June 28, 2024 | By christa

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Understanding and Mitigating Third-Party Risks: Ensuring the Security of External Partnerships

• Cybersecurity

Imagine shaking hands with a potential business partner, only to realize later they have a nasty case of digital plague. That’s the hidden danger of third-party risk: seemingly innocuous partnerships can introduce major security headaches for your organization and, more importantly, your clients.

Companies use third-party vendors to provide anything from cloud storage to social media advertising campaigns. This outsourcing brings many benefits, yet it creates new security risks. According to a 2024 survey, 61% of companies suffered a third-party data breach or a cybersecurity incident in the past year. These incidents lead to the compromise of valuable data, disruption in operations, and reputational damage.

Just like fortifying your own cybersecurity, there are steps you can take to mitigate these risks. In this article, we’ll examine how bad actors infiltrate your networks through third-party contractors and how it’s possible to discover and reduce third-party risks.

The Importance of Identifying Third-Party Risks

Third-party breaches can expose sensitive data, disrupt operations, and damage your reputation. In a worst-case scenario, a successful attack on a vulnerable third-party vendor can provide a backdoor into your own network, compromising your data and putting your clients at risk.

Here are some of the common third-party risks to consider:

• Data Breaches: Third-party vendors may have access to your sensitive data, such as customer information or financial records. If their security measures are inadequate, this data could be compromised in a cyberattack.
• Cybersecurity Weaknesses: Inadequate security practices at a third-party vendor can create vulnerabilities in your own security posture. Outdated software, weak password management, and a lack of employee training can all leave your data and systems exposed.
• Supply Chain Disruptions: A cyberattack on a critical third-party vendor can disrupt their operations and impact your ability to deliver services to your clients.
• Regulatory Compliance Issues: Your organization may be held responsible for complying with data privacy regulations, even if a breach occurs at a third-party vendor.

Implementing Security Measures to Mitigate Third-Party Risks

Identifying and understanding potential risks is the first step toward effective mitigation.

Here are some key strategies to implement:

• Vendor Risk Assessment: Before engaging with a third-party vendor, conduct a thorough risk assessment to evaluate their security posture. This should include assessing their security policies, procedures, and incident response plans.
• Contractual Obligations: Include strict security clauses in your contracts with third-party vendors. These clauses should outline their security responsibilities, data breach notification requirements, and potential consequences for non-compliance.
• Access Controls: Limit access to sensitive data only to authorized personnel at third-party vendors. Implement data encryption and multi-factor authentication protocols to strengthen access control measures.
• Continuous Monitoring: Don’t rely on a one-time assessment. Monitor your third-party vendors on an ongoing basis to stay informed of any changes in their security posture.
• Security Awareness Training: Promote a culture of cybersecurity within your organization and provide your employees with training on how to identify and avoid risks associated with third-party vendors.

A Real-World Example: Microsoft

The attack: Microsoft is a common subject of cyberattacks that take advantage of the implicit trust most security tools place in anything signed by the tech giant.

The method: In March 2021, 30,000 global organizations had their on-premises Microsoft Exchange Servers breached by a group known as HAFNIUM. Employee email accounts were accessed and malware was installed for long-term access.

The impact: In less than a year, 38 million records were breached through Microsoft Power Apps. This vulnerability uncovered COVID-19 testing, tracing, and vaccination records as well as employee data for such organizations as Ford Motor Company, American Airlines, and the New York Metropolitan Transportation Authority.

Conclusion: Mitigate Risk, Build Trust

You don’t have to stop using third-party vendors altogether. If you plan ahead and reduce third-party threats, it will help to protect your sensitive data, keep your business up and running, and maintain the trust of your clients. With these steps, your business will survive with secure partners in tandem with a cyber-landscape rife with bad actors.

LeadingIT is a cyber-resilient technology and cybersecurity support provider. With our concierge support model, we provide customized solutions to meet the unique needs of nonprofits, schools, manufacturers, accounting firms, government agencies, and law offices with 20-200 employees in the Chicagoland area. Our team of experts solves the unsolvable while helping our clients leverage technology to achieve their business goals, ensuring the highest level of security and reliability.