There is no success without risk. Risks in business are inevitable but the good news is that these risks are manageable. The third-party network that supports your business growth is essential to your success so risks to your network are risks to your success. Without proper risk management, it’s a bad idea to rely completely on third parties. Did you know that third party risk management software is there to save the day? With this powerful software behind you, you will have the tools you need to manage the risks.
Regulations and data control standards are constantly changing and are therefore becoming particularly difficult to keep up with. You need the expertise and technology that comes with third party risk management software to make the important decisions you need to make quickly and confidently.
First – What is a Third Party?
A third party includes a variety of groups of people, from suppliers to vendors, business partners to service providers. Basically, it involves any entity with which your business works together. While they may only supply a small part of your business it doesn’t mean you don’t rely on them for success. Often, third parties require access to your business’s network in order to do their job which brings risk in itself. If their network is hacked, your network goes down with it.
Second – What is Third Party Risk Management?
Pre-warned is pre-armed. Third-party risk management involves identifying and reducing the risks that may crop up while working with other businesses or groups. You need to take a good look at the businesses you are currently working with and analyse what risks they face and the consequences that would occur for your business if these risks were to happen. Once these risks have been identified, you then need to take action. You may not be able to stop the risks, but you can put up safeguards to protect your business if things get ugly.
So, Why is Third Party Risk Management Important?
You can not underestimate the risks that come from your third party network. Outsourcing is becoming the easiest way to make business so nowadays many businesses rely on third parties for various elements of their business processes. If a third party, such as a data storage or payroll provider, suffers a severe enough attack it could be detrimental to your business and its functions.
Furthermore, the variety of security practices is wide and vast. Each third party will have different security measures so it’s important you investigate the security of each third party to ensure you understand the stability of each link in your network. If there are some extreme or unnecessary risks, this is a great opportunity to make some changes and replace any weak connections.
As previously mentioned, third parties often require access to your network so if their login credentials are ever hacked or stolen, the security of your whole network is compromised. Additionally, when third party attacks do appear, your business will be liable even if the fault lies with the third party. Not only will this bring a lot of damage to your reputation, but it could also leave you open to prosecution.
The threat that comes through third parties should not be underrated. According to one report, over 50 per cent of organisations have experienced some kind of data breach related to their third party. Businesses that rely on third parties are expanding too with as much as 80 per cent of both direct and indirect costs of business being due to third parties. The vulnerabilities of these third parties are plaguing businesses as they pay the consequences of a third party’s breach.
How Can You Implement Third-Party Risk Management?
The risk management of third parties is a multi-faceted and involved process. A software solution does a lot of the hard work for you and basically covers these general areas:
- Take an inventory of third parties. Regardless of the size of the third party, it’s important to take them into consideration when taking an inventory of your third parties. You should also have a record of the data and areas of the network that are accessible by each party.
- Categorise the third parties by the level of risk. Priorities and look at what are the possibilities of attack and the likelihood of them happening. This will help you to give your attention to the most imminent threats first.
- Consider all the potential risks. Think beyond simple cyber security but consider all the different angles from which an attack may come.
- Minimise the risks. Once you’ve gathered the information you need to list and prioritise the risks, take action to reduce the risks where possible. You may identify areas of the network that need improving or third parties that need to be replaced.
The risk management of third parties is becoming an increasingly important part of operating a secure and successful business. You need to understand whom you’re working with, the risks you may encounter and how to deal with them when you face them. Third-party risk management requires ongoing monitoring, and your security is not something that you should, or can, ever take for granted.
Third party risk management software is changing the scene of security as we know it, giving businesses a scalable solution to match the needs and concerns of their particular organisation. Collected data can be transformed into helpful, actionable insights. This will help you to stay ahead of the game, keep up to date with security regulations and protect the future of your business. Risk management software will no doubt become a valued extension of your compliance team, giving you the information and peace of mind that you need to make good decisions for the benefit of your business, and all involved in it.
A technology-led approach will give you the upper hand and help you to prepare as best you can for the unprecedented economical scene in which we all now live and operate.