Category Archives: Third-Party

Key Risk and Control Indicators for Supplier, Supply Chain, and Third-Party Risks

Governance Risk & Compliance, Risk Analysis, Risk Assessment, Risk management, Risks, Third-Party, Vendor, Vendors, , ,

To effectively monitor supplier risk, supply chain risk, or third-party risk, you can utilize Key Risk Indicators (KRIs) and Key Control Indicators (KCIs). These metrics will help you assess potential risks and the effectiveness of controls, while also providing insights into trends over time.

Key Risk and Control Indicators for Supplier, Supply Chain, and Third-Party Risks

KRIs are metrics used to signal potential risks and vulnerabilities within the supply chain or third-party relationships. They are forward-looking and help you anticipate problems before they become critical. Examples of KRIs in this area include:

  1. Supplier Financial Stability:
  • KRI Example: Credit rating changes, late payment history, or declining revenue.
  • Scoring: Quantitative (e.g., credit score) or Qualitative (e.g., High, Medium, Low).
  • Trend Analysis: Monitor credit score trends over time, showing potential risks of insolvency.
  1. Delivery Performance:
  • KRI Example: On-time delivery rate, missed deadlines, or lead time variability.
  • Scoring: Quantitative (% on-time deliveries, days late).
  • Trend Analysis: Plot historical delivery data to identify degradation in supplier performance.
  1. Compliance and Regulatory Risk:
  • KRI Example: Frequency of compliance violations, audit findings, or changes in regulatory status.
  • Scoring: Quantitative (number of violations) or Qualitative (compliance level: Full, Partial, Non-compliant).
  • Trend Analysis: Track compliance issues over time to spot recurring or increasing risks.
  1. Supplier Concentration Risk:
  • KRI Example: Percentage of critical goods supplied by a single supplier.
  • Scoring: Quantitative (% of total procurement from one supplier).
  • Trend Analysis: Monitor shifts in supplier concentration to identify dependency risks.
  1. Geopolitical Risk Exposure:
  • KRI Example: Number of suppliers in high-risk regions (e.g., war zones, politically unstable areas).
  • Scoring: Qualitative (High, Medium, Low based on geographic stability) or Quantitative (number of suppliers).
  • Trend Analysis: Track geopolitical risk exposure by region and its potential impact on the supply chain.

Key Control Indicators (KCIs) for Supplier, Supply Chain, and Third-Party Risks

KCIs monitor the effectiveness of controls that are in place to mitigate risks. They help ensure that appropriate actions are being taken to manage identified risks.

  1. Supplier Audits and Assessments:
  • KCI Example: Number and frequency of completed supplier audits.
  • Scoring: Quantitative (number of audits) or Qualitative (audit compliance level: High, Medium, Low).
  • Trend Analysis: Track the completion of audits and any recurring issues or improvements.
  1. Contractual Compliance:
  • KCI Example: Percentage of suppliers in compliance with contractual terms.
  • Scoring: Quantitative (% of compliant contracts).
  • Trend Analysis: Measure trends in contract compliance to assess control effectiveness over time.
  1. Supply Chain Visibility:
  • KCI Example: Availability of real-time data across the supply chain (e.g., inventory levels, shipping status).
  • Scoring: Quantitative (real-time data integration rate) or Qualitative (High, Medium, Low visibility).
  • Trend Analysis: Monitor the improvement or decline in supply chain transparency and control effectiveness.
  1. Incident Response Time:
  • KCI Example: Average time to resolve supply chain disruptions (e.g., cyberattacks, natural disasters).
  • Scoring: Quantitative (time to resolve incidents in hours or days).
  • Trend Analysis: Track the response time to incidents to measure the efficiency of controls.
  1. Training and Certification:
  • KCI Example: Percentage of supplier personnel trained in cybersecurity or compliance.
  • Scoring: Quantitative (% of trained personnel).
  • Trend Analysis: Track training completion rates over time to ensure ongoing compliance and control enhancement.

Scoring KRIs and KCIs:

Both quantitative and qualitative scoring methods can be used to measure KRIs and KCIs, depending on the specific risk or control being monitored:

  • Quantitative Scoring: Often numeric, providing hard data (e.g., % on-time deliveries, number of incidents). This is useful for trend analysis and visualizing data over time.
  • Qualitative Scoring: Typically categorical (e.g., High, Medium, Low). Useful when the data is more subjective or when precise numbers are not available but can still indicate trends.

Trend Analysis for KRIs and KCIs:

  • Use dashboards and reporting tools (e.g., Power BI, Tableau) to visualize trends in both KRIs and KCIs.
  • Track the progression of indicators over time to detect improvements, deteriorations, or sudden changes.
  • Plot both KRIs and KCIs together to show how risk exposure relates to the effectiveness of controls.

By using this combination of KRIs and KCIs, and applying either quantitative or qualitative scoring methods, you can develop a robust framework for assessing supplier and third-party risks while also tracking control effectiveness. This allows for ongoing monitoring and the ability to display trends over time, providing a clear picture of risk management performance.

