Third and fourth-party vendors have become paramount to many businesses’ operations, as they can help improve efficiency and expand the availability of services. However, these vendors often come with increased cybersecurity risks for your organization. According to Ponemon, the average cost of a data breach increases by more than $370,000 for breaches caused by third-party vendors. With costs on the rise, it’s becoming clear that businesses need to continuously monitor their vendors’ cybersecurity posture.
Third-party risk management can be time and labor-intensive, thus, many organizations are turning to automated technologies to conduct vendor risk management (VRM) and assessments. Armed with technologies like automated cybersecurity questionnaires and security ratings systems, organizations can build a comprehensive vendor risk management program that can help mitigate risk and streamline processes.
What is a vendor risk assessment and how do you perform one?
Most organizations understand that they should be actively monitoring their cybersecurity posture, but the security posture of vendors is often overlooked. A vendor risk assessment is a tool that helps your organization gain an understanding of the risk posed by a particular third or fourth-party vendor. To conduct a vendor risk assessment, your organization should review existing vendors, assign each with a security rating, respond to risks, define security metrics, and continuously monitor your vendors.
How does VRM automation technology help meet business requirements?
As organizations begin looking for ways to efficiently monitor their vendor risks, there are a few things that successful automation technologies should be able to do. Let’s look at a few of the ways VRM automation technology can help meet business requirements:
A leading challenge for organizations looking to monitor their third-party vendors is speed. Typically, vendor risk assessment processes are time-intensive and manual, often with a lot of back-and-forth communication from both sides. This can lead to undetected vulnerabilities within vendor networks and make it challenging to safely bring on additional vendors.
Automated assessment tools can accelerate the process by providing a quick, comprehensive view of a vendor’s performance. With tools like security ratings, which can instantly highlight risks within a network, organizations gain the ability to make rapid, data-driven decisions about risk prioritization. This allows for faster turnaround times and increased productivity, and helps to simplify the entire vendor risk management process.
Digital transformation has allowed organizations to rewrite how they do business, and as a result, many are turning to third-party vendors to help them carry out day-to-day operations. That said, most organizations do not have the human resources to conduct thorough due diligence on all existing and potential vendors. This has led to greater risk exposure and an expansive digital attack surface, and ultimately, it increases the likelihood of a third-party breach.
Organizations are increasingly utilizing technology-driven automation that can help streamline cybersecurity assessments across the entire supply chain, even as you begin bringing on new vendors. Continuous monitoring is also key to ensuring your organization’s vendors are properly managing their level of risk, and automated tools can be leveraged to monitor security performance over time.
As previously mentioned, vendor risk management assessments can be extremely time-consuming, and this problem is only exacerbated by the rapid adoption of additional third party services. For many organizations, effectively communicating priorities and next steps with vendors is the most challenging part of the vendor risk management process.
Successful proactive risk mitigation requires vendors to act quickly once they are made aware of vulnerabilities in their network. Therefore, your organization should make it as easy as possible for vendors to understand the issue and how they can solve it. Consider tools that can summarize findings in an easy-to-read manner that clearly
communicates the issue at hand.
How SecurityScorecard can help automate vendor risk management assessments
By adding automation into the equation, organizations can fully leverage the insights gained from vendor risk assessments without having to dedicate extensive amounts of time or resources to the process.
Automated vendor risk assessments allow you to gain visibility into every questionnaire and response completion, ultimately helping to mature security programs and relationships with vendors while simultaneously establishing continuous practices. With SecurityScorecard’s Atlas questionnaire platform, organizations are empowered to send, complete, and automatically validate results at scale.
The ability to create streamlined, replicable processes allows organizations to easily operationalize, collaborate, and remediate high-priority vendor-associated threats. This allows humans to focus on the most important initiatives that may have a bigger impact on the bottom line. To proactively defend against third-party data breaches and maintain efficiency as organizations begin working with more third and fourth-parties, automated vendor risk management assessments must become a critical component of their third-party risk management program.