Many organizations, small to large, have outsourced IT and other vital business functions to third-party vendors. Outsourcing various functions to third-party vendors allows organizations to focus on core functions and areas of expertise, while reducing business costs and maximizing profits and operational efficiencies. While there are many benefits to utilizing third-party vendors, it is also important to consider the risks. The cost of maximized profits and efficiencies is access to information, with third parties requiring access to sensitive company data. Considering the state of each vendor’s cybersecurity is crucial so that the benefits do not create a vulnerability to the principal organization. But how can trust be established when your company’s reputation is on the line?
It is important to ensure all cybersecurity measures practiced by vendors match the caliber of the principal organization’s own practices. When IT is outsourced to a third-party, it can be difficult to determine if the IT vendor is appropriately keeping up with security patches, outdated hardware, vulnerabilities, and more. Managing IT is more than responding to issues of broken computers experienced by end users. IT ensures that devices are patched and anti-viruses are functioning properly. IT also alerts owners and leadership to old servers and workstations. Essentially, effective IT must also support and enhance security.
How can you reap the benefits of outsourcing IT and ensure the vendor does not pose a vulnerability? The best practice would be to have a security team or security advisor who can validate how secure the vendor organization is. This could be another third-party or an in-house team or position. Another beneficial practice is standardizing the principal organization’s protocol for vendor vetting. Unfortunately, in today’s cybersecurity environment accepting a vendor’s self-attestation of security is not enough, making the vetting of vendors necessary. Vendors need to be on high-alert and aware that a breach can occur at any second. They should be utilizing preventative measures and detections, and closely following protocols to ensure that a breach does not happen. By having a security team or advisor validate vendors and strengthening vendor vetting protocols, organizations can experience the benefits of outsourcing IT without increased risk. Here is a list to help standardize vendor vetting:
- Verify standard of performance- Ensuring that the vendor operates on the appropriate industry standard (Ex: Vendors serving the healthcare industry must be HIPPA compliant)
- Obtain each vendor’s information security policy – This policy helps ensure that the vendor is following industry security best practice.
- Conduct a third-party audit – This allows organizations to see how an independent auditor has assessed a vendor’s cybersecurity posture, outlining areas of concern and current risk mitigation processes.
- Verify business continuity and disaster recovery plans- This ensures that the vendor has a plan of action and can respond in a timely manner should a security incident arise.
- Review any existing or upcoming confidentiality agreements
- Examine past or upcoming mergers or acquisitions
- Note existing operational risks
The era of simple vendor risk management has passed. Today, organizations are increasingly intertwined with a growing number of third-party vendors, who require more access to the primary organization’s data assets and are also working with their own third-parties. This has multiplied the size and complexity of third-party networks, changing the scope and complexity of vendor risk management with it. Security teams and advisors are great resources available to check and mentor both principal organizations and vendors on missed vulnerabilities and other areas of security concern. Security is now a foundation of all organizations and vendors must view it as a major concern, for the success and longevity of themselves and their partners.