What is Third Party Cyber Risk Management?

With the growing complexity and sophistication of cyber attacks, no business is immune to the risk of a cyber breach. It is crucial to recognise that suppliers, consultants, associates or even clients can serve as potential entry points for attackers. Therefore, assessing third-party cyber risk is essential to identify and address vulnerabilities that could compromise the security of a business.

By assessing third party cyber risk, businesses can take proactive measures to protect their sensitive data and systems. It helps organisations ensure that their third parties have implemented robust security measures and comply with industry regulations and best practices.

Understanding third-party cyber risk also enables businesses to prioritise and allocate resources effectively. By identifying areas or parties of high-risk, organisations can focus on strengthening their security controls, implementing monitoring mechanisms, and establishing incident response plans where necessary.

 

Understanding Third Party Risk Management (TPRM)

TPRM involves identifying, assessing, and controlling risks associated with operating with third parties. This process entails evaluating their security posture and ensuring their compliance with policies and regulations. By implementing TPRM, businesses can safeguard sensitive data and prevent cyber attacks.

 

The first step in TPRM is to identify and categorise third parties based on their criticality and level of access to the organisation’s systems and data. This helps in prioritising the evaluation and monitoring efforts accordingly.

 

Once third parties are identified, a comprehensive assessment of their security controls, policies, and practices needs to be conducted. This assessment can be done through industry specific questionnaires or tailored company specific questions. It provides insights into the third parties security posture and helps identify any potential vulnerabilities or gaps.

 

The assessment should be followed by risk evaluation and mitigation. Organisations need to review the assessment findings and determine the level of risk associated with each third party. This helps in prioritising risk mitigation efforts and developing appropriate risk management plans.

 

TPRM is an ongoing process that requires continuous monitoring and communication. It is essential to regularly review and assess third parties’ security controls, monitor their activities, and ensure compliance with agreed-upon security requirements.

 

Driving Factors for Increased Focus on Third Party Risk Management

Several factors have driven the increased focus on TPRM. Firstly, the growing reliance on third-parties by businesses has increased their exposure to cyber risk. As organisations continue to outsource various functions and services, their dependency on suppliers for critical operations and access to sensitive data has also increased. This amplifies the need for proper TPRM to ensure the security and integrity of the overall ecosystem.

 

The second factor driving the focus on TPRM is the increasing sophistication of cyber attacks. Cyber criminals have become adept at exploiting vulnerabilities in suppliers systems to gain unauthorised access to organisations’ networks. Over 70% of breaches are now occurring through the supply chain. This underscores the importance of thoroughly assessing and monitoring suppliers to minimise the risk of a breach.

 

Furthermore, regulatory bodies and industry frameworks are placing greater emphasis on TPRM. Compliance requirements, such as the EU’s General Data Protection Regulation (GDPR) and Cyber Essentials Plus and ISO27001, mandate organisations to ensure that their third parties meet specific security and privacy standards.

 

Common Problems with TPRM Programs

Despite the importance of TPRM, there are common challenges that businesses face when implementing such programs. These challenges include:

 

Lack of communication 

Inadequate communication between third parties and businesses can lead to misunderstandings regarding security requirements and policies. It is essential to establish clear lines of communication and ensure that both parties have a shared understanding of security expectations.

 

Limited visibility

Businesses may lack a comprehensive understanding of the security posture of their third parties. This can occur due to a lack of transparency from the third party themselves or insufficient mechanisms for monitoring third party activities. Organisations should strive for greater visibility into suppliers operations to mitigate any potential risks effectively.

 

Inadequate monitoring

Delayed or inadequate monitoring of third party activity can lead to missed security events and delays in incident response. Organisations need to establish monitoring mechanisms and processes that allow them to promptly detect and respond to any security incidents involving their third parties.

 

The Importance of  TPRM

TPRM is crucial for all businesses that operate with third parties; it enhances security, reduces risk exposure, and ensures compliance with regulations. By effectively managing third party risk, businesses can protect their valuable assets and maintain a high level of security.

 

A robust TPRM program helps organisations establish a clear framework for assessing and managing the risks associated with third-parties. This includes implementing appropriate security controls, conducting regular audits, and monitoring third party activities.

 

By proactively managing third party risk, businesses can prevent potential breaches and security incidents. This not only protects the organisation’s assets but also helps maintain customer trust and the overall reputation of the business.

 

TPRM also enhances regulatory compliance. Many regulatory frameworks require organisations to evaluate and manage the risk exposure from their third-parties. By adhering to these requirements, businesses can avoid penalties and legal consequences.

 

How Arx streamlines Third Party Cyber Risk Management

Arx offers a comprehensive solution to streamline third-party risk management processes, ensuring businesses can navigate the complex landscape of third party cyber risk with confidence and ease. From identifying and assessing third-parties to establishing stringent security requirements and providing ongoing monitoring, Arx empowers businesses to make informed decisions and proactively mitigate potential risks. With Arx, businesses can anticipate impacts, maintain security standards, and safeguard against cyber threats posed by third parties, enabling seamless and efficient business operations.

 

Identify and assess third-party risk

Arx evaluates the risk exposure of each third party, including their security posture and compliance with policies and regulations. With Arx you can maintain a comprehensive list of all third parties used, categorise them by risk level, and conduct regular automated assessments.

 

Establish security requirements

Arx helps businesses define specific security requirements for all third-parties, including data protection, access control, and incident response protocols. Establish clear contractual language outlining the security expectations and responsibilities of third parties.

 

Ongoing monitoring 

Arx Regularly monitors third party activity, reviews security reports, and helps companies conduct assessments on third parties. Arx provides the tools and resources to detect any potential security risks or vulnerabilities that may arise from the actions or systems of third-parties.

 

Enables easy business decision making

Arx analyses risks to help you anticipate potential impacts. This allows you to make informed business decisions to mitigate chances of a successful breach by attackers targeting your company. Arx equips you with the necessary tools to take proactive steps in mitigating cyber risks posed by third parties.