Tools for KRIs and KCIs for supplier risk, supply chain, and third-party risk management:

Here are several tools that provide Key Risk Indicators (KRIs) and Key Control Indicators (KCIs) for supplier risk, supply chain, and third-party risk management, along with built-in capabilities for scoring and trend analysis with minimal tuning:

A. Prevalent Third-Party Risk Management Platform

  • Capabilities: Prevalent offers automated risk assessments, scoring, and monitoring of third-party risks, including Key Risk Indicators. It includes features like dynamic risk scoring, risk reports, and dashboards that allow you to track trends over time.
  • Out-of-the-box features: Prebuilt templates and vendor risk profiles for faster deployment. Minimal tuning is needed to customize risk indicators.
  • Scoring: Quantitative and qualitative scoring based on risk factors like financial health, regulatory compliance, and operational risk.
  • Trend analysis: Visualize risk trends across multiple suppliers over time through dashboards.
  • Website: Prevalent

B. RiskWatch

  • Capabilities: RiskWatch provides automated risk assessments, scoring, and monitoring for supply chain and third-party risks. It includes out-of-the-box templates for creating KRIs and KCIs across different domains like cybersecurity, operational risk, and vendor compliance.
  • Out-of-the-box features: Prebuilt assessments for vendor risk management and supply chain risk with customizable KPIs.
  • Scoring: Quantitative scoring (e.g., risk scores) and qualitative ratings (e.g., high, medium, low) to reflect overall risk.
  • Trend analysis: Automatically generate risk trend reports to view changes over time.
  • Website: RiskWatch

C. MetricStream Third-Party Risk Management

  • Capabilities: MetricStream offers a comprehensive platform for managing third-party and supply chain risk. It supports KRIs and KCIs through built-in risk scoring, assessments, and monitoring.
  • Out-of-the-box features: Pre-configured templates and risk indicators for third-party risk assessments with options to customize.
  • Scoring: Quantitative and qualitative scoring based on factors like vendor performance, compliance, and cybersecurity.
  • Trend analysis: Visual dashboards for monitoring key risk/control trends and risk assessments over time.
  • Website: MetricStream

D. Aravo Third-Party Risk Management

  • Capabilities: Aravo provides a platform for third-party risk management with built-in KRIs and KCIs to assess and monitor suppliers and vendors. The platform comes with automated workflows for risk assessments and tracking.
  • Out-of-the-box features: Pre-configured templates for third-party risk with minimal need for customization.
  • Scoring: Both quantitative and qualitative risk scoring, based on compliance and operational risks.
  • Trend analysis: Real-time dashboards and reports that track and display risk trends and the effectiveness of control measures.
  • Website: Aravo

E. RSA Archer Third-Party Governance

  • Capabilities: RSA Archer offers robust tools for managing third-party and supply chain risks, with pre-configured KRIs, KCIs, and workflows. It also has reporting capabilities that visualize risks and control trends over time.
  • Out-of-the-box features: Configurable dashboards, risk templates, and automated workflows for supplier risk management.
  • Scoring: Quantitative risk scoring through risk indicators, combined with qualitative evaluations of vendor performance and compliance.
  • Trend analysis: Visual dashboards for monitoring trends, and built-in analytics for historical comparisons of risk and control performance.
  • Website: RSA Archer

F. LogicManager

  • Capabilities: LogicManager includes features for managing third-party risk, with configurable risk indicators and automated reporting for tracking trends in both risk exposure and control effectiveness.
  • Out-of-the-box features: Prebuilt templates and automated workflows to quickly deploy risk assessments and KRIs.
  • Scoring: Risk scores based on vendor financial health, regulatory compliance, and operational risk. Both qualitative and quantitative metrics can be incorporated.
  • Trend analysis: Trend analysis via automated reporting and dashboards that track risk factors over time.
  • Website: LogicManager

G. Coupa Risk Assess

  • Capabilities: Coupa’s risk management module provides an integrated platform for assessing supply chain and third-party risks. It uses KRIs and KCIs to monitor supplier performance and compliance with minimal setup.
  • Out-of-the-box features: Preconfigured risk indicators and reporting templates for quick implementation.
  • Scoring: Quantitative scoring using real-time risk data from multiple sources, as well as qualitative assessments.
  • Trend analysis: Built-in analytics and visualizations that show trends in supplier risk over time.
  • Website: Coupa

H. ProcessUnity Vendor Risk Management

  • Capabilities: ProcessUnity provides a vendor risk management solution that tracks key risks and controls for third-party suppliers. It includes KRIs and KCIs, real-time reporting, and analytics to display trends in vendor risk.
  • Out-of-the-box features: Ready-to-use templates for vendor risk scoring and assessments.
  • Scoring: Quantitative and qualitative risk assessments based on supplier financial health, regulatory compliance, and cybersecurity posture.
  • Trend analysis: Customizable dashboards to visualize risk and control trends over time.
  • Website: ProcessUnity

Conclusion:

These tools are designed to automate the tracking of Key Risk Indicators (KRIs) and Key Control Indicators (KCIs), providing both quantitative and qualitative scoring, as well as trend analysis. Many of them come with out-of-the-box templates and minimal tuning requirements, making them suitable for quickly implementing a risk management framework for supplier and third-party risk.

