Third-party risk is quickly becoming a primary concern for many organizations as the utilization of outside resources continues to increase. These organizations are operating in a complex ecosystem that connects data and systems, increasing risk on many fronts. These third parties gain access to employee data, customer data, financial information, operations intel, and more that is potentially accessible through systems.

Software, services, and suppliers are examples of third-party involvement that carries the appeal of cost savings and competitive advantage. Despite these benefits, they add a lot of work for your risk management teams. In addition to your own risk profile, your business is responsible for any risk-related action or inaction by everyone in your third-party network. While many reasonably expect their third parties to manage their own risk, this, unfortunately, does not always happen, making it extremely important to perform third-party risks assessments and ensure your organization is protected in the process.

Third-party Risks

According to a study performed by MasterCard’s RiskRecon and the Cyentia Institute, about 30% of organizations said their vendors would pose a risk to their operations if they were breached. Another quarter said around 50% of third-party vendors could have a severe impact on their organization if an attack was successful.

Examples of risks through third parties include:

Network Breach – any unauthorized activity on your organization’s digital network, jeopardizing network security and data.

Reputational Risk – negative public opinion gained by association, resulting from publicized security breaches, poor work practices, legal violations, or harmful customer interactions.

Intellectual Property Theft – robbing an individual or organization of their ideas, inventions, or creative expressions. IP typically includes trade secrets and proprietary information, including patents, trademarks, and copyrights.

Spear Phishing – targeting specific organizations or individuals in an attempt to steal sensitive information such as account credentials or financial information, often by sending counterfeit messages impersonating a legitimate person or organization.

Operational Risk – the possibility of a third-party action that causes an interruption to business operations or a full operational shutdown.

Data Theft – the unauthorized copying or transferring of an individual’s or an organization’s data from a computer or server.

Credential Theft – attempting to steal an individual’s passwords or login information with the intent to access private or secure data and information.

Fileless Malware – a type of malicious software that uses legitimate programs to infect a host rather than virus-laden files