In the modern day, businesses rely on third parties for an ever-changing range of purposes. In the area of risk, this is even more key.
In a recent post by Diligent, the company highlighted that while working with third parties offer clear benefits, these relationships can also make an organisation vulnerable.
The firm said, “Vendors often have access to valuable company systems and sensitive data. Consultants might be accessing the system from a different location or a different server. Each vendor may have its own methods for data-sharing and collaboration, with varying levels of security. Meanwhile, are these third parties keeping up with the latest compliance and regulatory standards?”
With these factors considered, it can be clear that CCOs and compliance teams have a lot to worry about as they navigate the rapidly evolving risk landscape. Organisations need the right tools to ensure they’re properly managing, monitoring and training their third-party resources.
How much damage can a third party or vendor do? In the opinion of Diligent, organisations need to consider potential threats across the business. These include in the areas of compliance, reputation, finances, operations and cybersecurity.
A report by IBM previously found that 83% of businesses will encounter a data breach often more than once, with many of these breaches coming from third-party vendors.
The IBM report pointed out that faster is better when detecting, responding to and recovering from threats. Organisations equipped with solutions like a fully deployed automation and artificial intelligence tool are able to identify and contain a breach faster than organizations without one, citing savings of 28 days and $3.05m.
Threat monitoring is just one way tech can help your business contain third-party risk. What are the others? In the opinion of Diligent, these include accurately accounting for compliance, keeping expectations and standards aligned, maximising efficiencies and protecting the company’s reputation.
Diligent said, “Getting started with third-party risk management can seem daunting. There are many processes involved: vendor onboarding, ongoing monitoring, incident remediation — the list goes on. And effective risk management policies require many layers, from assessing a third party’s security to guiding vendors on handling sensitive data.”
To have stronger third-party management, Diligent suggests a number of steps. These include researching industry best practices for third-party risk management processes and policies, and learning how to create your own.
In addition, firms should choose their metrics – like key performance and risk indicators – to distil complicated security measures into easy-to-read numbers. Assigning a risk score to each vendor can also help, as well as getting everyone on the same page through shared procedures for risk management.
Other key tips include mitigating risk by continuously updating polices around risk management and studying up on risk management frameworks so that the right one for your organisation can be chosen.
Diligent concluded, “In short, while third parties bring multifaceted value to operations and the bottom line, these vendors can also introduce potentially costly risks. With effective third-party risk management, you can strengthen your ability to monitor and mitigate these risks — more efficiently, securely and cost-effectively.”
Read the full post here.