Vendors are a key part of every business and, therefore, every organization’s security. Yet, one of the biggest challenges for security and third-party risk management teams is tracking down their vendors. It’s no wonder that 65% of organizations don’t know which third parties have access to their most sensitive data. On top of that, vendor risk management teams need to worry about who their vendors’ vendors are – namely their fourth parties.
This brings two pieces of news. The bad news: your biggest security challenge may be the vendors who are unknown to your risk management team. The good news: the rest of this article will show you how you can not only automatically uncover unknown third and fourth parties but also work with them to remediate any potential risks.
Traditional Third-Party Risk Management Methods Don’t Work
According to a recent Gartner survey, 71% of organizations report that their third-party network contains more vendors than it did three years ago. This same group reports their third-party network will grow even larger in the next three years. With the rapid pace of digital transformation, pressure to onboard quickly onboard new third parties, and new digital risks arising from increasingly digitized ways of working, the traditional third-party risk management process doesn’t cut it.
Traditionally, the process of identifying vendors involves emailing back and forth with procurement, surveying various departments, and individuals, and looking through contracts and payment history to understand the third parties that make up a digital supply chain. This is time-consuming, prone to errors and oversights, and often misses multiple “shadow” vendor relationships that may exist. It’s no wonder that 83% of legal and compliance leaders identify third-party risks after due diligence, not before. Once vendors are identified, vendor risk managers send lengthy security questionnaires that take hours to complete, provide point-in-time answers, and are nearly impossible to verify. These methods lack continuous visibility into vulnerabilities across the vendor ecosystem.
Now, imagine this process for fourth parties. If detecting and monitoring your own supply chain is hard, doing the same for fourth-party vendors is exponentially more difficult. Organizations need to move away from these manual processes to an automated, integrated, and collaborative approach. Here are three easy ways to do that.
1. Leverage a tool that automatically detects your full vendor ecosystem.
In order to scale the vendor risk management process, you have to embrace automation from start to finish. That begins with identifying your vendors. This is a combination of people, processes, and technology. Whether you’re beginning your vendor risk management process or have built a mature one, processes will not always be followed to a tee and a majority of organizations report talent shortages across the board. That is where technology comes in to fill this gap.
Imagine if you had a tool that can non-intrusively scan any domain and automatically detect your 3rd parties. Now, imagine if that same tool was also able to automatically attribute those third parties’ vendors – that is, your fourth parties. Leveraging SecurityScorecard’s Automatic Vendor Detection does exactly this, saving you hours in your third-party risk management process. With over 21 million vendor connections identified for over 180,000 companies, Automatic Vendor Detection visualizes identifying your third and fourth parties. While this may show you organizations you already know about, most customers are surprised to discover vendors that were not in their inventory.
Taking this automated next step will empower collaboration within your organization from procurement, security, IT, and most importantly, collaboration with your vendors.
2. Know the risk posed by each vendor AND your entire ecosystem.
Once vendors are identified, classification and identification of risk is the next challenge. Traditionally, most vendor risk management teams send lengthy security assessments to evaluate the security posture of their vendors. Unfortunately, these only provide a point-in-time view of security. Security and vendor risk management teams need continuous visibility into the security posture of each vendor, as well as an understanding of the overall risk posed by them.
Fortunately, Automatic Vendor Detection provides ongoing visibility into the overall security posture of each third and fourth-party vendor, enabling organizations to pinpoint their riskiest vendors and the specific issues that need to be resolved. Taking it one step further, Automatic Vendor Detection calculates a Supply Chain Risk Score by combining the risk of an organization and its entire digital supply chain. This takes into account multiple parameters, including infrastructure, paths to an organization, and how much risk each vendor can pose.
3. Identify concentration risk to continuously monitor your most crucial fourth parties.
Fourth-party concentration risk occurs when many of your third parties rely on the same fourth party. This can create a single point of failure if that fourth party, such as a popular host service or cloud provider, experiences a disruptive business event or data breach. One way to identify this is by asking your third parties for a list of their priority vendors. However, many businesses are reluctant to share their lists, and when they are shared, it is hard to verify or keep up to date.
Using Automatic Vendor Detection not only enables you to discover your fourth parties but also understand how they are connected to your organization. For every fourth party discovered, you can drill into the connections and third-party vendors that are leveraging this vendor. This arms you with the data you need to prioritize and continuously monitor not only your critical third-party vendors but theirs too. If a fourth-party vendor’s score suddenly drops from an A to a C, your team is armed with the knowledge to take action and prevent a potential breach or event.
Ready to add Automatic Vendor Detection into your vendor risk management process?
This is the year to take control of digital risk from your third and fourth parties, so you can manage risk and drive your business forward. Visibility into your digital supply chain is critical to business continuity, and it all starts with knowing your third and fourth parties. SecurityScorecard scans the global IP space daily to obtain a complete view of your digital ecosystem, enabling you to scale third-party risk management with continuous visibility across your entire ecosystem.
Get started with SecurityScorecard’s Automatic Vendor Detection today to automatically gain visibility into your entire digital footprint.