Third-party risk management (TPRM) is a necessary safeguard for any company that works with external entities, whether it’s a contractor, service provider, supplier, or partner. Third parties provide expertise in their given field, but they also increase the complexities and risks in your organization’s data security.
While TPRM is different for every organization, there are several best practices that help lay the foundation for a secure program.
In this article, we go over the two key steps in implementing reliable TPRM controls.
Step 1: Verify third party security efforts and compliance
Organizations of all industries and sizes rely on several vendors to perform their day-to-day activities. For example, Google Workspace provides standard email and documentation, Gusto is popular for payroll, and AWS offers a scalable cloud hosting experience.
A quick self-assessment can uncover all the vendors and third-party services being used throughout your organization. The following questions can guide your evaluation:
Step 2: Monitor and assess vendors on an ongoing basis
Third-party risk assessments are necessary to protecting your company against breaches and other incidents. The method can be as simple as recording data in a spreadsheet or as comprehensive as implementing an assessment automation software.
When considering what factors are important for both you and your customers, here are some of the risk categories to keep in mind:
Information security: Assess controls related to the security, confidentiality, and availability of data shared with third parties
Monitoring gaps: Includes periodic assessments, ongoing monitoring, incident notification, onboarding and offboarding, and adherence to appropriate SLAs
Business continuity: An increasingly important control, as third-party services and solutions are becoming more critical to your operations
Regulatory requirements: Mandatory supervision of third-party suppliers for many regulatory requirements, especially for financial and healthcare services and other government organizations
Lack of due diligence: Involves the use of distributed IT environments, legacy suppliers, global suppliers with limited insight, the use of subcontractors by third parties (also known as fourth parties)
Ultimately, TPRM considerations and controls will depend on your industry and the type of services and data you choose to outsource. Based on these factors, as well as the questions outlined above, you can start building a strong program that mitigates third-party risks and secures all sensitive data.