Other References:

https://www.prevalent.net/blog/use-nist-sp-800-53-for-third-party-supply-chain-risk-management

https://www.upguard.com/blog/kpis-to-measure-tprm

https://www.venminder.com/blog/examples-key-risk-indicators-third-party-management

How Third-Party Risk Fits In Your GRC Program

Best Practices, Coaching, Fundamentals, Governance Risk & Compliance, GRC, How To, Methodology, Program, Risk Analysis, Risk management, Risks, Third-Party, TPRM, Understand, , , , , , , ,
Screenshot

Third-Party Risk: A Crucial Element of Your GRC Program

In the increasingly interconnected landscape of modern business, organizations frequently leverage third-party vendors for a variety of services and solutions, from cloud storage and IT infrastructure to payroll and customer management systems. 

While these partnerships can drive efficiency, reduce costs, and enable companies to focus on their core competencies, they also introduce third-party risks that organizations must manage. 

The challenge of mitigating these risks necessitates their integration into a comprehensive Governance, Risk Management, and Compliance (GRC) program.

i. What is GRC?

Before delving into the role of third-party risk, it’s essential to understand GRC. Governance, Risk, and Compliance encompass the policies, processes, and controls put in place by organizations to ensure they operate efficiently, ethically, and in compliance with applicable laws and regulations.

o Governance: Refers to the system of rules, processes, and structures by which an organization is directed and controlled.

o Risk Management: Involves identifying, assessing, and mitigating risks that could potentially hinder an organization’s ability to achieve its objectives.

o Compliance: Ensures that an organization adheres to relevant laws, regulations, standards, and internal policies.

ii. Why Third-Party Risk Matters

Third-party relationships can expose your organization to a variety of risks, including:

o Security breaches: Third-party vendors may have inadequate security measures, making them vulnerable to cyberattacks that could compromise your data.

o Compliance failures: Third parties may not comply with relevant regulations, putting your organization at risk of fines and reputational damage.

o Business continuity disruptions: If a third-party vendor experiences a disruption, it can impact your operations.

iii. Understanding Third-Party Risks

Third-party risks arise from reliance on external entities to perform or support business functions. These risks can be multifaceted, encompassing cyber threats, data privacy concerns, operational vulnerabilities, and compliance lapses. 

A failure or breach in a vendor’s systems can have direct repercussions on an organization, leading to financial loss, reputational damage, and regulatory penalties.

The globalized economy and the digital nature of business operations have amplified these risks, making third-party risk management (TPRM) an essential component of any robust GRC program.

iv. Integrating TPRM into GRC

By incorporating TPRM into your GRC program, you can proactively identify, assess, and mitigate third-party risks. Here’s how:

o Vendor onboarding: Establish a process for vetting potential third parties, including risk assessments and security reviews.

o Contract management: Ensure that contracts with third parties clearly define risk expectations and responsibilities.

o Ongoing monitoring: Continuously monitor the performance of third parties and update risk assessments as needed.

v. Incorporating Risk from External Partners into Governance, Risk Management, and Compliance Frameworks

The integration of third-party risk management into your GRC program involves several key steps:

A. Risk Identification and Assessment

Start by cataloging all third parties that interact with your business processes and data. Conduct thorough risk assessments for each, considering the nature of the interaction, the sensitivity of shared data, and the third party’s security and compliance posture. This process helps prioritize risks based on their potential impact and likelihood, guiding resource allocation for mitigation efforts.

B. Due Diligence and Ongoing Monitoring

Due diligence is critical before onboarding a new third-party service provider and should be an integral part of the GRC framework. This includes evaluating the vendor’s security measures, compliance with relevant regulations (e.g., GDPR, HIPAA), and their ability to maintain service levels under adverse conditions. Ongoing monitoring is equally important to ensure that third parties continue to meet these standards throughout the duration of their contract.

C. Contract Management and Compliance

Effective contract management ensures that agreements with third parties include clauses and standards for security, compliance, and data privacy that align with your organization’s policies. This includes the right to audit the third party’s practices, data breach notification requirements, and specific levels of service. Compliance management ensures that third-party practices align with regulatory requirements and industry standards, mitigating legal and regulatory risks.

D. Ongoing Monitoring and Oversight

   o Continuous Monitoring: Implement processes to monitor third-party activities, performance, and compliance with contractual obligations and regulatory requirements.

   o Regular Assessments: Conduct periodic risk assessments and audits to ensure ongoing adherence to established standards and identify emerging risks.

E. Incident Management and Business Continuity Planning

Prepare for potential incidents involving third parties by establishing processes for swift action and communication. Your GRC program should include third-party risks in its incident response and business continuity plans, ensuring that there are procedures in place to minimize downtime and mitigate the impact of any breaches or failures.

F. Education and Awareness

Educate your organization’s stakeholders about the risks associated with third parties and the importance of due diligence and ongoing monitoring. A culture of risk awareness can drive more responsible decision-making and risk management practices across all levels of the organization.

vi. Challenges and Considerations

Integrating third-party risk into your GRC program involves navigating challenges such as the complexity of third-party relationships, the dynamic nature of risk, and the necessity of balancing risk management with business innovation. A successful program requires a combination of thorough assessment, continuous monitoring, and flexible strategies that can adapt to new threats and business needs.

vii. Strategies for Successful Integration

o Centralize Third-Party Risk Management: Establish a unified program that oversees all third-party risks, ensuring consistency and eliminating silos.

o Leverage Technology: Utilize GRC technology platforms that incorporate third-party risk management capabilities. This can streamline assessments, monitoring, and reporting processes.

o Build Cross-Functional Teams: Create a cross-disciplinary team involving members from legal, procurement, IT, compliance, and other relevant departments to address multifaceted third-party risks.

o Educate and Train: Foster a culture of risk awareness across the organization, including understanding the significance of third-party risks and the role of employees in mitigating them.

o Establish Strong Contracts and SLAs: Define clear expectations, responsibilities, and consequences related to security, compliance, and performance in all third-party contracts and Service Level Agreements (SLAs).

viii. Benefits of Effective TPRM

A well-integrated TPRM program can bring significant benefits to your organization:

o Reduced risk of security breaches and data loss

o Enhanced compliance posture

o Improved operational resilience

o Stronger vendor relationships

ix. Conclusion

Incorporating third-party risk into your GRC program is not a one-time activity but an ongoing process that evolves with the threat landscape, technological advances, and regulatory changes. 

