Organisations are often unaware of the risks that third-party vendors expose them to. This frequently makes organisations vulnerable to preventable malicious cyber attacks. Third party risk management is vital for organisations and businesses, but a lack of consistent reporting and continuous risk monitoring can challenges that put organisations at risk and vulnerable to data breaches.
Over 50% of organisations have faced a data breach due to their third-party vendors, but in an attempt to successfully manage and lower this growing risk whilst staying ahead of future challenges, organisations should utilise credible continuous risk monitoring solutions. Third-party risk is consistently escalating for several reasons. Countless regulators have prioritised how companies manage their third party risks and as a result, have increased fines for violation of third party risks. Due to this escalating factor, more customers are affected by the third-party system failure, thereby making the organisation’s reputation suffer. Many companies are turning to the use of cyber risk ratings and security ratings to help measure and manage their cyber risks with third party risk data, to find out more about Orpheus Cyber’s cyber risk ratings click here.
Absence of policy awareness and training
A reoccurring issue that many companies have is tracking vendor risks in line with their internal policies and certifications. This then results in operational issues which is why companies must communicate their policies as clear and concise as possible. Lack of communication can result in a third party’s ability to reassure compliance.
Legal and regulatory
Legal and regulatory risk involving a third party will impact the compliance with legislation or regulation. For example, if an organisations supplier violates labour or environmental laws, the organisation can still be found liable. Outsourcing does not mean the end of responsibility.
Unstructured third-party monitoring procedures
Companies and organisations that use undefined and decentralised third-party monitoring systems can cause challenges such as unstructured processes and undefined metrics to arise, this is because these decentralised third-party monitoring systems are difficult to measure. This can lead to a failure in monitoring their third parties and cause risks to occur.
Complex vendor networks
Many companies deal with hundreds of supplies and vendors, these suppliers and vendors in turn have their correspondence with different individuals such as subcontractors, agents etc. Third-party risks can arise at any time because of this. The challenge arises when vendors may provide a required specialist, but regularly do not accept definitive responsibility for the risk that comes with the service offered by the experts.
To find out more about the impact and importance of third party risk, click here