In today's business landscape, third-party vendors play a critical role in providing goods and services to organizations. However, they also present a significant risk, as their security vulnerabilities can be exploited to gain unauthorized access to an organization's systems and data. As per Gartner, more than 80% of legal and compliance leaders shared that third-party risks were identified after initial onboarding and due diligence, suggesting traditional due diligence methods in risk management policy fail to capture new and evolving risks. In addition, organisations report that their third-party network contains more vendors than it did three years ago.
The current state of cybersecurity risk management for third parties is complex and multi-faceted. Third-party cyber risk assessment is becoming more prevalent and there are various methods that companies use for vendor risk management and due diligence. These include passive analysis of information that can be gathered from the dark web and other sources, active testing of the external attack surface, and consulting-led assessments. However, there is a lack of consistency in the methods used by companies, with many relying on their own developed questionnaires and spreadsheets to assess the risk posed by their third-party vendors. Moreover, the information gathered from an external attack surface perspective is not connected to the control posture discovered through the internal control assessments leading to two distinct outside-in and inside-out views.
The landscape is also complicated by the one-to-many desires of both the customer and the vendor, which has led to the emergence of GRC vendors extending their traditional compliance assessment offerings to include supplier risk management as part of their functionalities. The implementation of cyber risk management practices can be challenging for organizations, particularly when it comes to connecting the inside-out and outside-in approaches. Cost efficiency is definitely a concern, but there are other challenges as well. As per an article from McKinsey - in today’s riskier, more connected environment, organizations must collaborate closely with external partners to reduce vulnerabilities to cyber attackers. Let's take a look at some of the common hurdles organizations are facing in implementing these practices.
The rapid transition to cloud platforms and third-party reliance has put traditional IT enterprises in a state of great transition. As more things are becoming available as a service, organizations are struggling to keep up with change and are finding it challenging to measure risk across internal and external attack surfaces for third-party management. Compliance and security teams often struggle to keep up with the pace of change and are sometimes the last to know when a business moves to the cloud. Another significant challenge is the lack of transparency from third parties regarding their security efforts including business continuity planning and incident response planning. There is often a lot of internal back and forth on how to manage vendors, and sometimes executive-level decision-makers do not have a playbook on the rules of the road, leading to cycles of indecision and stress for the security and risk management teams. Ultimately, these challenges can hinder organizations' ability to protect themselves from third-party security risks, leaving them vulnerable to attacks. Read our blog for additional information on understanding the role and importance of Third-Parties in business: Navigating Cybersecurity Challenges.
It's not just a matter of checking a box when it comes to understanding internal security controls and how third-party companies handle data. Ensuring accountability by third parties is becoming increasingly critical. External scans alone do not offer sufficient insight into the internal security controls that are essential for compliance regulations and incident response planning. The desire to have both outside-in and inside-out approaches to security is more prevalent than ever. In the event of a business disruption or regulatory impact, understanding these internal controls becomes even more critical.
One of the key changes that have made connecting the outside-in and inside-out approach more viable is the rise of machine learning and advanced analytics. These technologies have made it possible to process and analyze vast amounts of data, providing organizations with insights that were previously impossible to obtain. Additionally, the proliferation of cloud computing and the growth of APIs have made it easier for organizations to access and share data with third parties, further enabling the inside-out approach. All of these factors have contributed to a shift in the tech landscape, making it easier for organizations to adopt new models and approaches that can help them better understand and manage their vendor risks.
The appetite of executives to invest in third-party security has also grown, and the willingness to answer questions by third parties has changed. This change in expectation means that businesses understand that holding data requires them to help their partners understand their security measures. This duty did not exist to the same extent even five years ago. Regulation and emphasis on security by corporate boards have also played a role in driving the need for better third-party security. The solar winds attack was a seminal moment in the security world, highlighting the risk third-party partners pose to organizations.
Furthermore, the continuous coding, continuous integration, and continuous testing of applications in today's fast-paced technological landscape pose challenges for security. Organizations are pushing code as often as every day, making it difficult to keep up with all the security updates. The process of verifying that third-party partners are identifying and fixing vulnerabilities before they go out is essential, or businesses may have the exposure they are unaware of. The traditional method of delivering applications with time to test and go through gates is no longer sufficient, and security must be prioritized throughout the entire third-party infrastructure.
Alfahive helps solve the challenge of managing third-party risk by providing a comprehensive solution that saves time and energy. We offer a structured process that focuses on the most meaningful areas of risk, reducing the amount of time spent on mundane tasks like managing questionnaires and gathering responses. By delegating the responsibility to the third party, Alfahive equips security organizations with the necessary capabilities to provide the required information back in a timely manner. With our Cyber risk automation platform, RiskNestTM we help organizations understand and make sense of the information provided, turning assessments into quantifications that are meaningful in deciding which vendors are important to work with. Have a look at our case study on how we helped a large multi-brand omnichannel retailer automate third-party risk assessment and quantification.
Furthermore, Alfahive provides recommendations on which controls to mandate to the third party that would reduce first-party risk. Our platform-generated report includes all the necessary controls for the third party to implement. Alfahive helps organizations manage their vendors by looking across all the major risk areas for third-party business disruption, such as ransomware and data breaches, and doing so based on the organization's first-party impact. We also help track the ongoing status of third-party improvement, automatically updating risk assessments and risk registers for the organization. This virtuous cycle ensures that organizations can continuously monitor and manage their third-party risk effectively.
