How Third-Party Risks Have Evolved in 2021

The COVID-19 pandemic permanently changed the way many companies operate. With remote work increasingly common and supply chain issues more frequent, many organizations have had to shift how they approach day-to-day operations. Risk management is no exception, and third-party risks are becoming increasingly dangerous to many companies.

A third party is an outside contractor or vendor that provides a service for your company. The party could be a bookkeeper who handles your company’s finances, a cloud storage service, the vendors along your supply chain, or any number of other providers. Outsourcing these functions and tasks is often necessary, but outside parties will also expand the range of your risk, creating potential new vulnerabilities.

Third-party risk encompasses a wide array of threats, and will depend heavily on the type of services your contractor provides. Traditional malware and phishing hackers may target smaller contractors that don’t have the robust security measures of a larger company. Your intellectual property could be in danger via any vendor that has access to your company’s proprietary materials. Reputational risk is also a factor, since any security breach that affects your vendors could reflect poorly on your organization.

The consequences of third-party risk can be severe. Any information or customer data accessed or stored by a third party can be made vulnerable by a data breach. Moreover, hackers can use your connection to your vendor as an entry point to your systems, laying the groundwork for future attacks. Regulatory compliance frameworks are also increasingly concerned with third-party risk, and breaches of your contractor’s defenses can result in fines and lost business for you.

In short, hackers and cyberthieves have adapted quickly to the new digital landscape. Companies in 2021 must practice their due diligence to protect themselves and their customers.

Third-Party Risk is Changing with the Digital World

COVID-19 forced countless companies to move some, if not all, of their workforce to remote positions. Most organizations were not prepared for the new security challenges that have arisen due to this unprecedented change.

For example, staff working on their personal devices may have weakened your networks’ endpoint security, and the cloud storage service providers and third-party applications that improve remote workflow can also weaken your overall risk profile. These potential risks affect your contractors as well — and while your own organization may have accounted for these new threats, you have less insight into the risk management ecosystem of your vendors.

Moreover, many governments have responded to the pandemic and lockdowns by shifting their compliance requirements. The healthcare industry, for example, had to adapt its high expectations for privacy compliance to tele-health (which has taken off since the start of the pandemic).

If your compliance requirements have changed, that means your contractors must comply with those changes as well. Overlooking a compliance issue in a contractor could have potentially disastrous results for your company in the future, and these changing requirements must factor into your vendor risk management program.

The pandemic had devastating effects on the global supply chain, and these effects have carried over even as much of the world attempts to return to normal. Supply chains were increasingly managed via technology before the pandemic, and that trend shows no sign of slowing down. While convenient, these supply chain automation solutions are also subject to potential breaches as well as system errors, and it’s important to have contingency plans in place to assure your data protection and to keep your operations running smoothly.

Assure Your Third-Party Mitigation Plans Work for the Modern Age

With new threats constantly on the horizon, it’s important to develop a risk mitigation plan that includes your third-party vendors. Here are some factors to keep in mind:

• Prevention is key. It’s not enough to solve issues as they arise; that lack of strategy will provide too many opportunities for hackers to access your data. Your third-party risk management should be integrated into your regular risk assessments. You might not have access to your vendors’ internal risk prevention processes, but you can prepare for how your company will mitigate the damage should a breach affect a third-party contractor.
• Include risk management protocols in your contracts. This measure is particularly important for companies in industries that are subject to government regulations. Any compliance risk that applies to you will also apply to any of your contractors, and your company can be held responsible for their vulnerabilities. By adding regulatory requirements to your third-party relationships you can better assure that your contractors meet your compliance goals.
• Use technology to your advantage. Hackers move fast, but security techniques are constantly evolving to match those changing threats. Leveraging new advancements in information security and risk management can allow for continuous monitoring and give you a critical edge in the face of potential attackers.

Stop Emerging Risks in With ZenGRC

ZenGRC is an innovative risk management solution that helps track your cybersecurity risk in real-time throughout your entire organization — including third-party vendors. ZenGRC helps you streamline vendor assessments and create questionnaires that allow your contractors to easily give you the information you need to assure that their risk management aligns with yours.

If you’re concerned about your third-party risk management program, schedule a demo to learn more about how ZenGRC can keep your sensitive information secure.