Third-party risk management (TPRM) has evolved from an annual checklist exercise to an essential daily practice in today’s highly interdependent business world. When an event on the other side of the globe has the potential to disrupt your customer experience and business continuity, it is vital to recognize and manage such risks effectively and quickly.

From a day-to-day level, TPRM can come in many forms; each business needs to find an approach that works for its own unique structure. Some widely used frameworks are a good starting point, such as those provided by organizations like the National Institute of Standards and Technology (NIST) or the International Standards Organization (ISO).

One of the most widely used frameworks is the ISO 27001 standard for Information Security Management System (ISMS), which can help businesses reduce cybersecurity and information security risks.

ISO recently published updated guidance on information security controls, cybersecurity, and data protection. Let’s look at what this means for your ISO compliance in 2022.

What is Third-Party Risk Management?

Third-party risk management, also known as vendor risk management (VRM), is the process of discovering, analyzing, and managing risks posed by a company’s third-party relationships and activities.

A third party is any person or business connected to your operations but not part of your organization’s management. Outsourcing to third parties can help your organization gain efficiencies and capabilities or harm operations if left unmonitored.

TPRM allows businesses to see which providers adhere to information security, compliance, and data privacy requirements similar to your own standards.

Benefits of Implementing Risk Management

One benefit of a well-developed third-party risk management program is the comprehensive insight it provides into your business’s interactions with vendors and how interdependence with other organizations affects various parts of your business. A great deal of information can be gleaned from evaluating vendor security at a granular level.

TPRM helps companies develop and automate their supplier risk management program. It aids in the standardization of onboarding processes, assessments, risk identification and mitigation, and monitoring operations. Furthermore, a robust supplier risk management program will bring advantages such as:

  • Improved risk management. You’ll know where third-party and fourth-party risks sit after categorizing all of your suppliers in your TPRM program. Suppliers should be classified as low, medium, or high risk so that the VRM program can concentrate on medium- and high-risk vendors.
  • Expense reduction. Your TPRM program will improve the efficiency of your vendor management operations by standardizing processes. Risk management will limit the incidence of costly unanticipated events.
  • Business compliance. Government authorities fine businesses that fail to handle third parties properly. Regulators consider vendors to be an extension of a business’s ecosystem, and a violation can result in sanctions for both the corporation and the vendor.
  • Improved reporting. It might be challenging to gather information without a proper TPRM. Ascertain that your VRM platform includes extensive reporting capabilities so that you can complete supplier risk assessments and generate summary reports for your board of directors and other stakeholders.
  • Defensibility. When your company suffers a data breach, authorities, customers, and others will frequently take you to court. Even if a third party committed the violation, your firm might be held liable if you do not have a TPRM program in place that demonstrates you did your due diligence.

How to Conduct Vendor Risk Assessment

The vendor risk assessment is a tool that enables companies to vet third-party suppliers and demonstrate due diligence on such service providers. Management should perform the following to create successful vendor assessments:

  • Compare the list of third-party suppliers from your accounts payable department to your vendor lists to ensure that no third party has been overlooked by your TPRM program.
  • Your security team should have a specified cybersecurity questionnaire for vendors as part of the vendor assessment process so that you can set clear expectations regarding security duties.
  • Once you have the accounts payable lists, divide the third-party service providers into categories based on the type of vendor and access control: cloud storage providers, advertising companies, professional advisory services, and so forth.
  • At the service or product level, evaluate third-party vendor partnerships. To comprehend all of the risks posed by third-party service providers, do a risk assessment on each service and product offered by each vendor.
  • Determine the requirements for due diligence depending on the level of risk for crucial third-party providers. Consider more regular and in-depth monitoring if, for example, a vendor is a high risk.
  • ISO 27001 risk assessments and other special assessments can help you maintain compliance with regulatory requirements.
  • Any substantial modifications to the third-party risk assessments should be communicated to top executives and other stakeholders.

What Are the ISO Requirements for 2022?

ISO 27001 is an international standard that rigorously assesses cyber and information security requirements. It defines expectations for creating, implementing, maintaining, and upgrading an information security management system. In addition, it details a systematic way to protect information assets, sensitive information, and personal data based on an international set of rules.

The ISO 27001 standard takes a risk-based approach to secure sensitive data across an organization’s three central components: IT systems, people, and processes. It is the most widely used international standard for enhancing the data protection of all IT systems and information processes, including those involving third-party vendors.

The ISO 27002 standard is a set of information security guidelines that assists organizations in implementing, maintaining, and improving their information security management. It contains nearly 100 potential controls and control mechanisms intended to be applied to the ISO 27001 standard.

ISO 27002 suggests rules aim to fix specific issues discovered through a formal risk assessment. It serves as a roadmap for creating security standards and implementing effective security management practices. ISO 27002 complements the security controls listed in Annex A of ISO 27001. These controls address all of the common cyberattack vectors in the supply chain.

Like many other standards, ISO 27002 has been revised over the years to address the constant change in the threat landscape. ISO 27002 was first published in 2000 as ISO 1779. It was revised in 2005 and 2013, with its most recent change in March 2022.

Changes in the Requirements for 2022

A significant part of ISO 27001, including Causes 4 through 10, will remain roughly the same.

However, the information security requirements defined in ISO 27002:2013 Annex A have been upgraded to 27002:2022 in an effort to simplify implementation. For example, the standard is now divided into four parts, rather than 14. The number of controls was reduced from 114 to 93. No controls were actually eliminated, but some were combined, and 11 were added.

How Will These Changes Affect my ISO 27001 certification?

If a potential customer is waiting for you to be certified before working with your company, you should start your ISO 27001 implementation now. Currently, you will still need to align to ISO 27001:2013 clauses. This means your Statement of Applicability (SOA) must continue to refer to ISO 27002:2013 appendix controls.

The modifications to ISO 27001:2013 are minor and mainly concern the controls’ management and sorting. As a result, they have little effect on your documentation and not the actual technology used.

Depending on the urgency in which your company needs to be certified, you may be better off complying with the current standard by implementing the controls that your company lacks. Then after ISO27001:2022 is released, begin the certification processes.

When ISO27001:2022 is released, we anticipate the following modifications to documentation:

  • Adapt your risk management methodology to the new control structure
  • Bring your Statement of Applicability up to date
  • Change certain areas of your current policies and processes

Certified organizations often have a two-year transition period to rewrite their management system to adhere to a new standard version, so there will be plenty of time to make the required modifications.

Maintain ISO Requirements with Reciprocity ZenRisk

Keeping track of changes in standards and new requirements can be intimidating for any compliance team with traditional tools and spreadsheets.

With Reciprocity ZenRisk, you obtain the real-time visibility you need to stay ahead of risks and effectively convey the effect of risk on high-priority business activities. This contextual data allows you to prioritize investments and make sound business decisions while maximizing security.

ZenRisk is a comprehensive cybersecurity risk management system that gives actionable insights into your business operations to assist you in efficiently identifying, assessing, and mitigating vulnerabilities and cyber risks.

It has tools and templates you need to manage IT risk and supplier relationships. Choose from a vast, pre-loaded content library and pick the correct combination of controls, risks, and threats to analyze the associated risks with your business process or project. You can also reduce manual work by automating your assessment workflows and risk scoring processes.

You will better understand your security posture and identify high-risk regions by combining information with built-in, repeatable, industry-standard scoring techniques and expert-suggested inherent risk scores. Schedule a demo today!