Third-party vendors are a necessary part of nearly every business. Outsourced operations, from IT to finance, can help increase operational efficiency but can also introduce vulnerabilities into your organization. Scrutiny is key when hiring and maintaining a business relationship with vendors, and that scrutiny should involve careful analysis of the following five vendor risks every business should monitor.
Operational Risk
In 2020, hundreds of businesses shut down due to the pandemic. If one of these shutdowns was a vendor of yours, the services they provided suddenly ceased. Some may have referred you to a competitor, others might have left you high and dry. Depending on the level of service that vendor provided, there’s no doubt your business had to scramble.
The best way to overcome operational risk is with a business continuity plan. In the event of a crisis, your business continuity plan outlines the steps needed to get back on your feet quickly.
Cybersecurity Risk
The pandemic negatively impacted this area of risk as well. Hundreds of pandemic-fueled breaches occurred in 2020, hitting businesses both large and small. Cybersecurity threats, including phishing, malware, ransomware, and data breaches, all increased in 2020 by exploiting pandemic news and preying on the fears surrounding COVID-19.
You may have initiatives in place to revamp and reallocate resources to your security program, but don’t overlook your vendors’ security programs. Annual assessments only take a snapshot in time of a vendor’s security practices. To be thorough, you need to continuously monitor every vendor and their attack surfaces.
Cloud Risk
An emerging area of vendor risk is cloud risk, resulting from the rush to market of SaaS tools. The benefits of these cloud-based software solutions are numerous: ease of use, 24/7 access, fast delivery, reliability, and affordability. However, they pose the same risks as regular third-party vendors, and maybe more.
When data only exists in an online, digital format, it is especially susceptible to hackers. Look for SaaS providers that encrypt data, offer two-factor authentication, and have a robust security program in place.
Compliance Risk
Many businesses are subject to compliance regulations. If your organization must adhere to certain industry regulations, so too must your vendors, especially in the area of personal data handling. Violations of these laws and regulations can result in stiff fines and penalties should an organization or its vendors be found guilty of a compliance failure.
To help protect your organization against this type of risk, vendor risk assessments should include a thorough analysis of the ongoing steps taken by the vendor to comply with industry and compliance regulations. Not all vendor risk management platforms are created equal so find one that is adaptable enough to integrate with applicable industry frameworks.
Reputational Risk
If any of the above four risks are compromised, reputational risk can result. If one of your vendors makes the headlines for a breach, your organization’s name will be quick to follow. You only need to research the SolarWinds debacle to see how a vendor’s reputation can be ruined quickly. This Austin-based company landed at the center of a Russian hacking campaign, making headlines around the world. Every business they serviced is now viewed as compromised and suspect.
Becoming Risk Averse
Our world is growing increasingly dependent on a remote workforce, which introduces new cybersecurity risks and attack surfaces every day for both you and your vendors. The first line of defense is identifying your top risks and taking steps to safeguard your business. Complete this form to receive a personalized walk-through of ProcessBolt and learn how we can enhance your organization’s third-party risk management program.
