How to Prevent Third-Party Data Breaches
Many businesses rely on third-party service providers as major functions within business organizations are increasingly being done in the cloud. These providers can be contractors, vendors, or software as a service (SaaS) platforms. While this can improve the business’ bottom line, it can also open them up to third-party data breaches.
A third-party data breach occurs when the computer system of these vendors is hacked and sensitive information about businesses that patronize them is exposed. Cybercriminals can even target vendors in an organization’s third-party ecosystem to steal the data of that specific organization.
Industry analysts approximate that third parties are the reason for data breaches in over 51% of organizations. Internet and cloud service providers, Email service providers, and Credit card providers, are the most popular targets. In this article we explore the different methods businesses can employ to prevent these third-party data breaches.
Security Ratings
It can be dangerous for businesses to give third-party providers access to their networks and sensitive data without understanding first any cybersecurity risk these vendors may pose. Far too many businesses fail to exercise due diligence when selecting vendors. In fact, according to a recent survey only around 40% of businesses examined the third party vendors they work with.
A great solution to this problem is Security ratings, which provide a simple method to evaluate a potential vendor without adding operational expense to the vendor management team. Security ratings have become popular because they may occasionally complement or even replace time-consuming vendor risks evaluation methods such as surveys, on-site inspections, and penetration testing.
Security ratings provide direct insight into a potential vendor’s external security posture and the cyber risks to which they may be vulnerable. The operational load for Third-Party Risk Management teams as they select vendors, complete their due diligence, and onboard and monitor vendors is considerably reduced as a result.
Third Party Vendor Inventory
Before an organization can accurately estimate the risk, their third-party service providers pose, they must first discover who their third-party vendors are and how much information is exchanged with each of them.
The best way to evaluate the degree of risk introduced by vendors is by building a third-party vendor inventory to keep track of the data third parties have access to and how this data is used.
As easy as this may seem, keeping track of all vendors is not always straightforward, especially for big organizations. According to a survey, 54% of organizations stated they do not keep track of which third parties have access to private data and how many of these third parties share that information with one or more of their other clients.
Vendor Risk Management Questionnaires
Over the duration of a contract, a third-party vendor’s security policy can and will change. As a result, it’s important for businesses to keep track of their security configurations throughout time.
The problem is that most businesses do not monitor their vendors on a regular basis. Rather, they rely on snapshot evaluations like audits, which provide only a glimpse of an organization’s security situation.
These kinds of inspections have a purpose since they reveal concerns that are often ignored by external scanning solutions. They are, however, inadequate as a continuous security monitoring solution.
Security ratings, on the other hand, offer a real-time review of a vendor’s data security procedures. Businesses can combine that with the use of vendor risk management questionnaires to conduct periodic assessments. New specialized surveys or survey templates can be created and tailored to the organization’s needs. These steps will allow the business to analyze the cybersecurity approaches of third-party vendors and discover possible gaps as these vendors change their security policies.
Data Sharing Disclosures
Another great tactic business organizations can use to reduce or prevent third party data breaches is to add a condition in their vendor contracts that ensures third parties disclose information about partnerships with other vendors with whom they will be exchanging sensitive information. This condition makes it an obligation for vendors to notify the business organization when they exchange data with a Nth party and provides them with a better grasp of the data usage and distribution of their outsourced partnerships.
Third Party Incident Response
No matter what policies have been put in place to avoid third-party data breaches, businesses should still prepare for an incident involving a vendor before it occurs. Every organization needs to first evaluate the range of cybersecurity risks and attacks to determine which are relevant to them. Then create defined methods for addressing such threats.
By utilizing specialized third-party incident response services, businesses can get alerts for any suspicious activities and events connected to third-party vendor activity to enable rapid early detection of cybersecurity issues. Organizations need to select responsible individuals who will be alerted in the event of a third-party cybersecurity issue and ensure sure their names and contact details are included in the cybersecurity policy.
Preventing Third-party Data Breaches
Many subcontractors and vendors are unable to match the level of the cybersecurity implemented by the businesses they partner with. Therefore, rather than directly assaulting their intended targets, hackers frequently target third-party suppliers and service providers to gain access indirectly.
Poor third-party vendor data security exposes all the businesses they work with to cyberthreats, which can result in significant financial losses. Business organizations need to ensure they are doing everything they can to not only protect the data within their organization but also the data shared with third parties.
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