Third-Party Security: 5 Steps to Securing Your Ecosystem

What Is Third-Party Security?

A third-party vendor is an entity with which an organization has a business relationship and that has access to the organization's protected data assets.

Third-party vendors and suppliers represent a severe security risk and were the cause for several global-scale attacks, such as the SolarWinds and Kaseya attacks. Third-party security is a set of practices, servies, and technologies that can identify these risks and protect your organization from security threats associated with third-party vendors.

Third-party risk management is becoming a critical part of any organization’s information security strategy.

Why Is Third-Party Security Important?

In most organizations, the board of directors and senior management are responsible for managing third-party relationships within an organization. This responsibility should include identifying and acting on risks that arise from these relationships.

Senior executives need to understand the high risk of cybersecurity attacks and data breaches within their organizations and external service providers. Technologies such as cloud-based applications have accelerated the outsourcing trend and increased the associated risks. Regardless of your organization's risk profile, third-party risk management is essential for internal auditing and risk mitigation.

Unfortunately, in many cases organizations fail to properly evaluate security aspects of their third-party relationships. Failure to manage these risks can expose organizations to regulatory, financial, litigation, and reputational damage. This can undermine an organization's ability to acquire new customers or serve existing customers.

Especially after the recent wave of supply chain attacks, third-party security is now widely recognized as a critical pillar of any organization’s information security efforts.

How Having A Third-Party Risk Management Program Can Help

A strong third-party risk management program should address all aspects of risk throughout the lifecycle of a third-party relationship. Third-party risk is on C-level and board-level agendas, especially for organizations operating in regulated environments. The rise of decentralized businesses has increased the need for a coherent third-party governance program.

Focusing on operational risk factors such as performance, quality standards, lead times, KPIs, and SLA measurements is not enough. Reputational, financial, legal, and regulatory factors are becoming increasingly important. These factors include the following:


  • Labor practices

  • Information risk management

  • Financial health

  • Compliance with regulations and industry standards

  • Health and safety compliance


The risk assessment process is part of internal controls and should include supply chain and other third-party risk assessments. Third parties include suppliers, business channels, marketing partners, payroll vendors, and others who, if breached, could harm your finances, reputation, or compliance.

A third-party risk management program should be aligned with the following aspects of your organization:


  • Regulatory and compliance requirements

  • Acceptable level of risk

  • Use of third parties in business processes

  • Joint ventures, mergers and acquisitions

  • Overall enterprise risk management strategy

5 Steps for Implementing Third-Party Security

When your organization is considering a business relationship with a third-party vendor, certain measures can be taken to ensure third-party security throughout the process.

1. Perform Due Diligence Before Signing

Ensure that third parties have the same level of security as your organization before signing a contract. Remember that if the provider's system is compromised, hackers can gain access to your data next. Ask questions like the following:


  • Does the supplier have a response and notification plan?

  • Does the supplier document resolution processes?

  • Does the supplier perform penetration testing?

2. Build Third-party Security into Vendor Contracts

Once you have confidence in your vendor’s internal security, you can write an agreement to protect both parties.

Standard tests for phishing, hacking, and social engineering are required. Vendors and their employees need to be aware of these vulnerabilities, as cybercriminals use vendors to target large organizations.

Your supplier should conduct testing at least once a year, document a plan for finding and fixing issues. They should also sign a complete nondisclosure agreement that documents access controls.

3. Formalize Responsibilities, Rules, and Decision Criteria

Risk management programs typically use policies to describe the program's desired outcome. However, many programs do not include formal assignment of rules, roles, and responsibilities. You must identify all parties responsible for this process and the stakeholders consulted with or informed of ongoing changes and results.

Reviewing and evaluating your vendors can often seem more like an art than science. You may encounter many times when you need to make risk-based decisions and accept risk according to impact or likelihood. However, you still should define decision criteria to apply during these situations. Here are some tips you can apply to this process:


  • Perform an initial assignment of the quantified risk of each attribute as reported in a vendor questionnaire.

  • Describe exactly when specific scores or answers require a review by other personnel or teams or escalation.

  • Define the acceptable levels of likelihood per risk event in connection with the impact it might have on the organization.


While companies often try to incorporate this process, many fail to accurately define the mechanics, rules, and thresholds. Remember that these metrics aim to provide defensibility when the information is reviewed by a regulator in security events, like a vendor breach.

4. Assess Vulnerabilities on a Continuous Basis

This process does not end with inventorying third parties and their security posture. You also must regularly conduct security audits, analyze reports, and monitor this part of the supply chain to provide internal and external auditors with necessary information. By regularly auditing and reporting, you gain visibility into all vendor actions.

Monitoring when, how, and what third parties access enables you to identify and address security vulnerabilities immediately. You can automate these processes to save time and improve your workflow. An access management platform that automatically monitors these aspects can help you secure remote access efficiently.

5. Effective Offboarding Process

Suppliers may retain access to sensitive data and systems or buildings if exit management processes are not in place. So, even if the contract has expired, data can be compromised. Organizations must do the following upon termination of a partnership:


  • Require vendors to destroy or delete all data related to your organization and provide formal data erasure documentation. This includes situations in which a vendor subcontracts data to another vendor.

  • Revoke privileges, ensuring that all vendor privileges on systems and physical locations are terminated.

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