Creating an ideal Third-Party Risk Management (TPRM) approach is crucial. The use of third parties is not a new concept. Almost every organization uses one third party tool or the other and third-parties seem like the most vulnerable links in an organization’s security policy.
Third-parties are a crucial and fundamentally risky element in the strongly-linked digital ecosystem. Considering the extensiveness and possible severity of risks that are fundamentally present with third parties, TPRM has swiftly evolved from a ‘point-in-time’ process to an iterative approach, complete with systems, policies, and procedures, in organizations that are determined to manage third-party risk.
What is Third-Party Risk Management?
To understand Third-Party Risk Management (TPRM), you must first understand what third-party means. A “Third-party” is an entity or organization which you have an agreement with to deliver a product or service to either you or your clientele on behalf of your company. A third party is also referred to as a supplier, service provider, or vendor.
Therefore, Third-Party Risk Management is an assessment of vendor risk presented by a company’s third-party relationships along the whole supply chain. TPRM involves recognizing, evaluating, and monitoring the risks depicted throughout the lifecycle of your relationships with third-parties. This often begins during procurement and reaches to the end of the offboarding process.
Gradually, the reach of vendor management extends to on-sourcing and sub-contracting and on-arrangements to lessen fourth-party risk. The risks to be evaluated are business continuity risk, security risk, reputational risk, operational risk, and privacy risk.
Why is Third-Party Risk Management important?
Cyberattacks are increasing in impact, frequency, and sophistication as cybercriminals are constantly advancing their efforts to compromise information, systems, and networks. Risks come in all forms and sizes for different companies. Third-Party Risk Management is mainly important for high-risk vendors who process intellectual property and other sensitive information.
Supplier risk management isn’t just about identifying and controlling cybersecurity vulnerabilities and offering compliance advisory services of third parties. While these concerns cannot be trivialized, TPRM consists of an entire host of other features including environmental impacts, ethical business practices, safety procedures, and corruption, among others. Monitoring your third-party suppliers and supply chain is important.
Other reasons why TPRM is important are:
- Reduced costs
- It lets you address potential risks with fewer resources and in less time
- Gives you an opportunity to concentrate on your core business functions
- Offers you a framework for your organization and your vendors
- Enhances the integrity, confidentiality, and obtainability of your services
- Drives financial and operational competences
- Guarantees that the reputation and quality of your services and products are not ruined.
Businesses are now investing deeply in a Third-Party Risk Management training program to better recognize and control risks before they escalate. As the importance of TPRM continues to increase, organizations are hiring qualified professionals more than ever before. Security and risk experts are continuously searching for certification programs in TPRM to refine their skills and authenticate their expertise. Sign-up for the CCISO certification program now to get a jumpstart!
Common Types of Third-Party Risks
Strategic risk arises from making adverse business decisions, or from the failure to implement appropriate business decisions that aligns with the organization’s strategic goals.
This type of risk arises from negative public opinion created by a third-party. Customer who are unsatisfied, security breaches, and legal violations are all examples that could cause a company’s reputation to fall.
An example of operation risk is one where a software vendor is hacked, leaving the company with a downed system, or a supplier being impacted by a natural disaster.
Often, risks caused by third parties result in financial damage. An example could be a supplier delivering faulty material, resulting in poop sales.
This type of third party risk impacts compliance with laws, rules, and regulations. An example of this type of a risk is when a supplier violates a cyber law, the principle organization can also be found liable and face fines.
Information Security Risk
This is the most important type of third-party risk. An example of this type of risk is when a policy is signed with a third-party, sharing data, and the third-party is breached, thereby breaching the principle organization as well.
How do you do a third-party risk assessment?
To identify a third-party risk, an assessment may be performed by an independent or in-house cybersecurity expert. The evaluator will possibly use a vendor risk management framework from the National Institute for Standards and Technology (NIST) or the International Organization for Standardization (ISO) to evaluate your vendor risk management program. The following are the steps involved in conducting a third-party risk assessment
- Recognizing the probable risks presented by your entire third-party relationships.
