Third Party Risk: What It Is and How CISOs Can Address It

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In today's world of increasingly complex and dynamic business processes, organizations have begun to increasingly rely on third parties to enhance their capabilities to deliver essential services.

However, while integrating third-party features can maximize distribution and profit, third-parties present their own risks and dangers. For example, third-party vendors who share systems with an organization can pose security risks that can have significant financial, legal, and business consequences.

According to Gartner, organizations that are hesitant to expand their ecosystem for fear of the risks it can create will likely be overtaken by organizations that boldly decide to seize the value of third-party relationships, confident in their ability to identify and to effectively manage risks. Therefore, it is essential to manage third-party security risks effectively and efficiently.

Risk and compliance

Third parties can increase an organization's exposure to several risks, including interrupted or failed operations, data security failures, compliance failures, and an inconsistent view of the organization's objectives. According to an Intel471 Threat Report, 51% of organizations have experienced a data breach caused by a third party.

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“Organizations often grant third parties access to networks, applications, and resources for legitimate business reasons. However, when they do so with an older VPN, they often provide too broad access to all of them. 'a network, rather than granular access to the specific applications and resources needed to do their jobs,' said John Dasher, vice president of product marketing, Banyan Security at VentureBeat.

Third-party risks have increased so much that compliance regulations have become essential to an organization's processes and policies. Despite changing regulations and increased confidence in risk management programs at all levels, a Deloitte report found that third-party risk estimates also concluded that more than 40% of organizations are not demonstrating enhanced third party due diligence.

The growing threat of cybersecurity

As the need for third-party risk management becomes more apparent to organizations, risk management teams have begun to go to great lengths to ensure that vendors do not become liabilities when they become a crucial part of business operations.

However, when organizations often integrate a third party into their business operations, they are also integrating other organizations unknowingly, either now or in the future. This can cause organizations to unknowingly take on many forms of risk, especially in terms of cybersecurity.

"This is a huge concern because companies can't just stop working with third parties," said Alla Valente, senior analyst at Forrester. According to t...