As organizations continue to extend their operations through a network of third-party relationships, the importance of a holistic approach to third-party risk in GRC strategies cannot be overstated. 

By effectively embedding third-party risk considerations into governance, risk management, and compliance activities, organizations can protect their assets, reputation, and ultimately, their success in the market.

x. Further references 

Third-Party Risk Management Considerations for Your GRC Strategy

LinkedIn · Nikhil Patel1 week agoHow third-party risk shapes your GRC program | Nikhil Patel posted on the topic

Venminderhttps://www.venminder.com › blogThe Differences Between a TPRM and GRC Platform and Why You May Need Both

GuidePoint Securityhttps://www.guidepointsecurity.com › …Addressing Third Party Risk In Your GRC Program

iTech GRChttps://itechgrc.com › what-is-a-thir…What is a Third-Party Risk Assessment? – IBM OpenPages GRC Services

Centraleyeshttps://www.centraleyes.com › key…Understanding the Key Differences Between TPRM and GRC

Secureframehttps://secureframe.com › hub › grcWhat Is Third-Party Risk Management + Policy

GRC 20/20 Research, LLChttps://grc2020.com › EventGRC & Third Parties: Building a Holistic Approach to Managing Risk

SponsoredS&P Globalhttps://www.spglobal.com › assessments › ky3pImproved Vendor Relationships – Third Party Risk Assessments

Sponsoredtuv.comhttps://www.tuv.com › vendor › assessmentThird Party Risk Assessment | Vendor Risk Management

GRF CPAs & Advisorshttps://www.grfcpa.com › resourceA Guide to Third Party Risk Management – GRF …

Bitsighthttps://www.bitsight.com › blog › u…What is TPRM? (Guide to Third Party Risk Management)

LinkedIn · Priyanka R8 months agoBest Practices for Managing Third-Party Risk in a GRC Program

ISACAhttps://www.isaca.org › industry-newsGRC Programming: The Third-Party Security Web

SponsoredS&P Globalhttps://www.spglobal.com › assessments › ky3pImproved Vendor Relationships – Third Party Risk Assessments

Best Practices for Third-Party Data Privacy

Best Practices, Data, Governance Risk & Compliance, Privacy, Third-Party, ,

Ensuring third-party data privacy is crucial in maintaining trust and demonstrating compliance with various privacy regulations. 

Some best practices for third-party data privacy:

A. Conduct Due Diligence:

o Assess the third party’s data security practices: Evaluate their security controls, policies, and procedures for protecting data.

o Review their privacy policies: Understand how they collect, use, and share data, and ensure their practices align with your own.

o Request third-party audits: Request independent audits of their data security and privacy practices for deeper insights.

B. Data Mapping:

   o Practice: Understand and document the flow of third-party data throughout your systems.

   o Rationale: Enables better control and accountability over the lifecycle of third-party data.

C. Clear Data Purpose and Consent:

   o Practice: Clearly communicate the purpose for collecting third-party data and obtain explicit consent.

   o Rationale: Ensures transparency and compliance with data protection regulations.

D. Data Minimization:

   o Practice: Collect and process only the minimum amount of data necessary for the intended purpose.

   o Rationale: Reduces the risk associated with unnecessary data exposure.

E. Contractual Agreements:

o Include clear data privacy clauses: Clearly define data ownership, usage restrictions, and data breach notification protocols in your contracts.

o Limit data sharing: Specify the types of data that can be shared with the third party and the purposes for sharing.

o Implement data minimization: Limit the amount of data shared to the minimum necessary for the intended purpose.

F. Contractual Obligations:

   o Practice: Clearly define data protection clauses in contracts with third parties.

   o Rationale: Establishes legal obligations and expectations regarding data privacy.

G. Audits and Assessments: Regularly audit third parties to ensure they’re maintaining the agreed-upon privacy practices. This can be done through reviews, surveys, onsite visits, and third-party audits.

H. Security Assessments:

   o Practice: Regularly assess the security measures of third parties handling sensitive data.

   o Rationale: Ensures that third parties maintain a robust security posture.

I. Data Governance and Security:

o Implement data security controls: Utilize encryption, access control mechanisms, and vulnerability management practices to protect data.

o Monitor data access: Track and monitor user access to data and identify potential anomalies or unauthorized activities.

o Conduct regular security assessments: Regularly evaluate the security posture of your third-party vendors to identify and mitigate vulnerabilities.

J. Transparency and Communication:

o Provide clear privacy notices to users: Inform users about the types of data you collect, how it is used, and with whom it is shared.

o Be transparent about third-party data sharing: Inform users about the third parties with whom you share their data and the purposes for sharing.

o Establish communication channels: Create open communication channels with users to address their privacy concerns and questions.