- Organizing vendors based on their access to your networks, systems, and data.
- Appraising service level agreements (SLAs) to make sure that your suppliers perform as anticipated.
- Analyzing risks for each vendor based on their significance to your organization, the access to your digital network or system, and the level of sensitivity of the information they individually handle.
- Regulating compliance necessities for your organization counting the standards and regulations that must be met.
- Constantly checking for changes in their environment and yours, including changes in industry standards and regulations.
- Probing vendors with risk management questionnaires.
- Auditing certain vendors based on their responses to the questionnaires, probably with on-site visits
How do you mitigate third-party risk?
Implementing a holistic program is an ideal approach for handling third-party activities. Companies are now beginning to understand the rising risks that third-parties present to their business and are stepping up their Third-Party Risk Management endeavors appropriately.
Step 1: Identify third-party risk
Risks can be identified at different levels of engagement with third parties. Since third-party services and tools are given access to numerous resources, data, systems, applications, network appliances, and applications, and data, deciding their security risks can be complicated. You can identify risks by:
- Performing penetration testing and source code analysis to rank risks for third-parties
- Performing a threat model to assess crucial assets that a third-party tool can impact.
- Performing a red teaming assessment for the services offered by third parties to diagnose additional risks.
- Assessing exit and entry points for all third-party services and tools.
Step 2: Evaluate third-party risk
After identifying third-party risks, you need to carry out a careful evaluation to assess and account for the impact. You cannot successfully mitigate risks without evaluations and assessments. You can do the following to effectively evaluate third party risks.
- Rank the assessment of critical third-party services and tools to supervise the additional evaluation cost to the security program.
- Perform periodic evaluations concerning access to authorized and unauthorized resources for third-party services and tools.
- Evaluate the general possible business impacts of individual critical third-party tool risk.
- Assess the third-party services or tools using balanced resources.
Step 3: Mitigate third-party risk
To effectively mitigate third-party risks, risks must be assessed in a time-and-cost manner. This approach helps to lessen the seriousness of the recognized risks and resolve them. Risks must be communicated to the third party via an open channel to mitigate them. Best practices for mitigation include:
- Keep an inventory of your entire third-party assets, alongside their exchanges with downstream and upstream assets in the organization.
- Promote asset ownership for each third-party tool or service in the inventory.
- Communicate the risk management strategy to the third party and prospects before integrating the service or tool.
- Create an open channel for communicating risks and threats to the third party.
- Apply mitigating controls for safeguarding all third-party exits and entry points.
- Integrate and review changes from a third-party before distribution to customers and employees.
- Scrutinize both authorized and unauthorized access to systems from third-party assets.
Why Choose EC-Council’s CCISO Certification Program?
Besides the fact that the CCISO is designed for information security executives who want to be CISOs by refining their learning and skills to align information security programs with business objectives and goals, CCISO is crucial for the following reasons:
Written by seasoned experts
The CCISO Advisory committee consists of seasoned CISOs who designed the program using their daily tasks as a guide and both management and technology firms. Likewise, the board consists of security leaders from Universities, the City of San Francisco, Amtrak, HP, Lennar, the Center for Disease Control, and other consulting firms. These boards have shared their immense knowledge to produce this program to deal with the absence of a leadership training program in information security management.
Accredited by ANSI
EC-Council’s CCISO certification program is approved by the American National Standards Institute (ANSI), which is one of the numerous certification bodies primarily focused on ensuring the information security expert meets the ANSI/ISO/IEC 17024 Personnel Certification Accreditation standards.
Concentrates on C-Level Management through the Five Domains
By focusing on these five domains, EC-Council is not only able to guarantee that their beliefs align with those of the NCWF, but they are also able to meet business and organizational demands across the globe.
Recognizes the Importance of Real-World Experience
The information security officer must have prior knowledge before they can secure a C-Level job, as it allows them to acquire a holistic understanding of what to expect while in the area. This is why the CCISO certification program is made up of numerous real-world events confronting modern CISOs across the globe.