Ensuring due diligence has always been a key part of helping an organisation remain compliant and secure in the face of outside challenges. Ensuring cyber due diligence is no different.
In a recent post by Diligent, the company outlined how a company can best protect their organisation through cyber diligence and what it takes to ensure it.
The company said, ”Cyber due diligence helps organizations ensure that they only go into business with trusted partners, thereby reducing risks down the line.”
While risks are often a part of doing business, organisations often exposed to risk can mitigate them. An effective due diligence program, Diligent states, protects organisations from the start and reduces the liability that can come with third-party and fourth-party relationships.
Cyber due diligence is the process of assessing, monitoring and mitigating risks within a network, particularly those tied to third-party vendors.
The process occurs before an organisation finalises a relationship with a new third party or completes a merger or acquisition. During third-party and M&A cyber due diligence, an organisation will collect information about the potential new partner and its existing cybersecurity infrastructure.
This information, Diligent said, becomes the basis for the relationship because an organization can either decide not to move forward or move forward with a complete understanding of the risks involved.
Why is cyber due diligence important? Diligent remarked, “Cyber due diligence is important because it protects organizations from risks — risks that can become incredibly costly if left unchecked. A recent report from IBM and the Ponemon Institute found that the average cost of a data breach reached $4.35 million in 2022, which marks a 2.6% increase from 2021.”
Any time an organisation takes action to address risk, its protecting itself from potential financial costs and far-reaching reputational impacts. “Cyber due diligence is one of the best ways organizations can understand and mitigate their network’s many risks. It’s also important in ESG and compliance since due diligence helps organizations maintain transparent and ethical practices.”
In order to complete effective CDD, organisations should amongst other things, create a risk profile. At this stage, organisations will analyse the potential partner, paying special attention to that partner’s IT risk landscape.
In addition, firms should complete an inventory, which can help organisations visualise which assets may be the most vulnerable to cyber-attacks.
In other areas, they should also assess the risk management program – to help organisations understand if the potential third party is aware of and responding to risks they already face – and analyse technology needs. They also should define levels of access and monitor risks.
Diligent concluded, “Regular cyber due diligence matters. It can make the difference between protecting your organization and leaving the organization open to costly breaches. Having an effective due diligence program is an important way to practice good governance, attract investors, reassure clients and promote the importance of secure, ethical operations.”
Read the full post here.
Copyright © 2023 FinTech Global