K. Compliance and Regulatory Requirements:

o Understand applicable data privacy laws and regulations: Ensure your data privacy practices comply with relevant regulations like GDPR, CCPA, and HIPAA.

o Require third-party compliance: Hold your vendors accountable for complying with applicable data privacy regulations.

o Monitor compliance regularly: Regularly assess and monitor your vendors’ compliance with data privacy regulations.

L. Vendor Risk Management:

   o Practice: Implement a robust vendor risk management program.

   o Rationale: Evaluates and manages the risks associated with third-party relationships.

M. Data Privacy Impact Assessments (DPIA):

   o Practice: Conduct DPIAs for third-party data processing activities.

   o Rationale: Identifies and mitigates potential privacy risks associated with specific data processing activities.

N. Vendor Management and Monitoring:

o Develop a comprehensive vendor management program: This program should include vendor selection, onboarding, monitoring, and performance evaluation processes.

o Conduct periodic audits and assessments: Regularly evaluate your vendors’ data privacy practices and compliance with contractual obligations.

o Maintain a data inventory: Keep track of all data shared with third parties, including the type of data, purpose, and recipient.

O. User Access Controls:

    o Practice: Implement strict access controls to limit internal access to third-party data.

    o Rationale: Reduces the risk of unauthorized access and misuse.

P. Data Breach Response Plan:

    o Practice: Develop and test a data breach response plan specific to third-party incidents.

    o Rationale: Enables a swift and coordinated response in case of a data breach.

Q. Training: Provide training to the third-party vendors about your organization’s data privacy policies and expectations. Similarly, ensure the third party is appropriately training its personnel.

R. Educate Employees:

    o Practice: Train employees on the importance of third-party data privacy.

    o Rationale: Raises awareness and promotes a privacy-conscious culture within the organization.

S. Regular Updates on Privacy Policies:

    o Practice: Keep third parties informed about changes in privacy policies.

    o Rationale: Ensures ongoing alignment with evolving privacy standards and regulations.

T. Incident Response Planning: Expect the best but plan for the worst. Have a well-defined incident response plan in place outlining what steps need to be taken in case of a data breach, along with clear roles and responsibilities.

U. Privacy by Design: Ensure the third-party solutions you use are built with privacy in mind, using principles like anonymization, encryption, least privilege, etc.

V. Document Everything: Keep detailed records of all audits, assessments, trainings, contracts, and incident responses related to third-party vendors. This will be crucial for demonstrating measures taken for data privacy, if needed.

W. Continuous Monitoring: Keep track of third-party activities that might affect your data privacy commitments. Develop a system to continuously monitor their compliance.

X. Continuous Improvement:

o Regularly review and update your data privacy policies and procedures: Adapt your practices to reflect evolving technologies, regulations, and industry best practices.

o Seek expert advice: Consult with data privacy professionals to ensure your practices are aligned with current regulations and best practices.

o Foster a culture of data privacy: Promote a culture within your organization and with your vendors that prioritizes data privacy and user trust.

Protecting user data privacy is a crucial responsibility for organizations, and it becomes even more complex when working with third-party vendors.

By implementing these best practices, organizations can minimize the risks associated with third-party data sharing and demonstrate their commitment to user privacy. Building trust with users and maintaining compliance with regulations requires a continuous effort and a collaborative approach with all stakeholders.

https://www.linkedin.com/advice/1/how-can-you-secure-data-privacy-during-third-party-kavje

https://www.upguard.com/blog/data-protection-for-third-parties

https://www.onetrust.com/resources/tprm-privacy-compliance-ten-best-practices-when-working-with-third-parties-webinar/

https://www.titanfile.com/blog/data-security-best-practices/

https://www.linkedin.com/advice/1/how-do-you-protect-your-data-when-using-third-party

NextGen TPRM and elevated cyber risk

Cyber risk, Elevated, Governance Risk & Compliance, NextGen, Risk management, Third-Party, TPRM, , , , , ,

Next-Generation Third-Party Risk Management (NextGen TPRM) is a vital approach to managing cyber risk linked to business partnerships and collaborations. 

As organizations broaden their digital footprints, they increasingly rely on third-party providers for various services. However, this can lead to heightened cyber risk because organizations cannot control their partners’ security measures directly.

Traditional Third-Party Risk Management (TPRM) approaches often fall short in addressing the evolving threat landscape. This necessitates a transition to NextGen TPRM, a more dynamic and comprehensive approach to managing third-party cyber risk.

i. Challenges of Traditional TPRM

A. Static and infrequent assessments: Traditional TPRM methods rely on periodic assessments, failing to capture real-time changes in risk posture.

B. Limited visibility: Lack of comprehensive insights into third-party security posture and vulnerabilities.

C. Reliance on self-assessments: Over-dependence on self-reported information from third parties, potentially masking actual risks.

D. Manual and inefficient processes: Time-consuming manual processes hinder the scalability and effectiveness of TPRM.

ii. Benefits of NextGen TPRM

A. Continuous monitoring: Real-time monitoring of third-party security posture and threats to proactively identify and mitigate risks.

B. Enhanced visibility: Deeper insights into third-party security controls, vulnerabilities, and potential attack vectors.

