The power of automation for better vendor risk management
Companies have long relied on rich networks of external parties like manufacturers, service providers, suppliers or consultants, to boost their overall operations and reap the benefits of outside expertise or offerings. But while these partnerships are usually mutually beneficial, companies also need to be aware of the potential risks posed by their third-party, and even fourth-party, vendors, and account for security across their entire supplier ecosystem. Unfortunately, 80% of companies fear they don’t have full visibility into the security posture of their third-party partners. This is an urgent pain point to address since vulnerabilities along any link in the supply chain can lead to devastating consequences, such as data breaches, steep fines, reputational damage, and more.
The SolarWinds hack of 2020 is a prime example, when nation-state hackers breached SolarWinds’ Orion system and launched a supply chain attack that infiltrated the networks, systems, and data of thousands of SolarWinds’ customers, including federal agencies. And while this specific attack was extremely sophisticated, supply chain weaknesses can stem from simple oversights or lax procedures, like outside vendors or contractors being able to access sensitive data without meeting company contracts or procedures. Due to the complex nature of third-party risk management (TPRM), the whole process can feel overwhelming, especially for companies taking on the challenge without dedicated GRC teams.
Let automation do the heavy lifting
Unfortunately, this overwhelm often stems from companies relying on manual, labor-intensive processes to vet and manage their third-party partners, costing them valuable time and resources. And it’s not only vendor companies they need to be evaluating, but also the contract, freelance, and temp workers that make up 36% of the U.S. workforce, as well as third-party software and tools, like generative AI, that can pose additional data security risks. Essentially, any entity, individual, or tool that is granted any level of access to internal systems or data should be viewed as a potential liability — even though most third-party vendors strive to uphold the reputation and security expectations of the companies they work with.
While many organizations still use spreadsheets to manage third-party relationships and track metrics like access levels, risks identified, time to mitigate issues, etc., research shows nearly half of all TPRM tasks are supported by some degree of technology or process automation — and this percentage is only expected to grow. Manual processes leave room for human error since there is often a high volume of vendors and data at play and their statuses are frequently in flux, not to mention that GRC teams are stretched thin as it is. In addition, because of how burdensome these manual methods can be, many organizations only evaluate their vendors once (usually at the beginning of the relationship), giving them a limited, “point-in-time” snapshot of their risk level, instead of validating compliance on a continuous basis. As a result of these limitations, 83% of recently surveyed organizations have experienced negative consequences as a result of their current processes.
This is where automated compliance solutions can make a real difference. Automation alleviates many common painpr points and helps organizations more easily measure their vendors’ performance against set policy standards. Automation can handle repetitive tasks, provide risk scores for vendors, flag issues that need attention, document results, and more. Most importantly, these solutions offer real-time visibility into the risk and security postures of third- and fourth-party vendors. They have the capabilities to constantly verify that they’re meeting data privacy regulations, like GDPR or CCPA, or security frameworks, like ISO 27001 or SOC 2, or more specialized frameworks as relevant.
With the support of automated compliance tools, companies can rest assured – and have the documentation to prove – that their entire vendor ecosystem is committed to minimizing cyber risks and has the necessary security controls in place. Instead of depending on unreliable manual assessments or taking vendors at their word based on self-completed security questionnaires, companies can rely on 100% objective audits through ready-built platforms.
Shift to continuous monitoring at every stage
As mentioned, managing vendor partners is not a “one-and-done” activity. That’s why technology is so crucial to keep this process from being a herculean effort and make continuous monitoring more realistic throughout every stage of the vendor lifecycle. As an example, consider the initial assessment stage, when companies invite vendors to bid or pitch their services. Security questionnaires should be required at this point, especially for prospects that would be gaining full access to systems. These questionnaires can be automated to start, while still allowing respondents to supplement responses or resources. It’s also a good idea to require a security audit report to illuminate any gaps that would need to be addressed before a contract gets signed. Regardless of the size or influence of vendor prospects, companies should always do their due diligence when it comes to assessing risks to avoid easily preventable attacks.
Companies should provide a contract to approved vendors that clearly outlines compliance expectations — including a timeline of how long they have to fix any issues identified in the earlier security audit. The contract should make clear that if future concerns are flagged during review cycles that aren’t resolved in a timely manner, it could lead to non-renewal or even termination of the relationship. Additionally, this is the stage to determine what the process will look like to manage each new vendor’s risk potential and what security controls are needed.
Once this process is outlined, it’s a matter of sticking to it and continuously monitoring vendors’ compliance against the company’s risk management policies. If problems arise, companies should address them right away or terminate the relationship if the issues are especially concerning or difficult to fix. During the working relationship with vendors, companies should train their employees on how to securely engage with third parties.
Finally, when it comes time to part ways with a vendor, companies need to distance themselves from any remaining risks by removing the vendor from systems and confirming they no longer possess or have continued access to sensitive data. Automated compliance software can help teams maintain an up-to-date list of active and terminated vendors to ensure nothing (and no one) slips through the cracks.
Create trusted ecosystems
Security needs to be a top consideration during every step of a company’s relationship with external vendors – not only to avoid potentially disastrous outcomes, but also because interconnected organizations have a shared duty to create trusted ecosystems and protect the data and privacy of businesses along the entire supply chain (and by extension, their customers). Additionally, greater oversight prevents minor issues from becoming larger problems down the line.
While most third-party vendor relationships will lead to positive business outcomes, companies need to regularly review every external relationship they’re engaged in to ensure their vendors remain in compliance with security protocol. By replacing manual processes with automation and shifting from periodic to continuous third-party compliance checks, organizations will reduce human error, save time and resources, and have greater visibility and control over potential risks across their entire vendor ecosystem.
