“Take calculated risks. That is quite different from being rash.”
These words of wisdom from famed top U.S. General George Patton are something many risk managers would agree with, although following General Patton’s advice is easier said than done. Choosing the right risks to take can sometimes feel like a guessing game. And it sometimes feels like all bets are off when dealing with third-party vendors, who are notorious for having varying levels of cybersecurity protecting their networks and assets—the same ones interacting with your business systems.
But risk managers have found a powerful way to reduce enterprise risk using third-party cyber risk management (TPCRM). Here are some ways they’re using TPCRM to strategically guide their organizations’ partnerships.
How to Reduce Enterprise Risk with TPCRM
TPCRM provides you with a combination of two winning tools: Risk assessment technologies and a risk-based mindset that alters the way you view the organizations you interact with, particularly when it comes to the threats they may present to your digital assets.
Using TPCRM to Go Beyond Compliance and Develop a Risk-Based Methodology
Nowadays, most assessments involve aligning what you do with compliance standards, frequently at the expense of a genuine risk-based strategy. To measure risks and controls in a variety of scenarios—and also connect them to compliance frameworks and standards, you can use a third-party risk assessment solution. As a result, in addition to being aware of the biggest threats to your company, you can also keep it in line with compliance requirements.
Using TPCRM with Up-to-Date Data
The third-party risk management landscape has been changing, but the progress may not be fast enough to keep up with the changing threat landscape. For example, third-party risk management is starting to receive greater attention, but the tools and solutions that support it have often missed the mark and have been evolving too slowly. For instance, companies may use shared spreadsheets and custom evaluations. However, these frequently hide important information and risk due to being out-of-date.
On the other hand, the data resulting from a constantly updated, consistent, and organized methodology for third-party risk assessments is more relevant, recent, and usable as you assess your risk posture. As a result, teams across industries can quickly identify risks and produce insights for practical mitigation.
Leveraging TPCRM for Real-Time Visibility into Your Systems
To manage risk, you need all the visibility you can get. The security landscape is continuously shifting, and your vendors often take steps to reduce or eliminate risks, just like you do. However, if you are utilizing a static assessment, you have limited visibility into the current security posture of third parties and are probably too busy keeping up with manual data management to look for frequent changes.
Many companies have little or no trust in their capacity to manage third-party risk. But with a TPCRM program, that can change. Knowing which third parties provide you with the highest danger requires access to up-to-date risk assessment information on your vendors as well as any pertinent changes to their threat levels.
By using a risk management solution that continuously evaluates the cyber defenses of the vendors you do business with, you gain the exact kind of visibility you need to make confident decisions. You get an under-the-hood perspective as to how they’re managing their cyber risk. And you can use this information to estimate whether or not your ecosystem will be safe when connected to theirs.
For more on how to build an effective TPCRM program, download our free guide, Third-Party Cyber Risk Management for Dummies.
Using Security Ratings to Provide Objective Risk Assessments
Questionnaires and shared spreadsheets can easily misconstrue the actual risk profile of a company. However, with an objective security rating produced by a risk assessment system, you can quantify the risk of a vast number of companies without having to worry about whether or not the data you’re using is impacted by each company’s bias.
Security ratings provide several advantages:
- They enable you to establish a real-time picture of the risk posed by partnerships with businesses, third-party vendors, and supply chains.
- They give you confidence while purchasing a business because they provide an unbiased evaluation of the information security controls of a potential investment or M&A target.
- Insurers can make decisions regarding cyber insurance underwriting, pricing, and risk management because they can better analyze and price their insurance policies. This is thanks to the visibility they gain into the security program of those they insure.
- The ratings make it easier for governments to monitor and control the cybersecurity performance of their providers, reducing the risk to both their internal systems and the citizens and businesses who trust the government with their data.
Using an Online Risk Data Exchange
An online system that provides an exchange of risk data comes with several unique benefits, particularly when compared with manually having business partners fill out forms and spreadsheets. For example, with an online, cloud-based risk assessment platform you get:
- An online exchange that makes it easier to share data, analyze it, and prioritize the risks
- A holistic, independently verified understanding of a third party’s security posture
- Shareable enterprise-level evaluations for numerous clients, which enables you to compare them to each other
- Dynamic evaluations in the cloud that you can be updated regularly
- Built-in automatic validations that aid in the real-time detection and correction of issues that pose additional risk
Reduce Enterprise Risk with Third-Party Risk Assessment Tools
For risk managers with the George Patton mindset, third-party risk assessments may not be 100% safe havens from all risk, but they are powerful tools that provide decision-makers with the ability to make balanced, well-informed judgments. If you’re like many risk managers, it might be time for a fresh strategy if your assessments aren't giving you the right insights to reduce the risk posed to your firm from vendors.
CyberGRX’s cloud-based data exchange provides you with a comprehensive collection of machine learning-powered risk assessment tools that give you the data you need to significantly reduce your organization’s third-party risk. Learn more by setting up a demo today.
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