A recent study conducted by Deloitte showed that third-party risk management continues to be a pressing security concern in boardrooms and among CISOs and other executive-level security professionals. More than 74% of survey respondents said they faced some kind of third-party related incident in the last year and only 20% have enhanced their third-party program platforms or mechanisms. Given the increase in third-party breaches, and what’s at stake, it seems like it should be a no-brainer to take a proactive approach to third-party risk management.
However, in the face of technological overwhelm and time starvation, many enterprises continue to maintain unreliable, time-consuming ad hoc approaches to third-party risk management—simply because “the devil they know” seems less intimidating than finding another, more cohesive solution. Is your current third-party risk management strategy all about reacting to external events? If so, here are three reasons to take a proactive approach to third-party risk management.
1. Increase your visibility to prevent a third-party cyber breach
When your company shares critical data with third-party vendors, regardless of its internal security practices and policies, it’s easy to assume that that vendor maintains the same level of cyber security that you do. That’s a lot of trust to place in another organization, especially one into which you may have limited or no visibility. What’s worse, there is no single regulatory body that manages third-party risk management.
This puts the onus on the enterprise to conduct individual third-party risk assessments—and to do so on a regular schedule, so that you’re proactively identifying potential risks and mitigating them while ensuring compliance. At any given moment, most companies are just one cyber breach away from potential disaster; proactively assessing your third-party vendors is the best way to keep these disasters at bay.
2. Close the back door to cyber security risks
In the third-party risk management world, technology can be a triple-edged sword. It’s definitely part of the problem; while cloud-based data management systems do make it easier to share information with multiple partners and stakeholders, these systems also put that information at greater risk for cyber attack.
But it can also be part of the solution. New third-party risk management delivery models incorporate modern technology that can streamline your third-party risk management processes—saving valuable resources which can then be dedicated to avoiding cyber threats rather than reacting to them. The market, however, still remains largely unaware of the solutions that are available. Deloitte’s 2017 Extended Enterprise Risk Management Global survey showed that over 50% of the market doesn’t know that community utility models exist. These new models will not only increase your efficiency, but also help to create more effective, proactive third-party risk management programs. In fact, a leading private equity firm that adopted a comprehensive third-party risk management platform recently reported that it was able to assess more organizations in it’s third-party ecosystem while reallocating the resources saved to more strategic initiatives.
3. Generate actionable results from dynamic data
Let’s go back to your reactive strategy for a second. When you’re juggling multiple third-party risk assessments using shared spreadsheets, you don’t have a cohesive picture of risk in your third-party ecosystem. The unstructured data, often only showing a point in time, makes it nearly impossible to holistically interpret the results across your third-party ecosystem on an ongoing basis.
New delivery models, like an exchange, support a proactive third-party risk management strategy because they capture data in a structured format. This enables you to run analytics across that data and gain better visibility over all your vendors—so you can formulate a strategy to thwart potential issues before they arise. In addition, by consolidating data into a single comprehensive platform, organizations can easily access and update that data as threat levels and mitigation efforts change. This kind of dynamic platform can transform a complicated third-party risk management process into a modern, scalable program. And that means organizations can quickly understand and address risks, while third parties can dramatically streamline their own assessment processes—reducing their chances of putting their customers’ information in danger.