2021 didn’t have a response strategy in place.

Incident response is an essential aspect in third-party risk management and must be made a top priority. However, having a plan isn’t enough; it is just as important that all IT members and incident response team members are familiar with this plan and what it entails both inside and out. To achieve this, we recommend regularly conducting “cyber crisis tabletop exercises.” 

Ensure Your Cyber Maturity

With the world we live in, as interconnected as it has become, eliminating working with third parties is not only nearly impossible, but a poor business decision in the long run. 

Pay attention to the security operations of your partners, and make sure you’ve researched those partners well before signing on with them. Have third-party risk management be a key component in the strategy of your online presence, and ensure that you have an extensive and solid plan in the event that one of your partners does happen to be compromised. 

How you respond to cybersecurity incidents and how quickly you do so is, at the end of the day, one of the best TPRM strategies you can use. If you want to ensure the security of all your future endeavors, our expertise at Arruda Group might just be the solution you seek.