Securing a contract with a third-party vendor can be a difficult process with months of negotiations and dozens of variables in play. When the deal is finally done, are you confident that your data is in good hands?

In 2016, Soha Systems found that 63% of all data breaches were linked to third-party access. That means your organization might have a stellar security track record, a commanding CISO, and team of security analysts, but your third-parties might still be running Windows 95 or even older, less secure software.

This article will show you how to effectively build information security into a third-party relationship from the outset.

1. Include Information Security in Your Due Diligence Process

You should always include members of your information security team in the contract negotiation process from start to finish. They can help determine whether or not your organization’s data will be in secure hands- a determination that has become a big priority for CEOs and boards of directors. For example, imagine that your prospective third-party has difficulty agreeing to a security audit, if your information security team is involved, they can scrutinize your prospective third-party’s security posture. Specifically, they can look closely at the network of partners the third-party works with to see if there is a particular history of vulnerabilities or lack thereof.

That’s just one example of why it’s important to forge a relationship between your company’s executive management team or General Counsel and your company’s information security team. Integrating the security team ensures that third-party management is an informed process that considers not only the legal components, but also the technical ones (and vice versa). Plus, making sure that the security team and the executive/legal team have an ongoing collaboration has the added bonus of giving cybersecurity initiatives the visibility they need.

2. Collaborate on Third-Party Security with Your Third-Parties

You might think that third-parties are reluctant about having their security audited, but actually, many are open to this process, especially if a third-party is assessed non-intrusively. Vendors will be able to provide records attesting to their security preparedness, such as SOC reports, ISO Certifications, PCI Attestations of Compliance, and internal security control documentation. While these documents may be an encouraging sign of security hygiene, they’re no substitute for your own testing– whether that’s a penetration test, an onsite audit, or a more continuous form of monitoring.

Penetration testing — “pen testing” for short — is when a company essentially hires an ethical hacker from an external firm to penetrate the company’s systems and pinpoint weaknesses. If you are the CISO of a company with a decent security posture, you probably organize internal and external pen tests on an annual basis at minimum. If your prospective third-party agrees to a pen test, the protocol is similar to setting up a pen test for your own organization. In a pen test, “scope” is the most important aspect, representing everything that will be tested during this test. If the scope is too narrow, the test might miss critical systems. If it is too broad, the test will not be able to fully scan every system during the time allotted. For effective testing, you want to identify where your third-party is keeping your critical data, and perform a test on those systems, along with the processes that engage with them.

Another testing option is to have your security team perform a periodic onsite security audit on the third-party.The results will come back within one or two weeks depending on the complexity of data systems or scope of the audit. It’s important to note that higher-risk vendors warrant frequent audits which can become costly in resources and staff hours. If this winds up being the option you choose, the PCI Security Standards Council and National Institute of Standards and Technology (NIST) both have a comprehensive set of guidelines for audits (and pen tests).

A third option, which you can use to augment either of the above testing options, is to use a continuous monitoring tool to audit your vendors without any intrusive or interruptive testing. If the tools show that your prospective partner has gaping security holes, filling those gaps should be a fundamental part of the business relationship.

3. Secure Your Network From Third-Party Risk Through Network Segmentation

There’s no such thing as a completely secure company or system. Even if your testing shows that a third-party has immaculate cyber hygiene today, tomorrow they might misconfigure system hardware, modify security controls and privileges, or install insecure or misconfigured software. Any of these actions completely change a company’s security posture. With over 600 CVEs (common vulnerabilities and exposures) disclosed and published in October alone, it is bad practice to rely on good faith and luck when it comes to your third-party security.

In order to remain truly secure, it’s important to limit the ways in which your third-parties have access to critical data. Make sure you have robust processes in place to qualify your list of third parties and limit their access to only essential portions of your company network. You can dedicate or partition servers, use VLAN, or firewalls to ensure that specific data isn’t commingled with your third-party’s data. Essentially, by limiting network and data access, you’re ensuring your data is isolated so that if a data breach does occur, your risk is mitigated.

Above all, to gain confidence that your data is safe, you need to maintain a robust and transparent relationship with your security team from the outset. They can guide you on the best way to assess and protect yourself from third-party risks. If you ignore their recommendations, your next vendor contract might turn into your next big vulnerability.

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