Most organizations today rely on a complex network of third-party relationships to keep operating. Manufacturers depend on suppliers and logistics partners. Banks rely on payment processors and software vendors. Hospital systems share records with billing contractors and cloud storage providers.
Unfortunately, any of these relationships represents a potential entry point for risk in the form of data breaches. Third-party breaches have surged 60% year-over-year and now account for 48% of all breaches, according to a report by Verizon.
For governance, risk, and compliance (GRC) professionals, this finding calls for a major shift in the approach to risk management. Explore what third-party risk management looks like, why it’s more important than ever and how organizations can protect themselves from third-party data breaches.
Key Takeaways
- Third-party relationships introduce significant risks, making organizations vulnerable to data breaches.
- Third-party risk management needs to adapt to the rising prevalence of breaches, which account for 48% of all incidents.
- Implementing zero-trust security helps manage vendor access and establishes ongoing risk assessments.
- Continuous monitoring offers superior protection compared to traditional, one-time vendor assessments.
- Building a resilient security program centralizes data, assigns risk levels, and treats assessments as an ongoing process.
Table of Contents
- Why Are Third-Party Attacks So Prevalent?
- The Risks Introduced by Third-Party Partners
- The Zero-Trust Principle and Vendor Relationships
- Continuous Monitoring vs. Point-in-Time Checks
- Building a Resilient Security Program to Prevent Third-Party Breaches
- Protecting Your Organization From Third-Party Breaches With Onspring
Why Are Third-Party Attacks So Prevalent?
Cyber attackers typically look for the path of least resistance. That often means targeting a company’s supply chain rather than its main office.
Third parties often have privileged access to an organization’s data, without facing the same level of scrutiny as the company’s internal operations. A contractor managing IT infrastructure, for example, will often have deep visibility into core business operations, even if that contractor doesn’t have state-of-the-art security measures in place. Attackers exploit such security gaps whenever possible.
For many companies, especially larger organizations, the sheer number of third-party relationships makes risk assessment difficult. The median small to mid-sized business has 800 suppliers. Many of those suppliers have their own third-party relationships, such as subcontractors and cloud providers.
Every one of those relationships is a potential entry point for a cyber attacker, extending an organization’s risk exposure to every vendor, contractor, and third-party partnership. Internal measures like firewalls and threat detection software can’t protect against cyber risks outside an organization’s own walls. However, most businesses don’t have the resources to maintain visibility into the whole web of third-party relationships.
Contractors and partners can often fall into governance blind spots. In high-regulation sectors, internal employees go through a rigorous process of onboarding and security training. Vendors and contractors, though, often go through far less thorough security checks. Smart attackers realize this and take advantage.
The Risks Introduced by Third-Party Partners
Not all third-party risk is the same. Understanding its different presentations is the first step to combating it.
Unmonitored Access Points
Contractors often need access to internal systems to do their jobs. Unfortunately, organizations don’t always remember to remove that access when a contract ends or a project wraps up. Dormant credentials and forgotten integrations can provide convenient entry points for attackers.
Shared Data Exposure
Organizations often share sensitive information, such as customer data, financial records, or intellectual property, with their contractors. This can cause problems when contractors don’t secure their own networks adequately. If the contractor’s network is breached, that sensitive data may be exposed, creating multi-layered liability and compliance issues for everyone involved.
Fourth-Party and Nested Risk
Most vendors also have their own third-party relationships. If one of those vendors experiences a breach, the impact can ripple throughout the supply chain, compromising personal data across multiple vendor networks. This layered dependency is part of why breach numbers involving third parties have climbed so sharply.
Fragmented Incident Response
Many organizations lack a clear response plan for breaches that originate with one of their vendors. Who notifies whom, on what timeline and under what contractual obligations? Without a clear reporting structure and containment protocol, organizations can lose critical hours simply determining what took place and deciding on an action plan.
Combined Risks
It’s worth stressing that these risks are typically interconnected. Picture a contractor with excessive access to your network, working under weak security standards and handling your sensitive customer data, all while relying on their own under-vetted vendors. That’s a near-ideal situation for attackers looking for an easy target.
The Zero-Trust Principle and Vendor Relationships
Zero-trust security is built on a simple principle: Verify everything. Never grant any party access to your network and data based on trust alone. Instead, require potential users to earn trust on a continuous basis. Applying this principle to vendor relationships is one of the most effective ways to prevent third-party data breaches.
What does this look like in practice? Always grant access on a least-privilege basis, which means giving business partners, vendors, and contractors access to only the specific systems and data they need to perform their job functions. You should also limit access to a specific period in time, instead of allowing it to persist indefinitely.
Ensure that your team authenticates and authorizes third-party access requests individually, every time. Encourage your team to use automated tools where possible to streamline the process.
Organizations should also use network segmentation to restrict access to networks and systems. Log and monitor vendor connections, both to track vendor activity and to provide data for potential audits.
Zero-trust security also requires ongoing third-party risk assessment. Instead of a one-time security check, zero-trust verification routinely assesses vendors’ secruity postures, potential attack vectors, policies, technology, and security risks.
Continuous Monitoring vs. Point-in-Time Checks
Traditional vendor risk assessments often take the form of annual questionnaires, one-time audits, and contract-stage due diligence. But such approaches aren’t enough to protect organizations from a third-party data breach.
Vendor risk profiles can change rapidly due to changes and updates to their tools, staff, and security solutions. That’s why continuous monitoring is a much more effective future-proofing strategy than single point-in-time checks.
Security teams should strive for ongoing visibility into vendor security performance. That means monitoring for exposed credentials, tracking public breach disclosures involving partners, and reassessing risk whenever vendor relationships evolve or as new subcontractors are introduced into the chain. Continuous monitoring treats vendor relationships with the same vigilance applied to internal infrastructure.
It may feel overwhelming, at least at first. Having a game plan helps. Onspring’s eBook on zero-trust security lays out the structural shift required to minimize the risk of a third-party data breach. It includes a dedicated section on building continuous monitoring into vendor oversight programs and explains how GRC teams can operationalize ongoing assessment. Get an effective roadmap to protecting your organization from third-party breaches.
Building a Resilient Security Program to Prevent Third-Party Breaches
There are a few key steps that GRC and security teams should implement for effective third-party risk management. To start, teams should centralize all their vendor risk data so that security posture, access controls, and contractual obligations are all available in one location. When data is scattered across spreadsheets and buried in email threads, it’s much more difficult to spot security threats.
Teams should also assign each vendor a risk level, based on the sensitivity of the data or systems they have access to. Monitor high-risk vendors more closely. Establish your expectations around risk monitoring at the outset of every vendor relationship, and create a detailed plan for incident response and notification protocols.
Finally, it’s important to treat vendor risk assessment as a continuous process, not a one-time activity. There should be a plan in place for regular security assessments, especially when there are changes in the vendor relationship.
Protecting Your Organization From Third-Party Breaches With Onspring
Onspring supports a dynamic security program by giving your GRC teams a centralized platform to track vendor risk assessments, automate reassessment workflows and maintain a real-time view of third-party exposure across the organization. It’s a structured, continuously updated program that eliminates the old, fragmented, manual processes.
Ready to learn more about protecting your organization from third-party breaches? Download our ebook Understanding Zero-Trust Security and Its Impact on Your Organization.
