Protecting your data against unauthorized access and cyberattacks is hard. And, cybersecurity teams often question if they are doing enough to secure their most precious asset.
Besides single-party vulnerabilities, third-party threats are the source of 67% of data breaches.
Third parties are never the real target, though– you are. Remember the SolarWinds attack that affected many government agencies and Fortune 500 companies? This supply chain attack targeted third parties with access to SolarWinds systems– third parties were a means to the crown jewels. Cybercriminals want your data, and managing your data risk will mitigate the potential damages to your company. As such, it is essential to understand who has access to your data, what type of access they have, and what would happen if a third-party breach occurred.
In this article, we’ll discuss the importance of data risk management and data protection in today’s workplace, common data risks companies face, challenges with data risk management and identification, and best practices for managing data risks.
What is Data Risk Management?
To start, what exactly is data risk management? It’s a process that involves identifying and assessing how susceptible your data is to cyber criminals. Data risk management also involves the strategic plans that are put in place to minimize those risks, whether they are single-party or third-party threats. Common measures often include data encryption, regular backups, access controls, security audits, and incident response plans.
Most organizations share a few common data risk management goals:
- Protect the confidentiality, integrity, and availability of an organization's data; to minimize the impact of any data breaches or other security incidents.
- Maintain data integrity by ensuring that it is accurate and complete, as well as unmodified and untampered with in unauthorized ways.
- Ensure data is securely accessible by only authorized parties when needed.
- Minimize the impact of any data breaches or other security incidents by having response plans to quickly detect, contain, and recover from security incidents.
- Comply with relevant laws, regulations, and industry standards related to data protection.
- Continuously improve the overall risk management approach by monitoring, evaluating, and updating organizational data protection practices.
Common Third-Party Data Management Risks Faced by Companies Today
Third-party data breaches refer to a security incident in which sensitive information is accessed or disclosed by a third-party vendor or service provider. Third parties can include contractors, suppliers, or business partners. Breaches often occur due to a lack of security controls, human error, or malicious intent. Understanding common data risks enables you to manage your vulnerabilities more efficiently.
Insufficient Data Protection
Cybercriminals are constantly hunting for weaknesses in data protection methods, security, and even with employees. And if they find an “in,” sensitive company data is viewed, copied, changed, or stolen by unauthorized individuals for malicious purposes. In addition to the first-party challenges, if you don’t have visibility into the level of security controls that your third parties have (or don’t have), you’ve got even more potential risks.
For example, a third-party vendor may not have adequate data encryption, leaving sensitive information accessible to an attacker. Or don’t overlook the possibility of targeted spear-phishing attacks and the risks third-party social engineering gaps pose.
Third-party data breaches can have severe consequences for the companies whose data is affected, including financial losses, reputational damage, legal liabilities, and loss of customer trust. They can also lead to non-compliance with data protection regulations.
Non-Compliance With Industry Regulations
Third-party vendors may not be compliant with relevant laws and regulations related to data protection and privacy, such as the General Data Protection Regulation (GDPR) or the Health Insurance Portability and Accountability Act (HIPAA). Verifying vendor compliance with statutory and industry-specific requirements keeps you out of hot water and ensures you won’t be penalized for non-compliance.
Varied Assessment Data Quality
Keep in mind a risk assessment questionnaire is self-reported data. The responses are subject to human error, incomplete responses, or simply do not provide enough information about how data is protected and handled. They are also a snapshot in time and may not reflect recent changes to a third party’s security posture. Are security assessments worth the time? Yes, but if assessments are the only information you use, your organization likely has third-party risk blind spots.
Changes in Third-Party Security Posture
Continuous monitoring of third parties is essential to effective data risk management, enabling organizations to manage risks proactively and respond quickly to incidents. Continuous monitoring can alert you to:
Changes in third-party risk profile: The risk profile of third-party vendors can change over time due to new security threats, organizational changes, or dark web activity. Continuous monitoring allows you to identify and assess these changes and adjust your risk management strategies accordingly.
