The Importance of Third-Party Risk Assessments
In the age of SaaS and cloud-based technology, organizations are more interconnected and interdependent than ever. We are now largely reliant on our partners and providers to protect our data and networks.
To reduce these risks, firms are increasingly performing third-party risk assessments prior to implementing new technologies or renewing existing partnerships. Understanding the best practices for completing these evaluations is vital for a thorough third-party risk management (TPRM) program. Here's an overview of everything you should know:
The value of third-party risk management
Steps to take when conducting a third-party risk assessment.
Key factors to consider in a third-party risk assessment
The use of security questionnaires in the assessment process
Post-assessment actions
Risk assessment for technology vendors.
The Importance of Third-Party Risk Management
Businesses are more interconnected than ever. According to Vendr, the average firm works with more than 180 different vendors, each with various levels of access to company data, networks, and staff. Managing these connections and the related risks is critical, and this is where third-party risk management comes in.
Third-party risk management includes identifying, monitoring, controlling, and minimizing risks posed by external service providers and vendors. A strong TPRM program secures your company's vital assets as you extend your vendor network.
What is a Third-Party Risk Assessment?
For technology buyers, a third-party risk assessment is an essential component of any TPRM strategy. These assessments, which are conducted before entering into a business partnership, help to comprehend the possible hazards that a vendor may bring. This step is often required prior to executing a contract with a vendor.
Steps for a Third-Party Risk Assessment
A typical third-party risk assessment evaluates a variety of risk categories, including cybersecurity, operational, regulatory, reputational, and financial concerns. Vendors are expected to offer evidence and insights into these areas so that a complete picture of their security posture may be formed.
Key Elements in a Third-Party Risk Assessment:
In your assessment, you will have to review the following:
Cybersecurity Documentation: SOC 2 reports, penetration test results, and security whitepapers.
Risk Profile: The vendor's connectivity needs, access levels, and third-party dependencies.
Compliance certifications: SOC 2, GDPR, CCPA, ISO 27001, and FedRamp.
Data Security: Policies for data backup, deletion, encryption, and physical security.
Product security: Information on integrations, audit logging, access control, multi-factor authentication, and single sign-on.
Application Security: Policies governing secure development, credential management, and vulnerability management.
Legal: Subprocessor agreements, cyber insurance, data processing agreements, and service terms.
Access Control: Data access policies and password security.
Infrastructure: Status monitoring, hosting information, business continuity, and disaster recovery strategies.
Endpoint and Network Security: Disk encryption, threat detection, and firewalls.
Corporate security: Email protection, employee training, incident response, and internal SSO.
Policies: A variety of security-related policies exist, including permissible use, incident response, and risk management.
Security Grades: Evaluations by third parties such as SecurityScorecard.
Common Customer Questions: Pre-completed questionnaires that cover various buyer problems.
Incident Communications: Vendor procedures for communicating during events or breaches.
The Role of Security Questionnaires in Assessments
Many firms utilize security questionnaires to get this kind of comprehensive data. Standardized questions, such as the CAIQ and SIG, serve to accelerate the procedure. However, these surveys can be inconvenient and time-consuming for both buyers and sellers.
A Security Portal provides a solution by centralizing all security paperwork, allowing buyers to complete assessments more easily and decreasing suppliers' effort.
Post-Assessment Actions
After completing the assessment, it is critical to continue monitoring the vendor relationship as part of your TPRM strategy. This includes remaining up to date on emerging hazards, periodically reassessing risks, and undertaking extra evaluations prior to contract renewals.
Third-Party Risk Assessment for Sellers
As a technology provider, you will be exposed to third-party risk assessments from your clients. Preparing for these assessments entails centralizing all relevant risk information, actively sharing it, and maintaining transparency in your security policies.
Targhee Security is automating the security review process.
Targhee Security provides a scalable Security Portal that automates the security assessment process, enabling organizations to easily exchange sensitive material with prospective purchasers and customers. Our technology integrates with your CRM and data warehouse, making NDA signature and security assessments more efficient.
If you're ready to save time on security questionnaires, improve the buying experience, and position security as a revenue driver, contact us immediately.