C. Automated assessments: Utilizes automation to streamline assessments, reduce manual effort, and improve efficiency.

D. Integrated risk management: Integrates seamlessly with existing risk management frameworks for holistic risk management.

E. Data-driven decisions: Leverages data analytics to inform risk-based decisions and prioritize mitigation efforts.

iii. Key Features of NextGen TPRM Solutions

A. Automated risk assessments: Employ AI and machine learning to analyze a wider range of data points and identify potential risks.

B. Continuous monitoring: Leverage threat intelligence and security automation tools to provide real-time visibility into third-party security posture.

C. Collaboration tools: Facilitate secure communication and collaboration between organizations and their third parties.

D. Standardized reporting: Provide consistent and transparent reporting on third-party risks and mitigation actions.

E. Risk-based prioritization: Identify and prioritize critical third-party risks based on their potential impact and likelihood of occurrence.

Elevated cyber risk in the context of Third-Party Risk Management (TPRM) arises when the security measures of these third parties are lacking. 

If the third-party suffers a data breach, the organization’s security and reputation can be severely impacted. Therefore, NextGen TPRM strategies are essential for mitigating these elevated cyber risks.

iv. Implementing NextGen TPRM

A. Scalable TPRM Framework:

    – Strategy: Develop a scalable TPRM framework that adapts to the organization’s growth and evolving cyber risks.

    – Rationale: Ensures the sustainability and effectiveness of TPRM practices over time.

B. Develop and implement policies and procedures: 

   – Strategy: NextGen TPRM (Third-Party Risk Management) represents a significant shift from traditional approaches, emphasizing continuous monitoring, enhanced visibility, and automation.    – Rationale: Implementing NextGen TPRM requires robust policies and procedures that guide the entire lifecycle of third-party relationships.

C. Continuous Monitoring:

   – Strategy: Implement continuous monitoring tools to assess third-party cyber risks in real-time.

   – Rationale: Enables proactive identification of potential threats and vulnerabilities.

D. Automated Risk Assessment:

   – Strategy: Utilize automated tools to assess and score the cybersecurity posture of third parties.

   – Rationale: Enhances efficiency and provides a more accurate and timely risk assessment.

E. Dynamic Risk Scoring:

   – Strategy: Implement dynamic risk scoring that adapts to changing cyber threat landscapes.

   – Rationale: Ensures a more responsive risk management approach to evolving cyber risks.

F. Threat Intelligence Integration:

   – Strategy: Integrate threat intelligence feeds to stay informed about emerging cyber threats.

   – Rationale: Enhances the ability to anticipate and mitigate risks based on current threat landscapes.

G. Contractual Cybersecurity Requirements:

   – Strategy: Include robust cybersecurity requirements in third-party contracts.

   – Rationale: Sets clear expectations for cybersecurity practices and standards.

H. Joint-Testing and Audits: 

   – Strategy: Conduct regular joint-testing and audits of third-party security measures and compliance. 

   – Rationale: Include provisions for this in contractual agreements.

I. Incident Response Planning:

   – Strategy: Collaborate with third parties on incident response planning and coordination.

   – Rationale: Ensures a swift and coordinated response in case of a cybersecurity incident.

J. Supply Chain Security:

   – Strategy: Extend security measures to the entire supply chain ecosystem.

   – Rationale: Addresses risks that may originate from interconnected suppliers and partners.

K. Regulatory Compliance Adherence:

   – Strategy: Ensure third parties comply with relevant cybersecurity regulations.

   – Rationale: Mitigates legal and compliance risks associated with cybersecurity breaches.

L. Vulnerability Management:

   – Strategy: Collaborate with third parties on effective vulnerability management practices.

   – Rationale: Reduces the likelihood of cyber incidents resulting from known vulnerabilities.

M. Cybersecurity Training for Third Parties:

    – Strategy: Provide cybersecurity training and awareness programs to third-party personnel.

    – Rationale: Strengthens the overall cybersecurity posture by extending knowledge and best practices.

N. Blockchain for Supply Chain Transparency:

    – Strategy: Explore blockchain technology to enhance transparency in the supply chain.

    – Rationale: Increases visibility and traceability, reducing the risk of malicious activities.

In today’s interconnected world, organizations rely heavily on third-party vendors for various services and functions. While this provides agility and efficiency, it also introduces significant cyber risks.

By embracing NextGen TPRM, organizations can gain greater visibility and control over their third-party risks, ultimately leading to a more secure and resilient IT ecosystem. This is crucial in today’s environment, where cyberattacks are increasingly sophisticated and targeted towards vulnerabilities within the supply chain.

https://www2.deloitte.com/content/dam/Deloitte/us/Documents/risk/us-the-rising-importance-of-tprm.pdf

https://kpmg.com/in/en/home/services/advisory/cyber-security/strategy-and-governance/third-party-risk-management.html

Your TPRM Program Must Account for Geopolitical Risk

https://www.sentinelone.com/blog/hidden-vulnerabilities-effective-third-party-risk-management-in-the-age-of-supply-chain-attacks/

https://www.cybergrx.com/resources/the-one-thing-all-modern-third-party-cyber-risk-management-programs-do

Benefits of Third-party Penetration Testing

Benefits, Best Practices, Coaching, Governance Risk & Compliance, Penetration Testing, Third-Party, , , ,

Third-party penetration testing, also known as ethical hacking, is a proactive and authorized attempt that offers various benefits to organizations seeking to enhance their cybersecurity posture. 

