As operations become increasingly complex, organizations have to be increasingly dependent on third-party vendors and service providers. This dependence brings about a lot of security risks.
This section considers some aspects of security related to third parties, among them being things like contractual obligations, minimum security requirements, supply chain risk management, and governance relative to vendors.
Provider Contractual Security
Understanding Contractual Security: The provider contractual security deals with identification of security responsibilities in different contracts, which are initiated with third-party providers. This contract should specify the security measures that need to be implemented by the vendors in data protection and also assurance of proper regulation compliance.
Example: In the contract between a health organization and cloud service providers, there would be inclusion of such clauses that obligate the latter to maintain HIPAA regulations, encrypt information resting and in transit, and conduct periodic audits on security issues. This will ensure both parties are on the same page concerning responsibilities regarding data protection.
Minimum Security Requirements
Baselines: Minimum security requirements are quite significant in ensuring that the third-party vendors create at least a minimum level of security. Such requirements have to be established for security considerations in order to consider a number of issues regarding access controls, data encryption, and incident response protocols.
Example: Yale University has set Minimum Security Standards that apply to all IT systems with access to Yale data. These minimum standards force vendors using a third-party service to take necessary measures towards vulnerability assessments, encryption of sensitive data, and timely patch management to reduce the risks associated.
Supply Chain Risk Management
Supply chain risk management includes the processes for identifying and mitigating risks that accompany third-party suppliers and vendors. That means analyzing suppliers’ security posture and evaluating potential disruptions in the supply chain.
Example: This can be illustrated by a manufacturing company that performs a risk assessment of its suppliers in terms of the security practices of those suppliers. If one or more of those suppliers has weak cybersecurity procedures, controls can be added to the process or different suppliers utilized to mitigate risk.
Vendor Governance Frameworks
Vendor governance refers to the various processes and policies implemented by organizations in managing their relationships with third-party vendors. Some of the services involved range from monitoring the performance and security compliance standards of the vendors to dealing with security incidents.
Example: A financial institution can adopt a vendor governance program which includes periodic security reviews, performance metrics, and compliance audits. These will ensure the vendors maintain the required standards of security and enable the organization to respond well in case of any security breaches.
Acquisition
Security Considerations in Acquisitions: Acquisition of an organization involves evaluation of its security posture. This would take into consideration all the existing security policies, practices, and vulnerabilities that may arise and impact the acquiring company.
Example: A technology company that is taking over a small-scale startup should foremost conduct a proper examination of security to find all the potential loopholes in the systems of the latter. This will give the acquirer insight into the associated risks and implement security measures accordingly after the takeover.
Divestitures
Managing Security for Divestitures: Divestiture in business means the selling off of parts, and in doing so, organizations can be led to security difficulties. These need to consider that sensitive data are kept secure during the transition period, and the divested entity continues to be in compliance with standards of security.
Example: When a large corporation divests from one of its subsidiaries, the transaction should have a data transfer plan where secure migration of data with access controls is in place, and compliance checks are performed in order to maintain sensitive information protection during this process.
Third-Party Assessment and Monitoring
Proper regular assessment and monitoring of third-party vendors need to be carried out in a continuous manner for maintaining security. The organizations shall review the security practices and their compliance with pre-set standards of third-party vendors from time to time.
Example: A retail company may engage in annual security audits of all the vendors involved in payment processing to ensure their compliance with the PCI DSS. Through monitoring, one will be able to identify any emerging risks and also ensure that the vendors maintain adequate levels of security.
Outsourcing and Offshoring
Security Implication Outsourcing and offshoring introduce added risks to security, particularly with sensitive data handled by third-party vendors in sometimes less-than-friendly jurisdictions. Their operations should be made to meet the same standards in terms of security as those within the organization itself.
Example: A company outsourcing its customer service to a call centre in another country should take necessary measures to make the centre implement efficient data protection, including staff training in data privacy and handling of customer information in security.
Conclusion
Third-party security management is one of the most critical cybersecurity concerns for any organization. Well-defined contractual responsibilities, minimum defined levels of security, and comprehensive governance frameworks help organizations mitigate the risks involved in third-party relationships and protect sensitive information.