Timely detection of security incidents: No one wants to learn from a news headline that a third party was breached. Continuous monitoring detects security incidents or breaches in real-time or near-real-time, enabling you to respond quickly and mitigate the impact of the incident.
Change in compliance standards: Did one of your third parties have a recent compliance issue? Continuous monitoring alerts you to the change.
Challenges with Data Risk Management and Risk Identification
Identifying where your data risk lies can be complicated due to the sheer volume and complexity of third parties. In fact, the average organization uses over 6,000 third-party vendors, according to a recent report. As a result, many organizations struggle with understanding exactly where their most pressing risks are and how best to manage them. It is also difficult for businesses to gain the insights they need to make informed decisions about the security posture of their vendors.
Managing a vast third-party ecosystem also makes it difficult to know who has access to sensitive data, what capacity they have access to that data, and at what level. As a customer, you must know which vendors have access to your data and, if one is breached, what the potential ramifications are with your system.
Tips and Best Practices for Managing Data Risk
Even though challenges arise, identifying your third-party data risk gaps and minimizing weaknesses from your vendors should be prioritized. Here are some tips and best practices to manage this risk and proactively tackle these challenges head-on.
Conduct thorough due diligence.
Before working with a third-party vendor, thoroughly research the vendor's data management practices and assess potential risks. Review the vendor's security policies and procedures and conduct on-site inspections if applicable. Read more on how to conduct third-party due diligence. As previously mentioned, a risk assessment is just one piece of your evaluation.
CyberGRX’s comprehensive third-party risk management platform empowers you with cyber risk intelligence, with the data plus application tools you need to make more informed vendor decisions. Curious about what’s possible? Check it out.
Focus your attention on your riskiest vendors.
If you’re struggling with identifying your most significant security risks among all the third parties you work with, you’re not alone– it’s been a gap in our industry until recently.
For this reason, CyberGRX developed Portfolio Risk Findings– a tool that allows you to view all your third parties against the industry framework you prefer, whether compliance or threat-based. Using both attested data and predictive risk profiles (US patent pending), your portfolio risk findings include a detailed report measured against control coverages and your selected framework, returning a score between 1% to 100%. This score helps you identify where your third parties fall on the risk spectrum, from high to low risk. As a result, you’ll gain visibility into your riskiest third parties and be able to filter vendors by each unmet control. If you’d like to preview this unique and proprietary feature, please book a demo time now.
Establish clear contract agreements and policies.
Create clear contract agreements and service policies with your third parties, outlining their respective responsibilities and obligations related to data protection. Collaborate with your third party to address your concerns and requirements for data encryption, access controls, incident response planning, and regular security audits.
Additionally, inherent risk analysis allows you to look at the likelihood that a third party will experience an incident, which third parties pose the most risk, and how bad an incident could be if it occurs. From there, you can prioritize your assessment strategy and discuss contractual agreements should your third party be breached.
Regularly monitor and evaluate vendors.
Establish processes to monitor and assess your third-party vendors' data management practices regularly. CyberGRX’s third-party threat tools enable you to identify, analyze, and monitor potential and changing security threats from your third parties so that you can respond quickly and precisely.
Implement incident response plans.
Incident response plans are imperative to detect, contain, and respond to third-party data breaches or other security incidents. Clearly outline the procedures for reporting and dealing with third-party incidents. Your cybersecurity policy should also have a team in place who is ready to be notified if a third-party incident takes place.
Data risk management is essential for every organization, as it provides insight into potential vulnerabilities and enables you to respond quickly if an attack does occur. However, identifying where your data risk lies can be complicated due to the sheer volume and complexity of today’s networks, third-party vendors, and other factors. But with the right data, tools, and proper planning, you can feel confident in the steps you’ve taken to mitigate your most pressing data-related risks.
For more on managing your third-party risk and uncovering hidden vulnerabilities, we invite you to book a demo to see the CyberGRX platform in action.