Third Party Data Security Risks to Watch Out For
Introduction
Data breaches and cyber attacks are unfortunately becoming more and more common. As organizations rely on third parties and vendors to provide services, manage data, and integrate systems, third party risk has emerged as a top concern for security and risk management teams. In this article, I will discuss some of the major third party data security risks that businesses should be aware of and work to mitigate.
Risks from Third Party Providers
Cloud Services
Many businesses utilize cloud services from large providers like Amazon Web Services, Microsoft Azure, and Google Cloud Platform. While these providers have strong security practices in place, ultimately the security of your data in the cloud depends on your own configurations and access controls. Misconfigurations are a common issue that can unintentionally expose data. Strong identity and access management, encryption, security monitoring, and auditing of configurations are critical.
Vendor Remote Access
Allowing third party vendors remote access into your systems inevitably increases risk. Their credentials could be compromised, their devices could be infected with malware, or they may abuse privileges and access data they shouldn’t. Organizations should have strict policies governing remote access by vendors, including requiring multi-factor authentication, limiting access to specific systems/accounts, monitoring activity, and promptly removing access when no longer needed.
Data Processing & Sharing
When providing a third party data to process or analyze, businesses must ensure proper contractual obligations around data security are in place. Third parties should provide specifics on where data will be stored, who has access, how it is secured in transit and at rest, retention periods, and disposal procedures. Legal liability in case of a breach should be clear.
Weak Security Standards
Vendors vary widely in their approach to security. Working with vendors with weak security policies, procedures, and standards introduces risk. Reviewing a vendor’s security posture through questionnaires, certifications, audits, and site visits provides assurance they can properly secure your data.
Lack of Incident Response Planning
If a data breach does occur, your vendor must be prepared to quickly detect, investigate, contain, eradicate, and recover from the incident. Ask about their incident response plan, past response experience, cyber insurance, and ability to meet regulatory breach notification timeframes. Test their response capability with drills.
Best Practices for Mitigating Third Party Risks
- Conduct thorough due diligence on a vendor’s security before contracting and on an ongoing basis through audits
- Limit vendor access to only what is necessary and immediately revoke when no longer needed
- Encrypt data both in transit and at rest
- Maintain inventory of vendor connections, data flows, credentials, and contracts
- Continuously monitor vendor access and activity
- Review reports and compliance like SOC2, ISO 27001, etc.
- Perform risk assessments to identify and document pertinent risks
- Include security requirements in contracts and enforce obligations
- Develop contingency plans in case the vendor’s operations are disrupted
Conclusion
Third parties provide enormous value, but also pose security risks that must be managed. With strong vendor security oversight, policies and procedures, encryption, monitoring, and preparation, companies can better position themselves against third party data breaches and limit their impact. Security is ultimately a shared responsibility between your organization and vendors.
