In today’s fast-paced world, organizations (and individuals) benefit from relying on third parties to manage their business processes. From cost reduction to speeding up production times, cloud-based services offer commercial advantages in an increasingly competitive market.

Microsoft defines cloud services as “the delivery of computing services including servers, storage, databases, networking, software, analytics, and intelligence over the Internet (“the cloud”) to offer faster innovation, flexible resources, and economies of scale.”

Those advantages, however, are not risk-free for organizations. Third-party relationships can generate all manner of risks: reputational, regulatory, cybersecurity, and financial, to name a few. These risks can be especially prominent in cloud services.

For example, Capital One suffered a data breach of 109 million financial records in 2019, thanks to an attacker exploiting the cloud-based storage provider Capital One used. That example is only one of many. Hence the critical role that third-party risk management plays in governing those risks among the cloud services your organization uses.

We explain why this risk exists and how you can better manage it in the sections below.

Common Third-Party Risks of Cloud Storage

Take these common risks into account when adding cloud-based services to your business processes.

Compliance Risks

By using cloud storage services, we outsource the information security management of the servers used for data storage to third-party vendors. This reduces the internal burden of cybersecurity, but generates its own set of potential risks. Or more precisely, cybersecurity burdens shift from your internal operations to your third-party relationships — but the burdens themselves do not go away.

Your company’s data security compliance obligations should be part of the minimum requirements when establishing third-party relationships. Incorporate those security requirements into your onboarding review of every cloud-based service you use, compliance failures on the vendors’ part can easily translate into compliance liability for your business.

Business Continuity Risks

Cloud storage services also bring operational risks. They become part of a company’s infrastructure and, consequently, its overall operation. So if the vendor fails, your operations degrade.

This means companies must evaluate the business continuity risk that a vendor might pose to your own operations, including possible disruptions to your supply chain. Evaluate the mechanisms that vendors have in place to prevent the disruption of their services; as well as the mechanisms you have in place to prevent the disruption of your services, should a critical vendor fail anyway.

Mobile Device Risks

Given the growth of Bring Your Own Device (BYOD) policies at corporate organizations, CISOs must also consider how to square the complexity of employees’ mobile devices with the cloud-based services you use. You might have employees accessing corporate data, on their own device, through a third-party vendor’s service.

This means CISOs will need to manage transactions that move among all three of those layers, with reinforced security protocols between both ends (user and data).

Best Practices for Managing Third-Party Risks

To combat these and other vendor management risks, it’s best to develop a vendor risk management (VRM) or third-party risk management (TPRM) program to manage the entire vendor lifecycle.

The following are some VRM best practices that could be useful to protect yourself from risk and increase your cloud security.

Third-Party Risk Assessment

Assessing third-party risk is critical. Before starting a relationship with third-party vendors, prepare a complete risk profile.

These profiles allow senior management and company stakeholders to understand the strategic risks associated with the vendor relationship, and what business processes or data might be at risk by using that vendor.

To that end, use vendor risk questionnaires to ask each vendor about its security policies, practices, past failures, and the like. Your risk assessment should also consider the data that your business would entrust to the vendor, your own compliance obligations to keep that data safe, and whether the vendor itself might then outsource its work to a sub-contractor — creating “fourth-party risk” for you.

Constant TPRM Program Evaluation

To work with third parties safely and effectively, it’s necessary to create a third-party risk management program that considers all the risks of the vendor relationship. That program should establish continuous monitoring procedures and remediation plans.

Moreover, that program needs to evolve over time. It should test internal controls regularly to assess their effectiveness, reassess risks among your third parties and among your own operations as they change over time, and take advantage of new tools to achieve effective vendor risk management and a strong security posture.

Technology Tools Adoption

Dealing with third-party risk today is nearly impossible without the help of proper technology tools. Automated monitoring, dashboard presentation of results, prompt alerting and reporting, the tracking of high-risk behaviors — all are possible with the right software. Use those tools to keep your third-party management program sharp.

Managing Third-Party Risks Is Easy With ZenGRC

Conducting third-party due diligence can be a time-consuming and daunting task, particularly for larger organizations with numerous vendors. This is all the more true for companies still employing legacy tools such as spreadsheets to manage their vendor workflows. Such manual systems can also lead to increased security risk due to human error, not to mention poor productivity.

With ZenGRC’s vendor risk management software, compliance officers gain better transparency into and control over vendor risk. And with its baked-in automation functionality, much of your governance, risk, and compliance duties are monitored for you.

ZenGRC streamlines the vendor management lifecycle and eliminates the headaches of disjointed processes, bottlenecks, and re-work associated with inaccurate manual processes.

Its continuous monitoring functionality assures that your team is always informed of your TPRM compliance requirements, and maps to numerous industry standards so you only have to do something once.

Ready for a free consultation? Reach out today.