Here are some significant benefits of opting for this:

A. Identifying Vulnerabilities: Penetration testing helps identify vulnerabilities in systems, networks, and applications that could be exploited by malicious actors. This proactive approach allows organizations to address weaknesses before they can be leveraged for cyberattacks.

B. Real-World Simulation: Penetration tests simulate real-world cyberattacks, providing a realistic assessment of an organization’s security resilience. This approach helps organizations understand how well their defenses hold up under simulated attack scenarios.

C. Risk Mitigation: By uncovering and addressing vulnerabilities, penetration testing assists in mitigating potential risks. Organizations can prioritize and fix identified issues, reducing the likelihood of successful cyberattacks.

D. Compliance Assurance: Many industry regulations and standards require organizations to conduct regular security assessments, including penetration testing. Some industries require regular third-party penetration testing for compliance with regulations such as PCI DSS and HIPAA. 

E. Unbiased Assessment: A third party can provide an objective view of your security posture. They won’t overlook anything due to familiarity or bias and will assess your system from a new perspective.

F. Verification of Security Controls: Penetration testing verifies the effectiveness of existing security controls. This includes firewalls, intrusion detection/prevention systems, and other security mechanisms. The testing helps ensure that these controls operate as intended.

G. Protecting Sensitive Data: Organizations often handle sensitive information, and a breach could lead to data loss or compromise. Penetration testing helps identify and address vulnerabilities that could be exploited to gain unauthorized access to sensitive data.

H. Understanding Attack Paths: Penetration testers analyze potential attack paths that adversaries might use to infiltrate an organization’s systems. This understanding enables organizations to fortify their defenses in critical areas.

I. Prioritizing Remediation Efforts: Penetration test reports provide insights into the severity of vulnerabilities, allowing organizations to prioritize remediation efforts. This helps allocate resources efficiently, focusing on addressing the most critical issues first.

J. Enhancing Incident Response: In the event of a security incident, having undergone penetration testing enhances an organization’s incident response capabilities. Teams are better prepared to detect, contain, and remediate security breaches effectively.

K. Building Stakeholder Confidence: Demonstrating a commitment to security through regular penetration testing builds confidence among customers, partners, and stakeholders. It signals that the organization takes proactive measures to protect its digital assets.

L. Trust Building: Demonstrating that your organization undertakes regular third-party penetration testing can help build trust with customers, partners, and stakeholders.

M. Security Awareness Improvement: Penetration testing raises awareness about potential security threats among employees. It encourages a security-conscious culture and promotes better adherence to security policies and practices.

N. Continuous Improvement: Penetration testing is not a one-time activity; it’s an iterative process. Regular testing allows organizations to continuously improve their security measures, adapting to evolving cyber threats.

O. Avoiding Business Disruption: Identifying and fixing vulnerabilities before they are exploited helps avoid potential business disruptions caused by cyberattacks. This proactive stance safeguards operations and maintains business continuity.

P. Cost Savings in the Long Run: While there’s an investment in conducting penetration tests, it often leads to long-term cost savings. Addressing vulnerabilities before they result in a breach is more cost-effective than dealing with the aftermath of a successful attack.

Q. Competitive Advantage: Organizations that prioritize and demonstrate a commitment to cybersecurity through penetration testing gain a competitive advantage. It can be a differentiator in the eyes of clients and partners who prioritize security in their business relationships.

R. Expertise: Third-party testers bring a wealth of knowledge from different industries and cases. Their expertise can help find vulnerabilities that an internal team might miss.

Third-party penetration testing plays a crucial role in enhancing cybersecurity by identifying and addressing vulnerabilities, improving incident response capabilities, and building stakeholder confidence. It is a proactive and strategic investment that contributes to the overall resilience of an organization’s digital infrastructure.

https://www.digitalxraid.com/3rd-party-penetration-testing/

https://drata.com/blog/penetration-testing

https://www.guidepointsecurity.com/penetration-testing-as-a-service/

https://www.knowledgehut.com/blog/security/penetration-testing-guide

https://networkassured.com/security/penetration-testing-for-small-business/

Navigating the Hidden Risks of Third-Party Vendors

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Third-party vendors play a crucial role in today’s interconnected business landscape, providing a wide range of services and expertise to organizations. 

However, this reliance on external partners also introduces a layer of complexity and potential risks that organizations must carefully manage. Hidden risks associated with third-party vendors can have significant consequences, including data breaches, financial losses, and reputational damage.

To effectively navigate these hidden risks, organizations need to adopt a proactive and comprehensive approach to third-party vendor management. This involves identifying, assessing, and mitigating risks throughout the vendor lifecycle, from onboarding to offboarding.

i. Identifying Third-Party Vendor Risks

The first step in navigating hidden risks is to identify the potential risks associated with each vendor. This requires a thorough understanding of the vendor’s business, the services they provide, and their access to the organization’s data and systems.

Key areas of focus for risk identification include:

A. Security and Privacy: Assess the vendor’s security practices, data handling procedures, and compliance with relevant regulations to safeguard sensitive information.

B. Financial Stability: Evaluate the vendor’s financial health and ability to meet contractual obligations to minimize disruptions to business operations.

C. Operational Resilience: Assess the vendor’s ability to maintain service continuity in the event of disruptions or outages to ensure business continuity.

D. Reputational Risks: Evaluate the vendor’s reputation; which could impact the organization’s image.

ii. Assessing Third-Party Vendor Risks

Once potential risks have been identified, a comprehensive assessment should be conducted to determine the likelihood and impact of each risk. 

This involves using a range of risk assessment methodologies, such as qualitative and quantitative analysis, to prioritize risks based on their severity.

Here are key strategies to manage these risks effectively:

A. Comprehensive Vendor Assessment: Conduct thorough assessments before engaging with vendors. Evaluate their security practices, data protection measures, financial stability, and overall risk posture. Consider using standardized questionnaires and on-site visits for a deeper understanding.

B. Due Diligence in Vendor Selection: Prioritize vendors with a proven track record of security and reliability. Consider their reputation in the industry and gather references from other organizations that have used their services.

C. Regulatory Compliance Verification: Ensure that vendors comply with relevant regulations and industry standards. This is crucial, especially if they handle sensitive data or provide services in highly regulated sectors.

D. Contractual Agreements: Clearly define expectations and responsibilities in contractual agreements. Include specific clauses related to data protection, security measures, incident response, and the right to audit the vendor’s security practices.

E. Continuous Monitoring and Auditing: Implement ongoing monitoring of vendor activities and conduct periodic security audits. Regularly assess their compliance with contractual agreements and evaluate their security posture over time.

F. Data Handling and Storage Practices: Understand how vendors handle and store data. Ensure they follow best practices for data encryption, access controls, and data retention policies to prevent unauthorized access and data breaches.

G. Cybersecurity Insurance: Consider requiring vendors to maintain cybersecurity insurance coverage. This can provide an additional layer of protection in case of a security incident that impacts your organization.

H. Third-party Liability Insurance: Having third-party liability insurance can provide a layer of protection against potential vendor-related losses.

I. Vendor Access Controls: Implement strict access controls to limit vendor access to sensitive data and systems, and regularly review and update access permissions.

J. Incident Response Planning: Collaborate with vendors to develop incident response plans. Ensure that they have clear procedures in place to address and report security incidents promptly. Coordinate your response strategies to effectively manage joint incidents.

K. Supply Chain Visibility: Gain visibility into your vendor’s supply chain. Understand the potential risks associated with their subcontractors and assess whether they have mechanisms in place to manage and monitor their own third-party relationships.

L. Crisis Communication Protocols: Establish clear communication protocols for handling security incidents. Define how information will be shared, and ensure that both parties are aligned on communication strategies to maintain transparency during crises.

M. Employee Training for Vendors: Encourage vendors to invest in cybersecurity training for their employees. The human factor is a significant element in security, and well-trained vendor personnel contribute to overall risk mitigation.

N. Vendor Off-boarding: Establish a clear and structured off-boarding process to ensure the secure termination of vendor relationships, including data deletion, access revocation, and audit trails.

O. Exit Strategies: Develop exit strategies in case of terminating relationships with vendors. Ensure that data is securely transferred or deleted, and assess the potential impact on your organization’s operations during the transition.

P. Redundancy and Contingency Planning: Consider redundancy and contingency plans for critical services provided by vendors. Evaluate alternatives in case a vendor faces disruptions or is unable to deliver services temporarily.

Q. Benchmarking and Industry Comparisons: Continuously benchmark vendors against industry standards and compare their security practices with similar service providers. This ongoing assessment helps you stay informed about evolving best practices.

R. Collaboration with Peers: Collaborate with other organizations in your industry to share insights and experiences with specific vendors. Collective knowledge can provide valuable perspectives on potential risks and challenges associated with shared vendors.

S. Information Security and Compliance: Ensure vendors comply with data privacy, security standards, and other regulations prevalent in your industry. Regular audits can confirm a vendor’s systems, policies, and procedures are compliant.

T. Continuity Planning: It’s important to have a plan for switching to a new vendor or bringing services in-house if a vendor fails to deliver.

U. Vendor Risk Assessment: Regular assessment of vendor risks is fundamental. This might involve analyzing their financial stability, understanding the geopolitical context they operate within, their cybersecurity measures, and their disaster recovery plans.

V. Continuous Communication: The best way to avoid misunderstanding and miscommunication is by having regular discussions and updates. Open communication can prevent issues from becoming major problems.

W. Training: Train your employees to understand the risks involved in dealing with third-party vendors, and how to appropriately manage these.

X. Confidentiality Agreements and NDAs: To protect sensitive business information, have third-party vendors sign non-disclosure agreements (NDAs) or confidentiality agreements.

By adopting a proactive and comprehensive approach to third-party vendor management, organizations can effectively identify, assess, and mitigate the hidden risks associated with external partners, protecting their valuable data, maintaining business continuity, and safeguarding their reputation.

https://www.navex.com/blog/article/risk-management-101-navigating-the-tightrope-of-third-party-risks/

https://www.securitymagazine.com/articles/99581-13-of-businesses-continuously-monitor-third-party-vendor-security-risks

Understanding Hidden Dangers: 3rd Party Security Risks

https://telefonicatech.com/en/blog/third-party-risk-the-hidden-threat-to-your-business

https://www.prevalent.net/blog/vendor-risk-management/