Service providers are now under siege. As data breaches increase in number and severity, each new day brings another news headlines touting the supply chain’s cybersecurity weaknesses. The annual Cost of a Data Breach Report found, again, that data breaches arising from third-party partners increased the total cost by $370,000. Organizations need to mitigate these costs and threat vectors to remain financially viable. Security ratings, platforms that monitor publicly available information, provide service providers with continuous monitoring that increases customer confidence, ultimately ensuring continued financial and reputational stability.
Why malicious actors target service providers
Service providers run the gamut of small, mid-size, and large companies. Each of these sized organizations comes with their own vulnerabilities that cybercriminals love exploiting.
Whether your organization is defined as a small business based on revenue or number of employees, this category is rapidly evolving into one of the primary threat vectors. The current cybersecurity skills gap means that cyber professionals are in greater demand, often leaving small businesses unable to bear the cost of the most experienced professionals.
Small businesses often use low-cost online technologies for marketing, data storage, and other business activities. These tools leave smaller organizations, such as those under 50 employees, at risk for a web application attack.
Mid-sized businesses suffer from the same talent gap problem as small businesses, but due to their size, they can often purchase better online tools. However, while many mid-sized businesses have an IT department, they often have more complex IT infrastructures. Expanded use of cloud services and more employees make them a prime target for cybercriminals.
A mid-sized business, often one scaling from mid-size to large, may have more remote employees who access resources using weak passwords or who use personal wireless networks whose security the employer cannot control.
While large organizations can employ seasoned cybersecurity professionals, they also control a vast ocean of personally identifiable information (PII). While the small and mid-sized businesses sing a siren song of security control weaknesses that lure cybercriminals, large organizations have larger vendor ecosystems and more data, making them primary data breach targets.
A large service provider engages more vendors, increasingly the upstream and downstream supply chain risk. Large organizations may have policies and procedures, but they lose visibility into the amount of risk within their ecosystem. Thus, not only are they attractive to cybercriminals as a threat vector, they also increase their vendor risk.
How cybersecurity costs impact service providers
No matter how large or small your organization, you find that cybersecurity increases a variety of costs across the organization. Even just a small sampling of these costs provides insight into the often difficult-to-quantify impact.
Whether it’s hiring IT staff or responding to vendor risk questionnaires, your organization spends a lot of money easing customer concerns. The average salary for an IT professional is $74,570, or approximately $35.85/hour.
You likely also have more than one IT professional answering vendor questionnaires. If each questionnaire takes four hours, that means you pay $143.40 per questionnaire. Now, multiply that by the number of customers you have requesting questionnaires. Even a small business with only 100 customers is paying $143,400 per year just responding to vendor risk management requests.
Compliance risk cost
Service providers need to meet increasingly stringent compliance requirements. For the sake of argument, you can assume at least one IT professional is dedicated to monitoring your security controls. You’re spending at minimum $74,570 on that individual’s salary. More likely, you’re actually spending more. The average Application Security Engineer salary is between $100,000 and $210,000. Now, add in your compliance manager salary, and any additional employees who spend time on your cybersecurity control implementation and monitoring.
Not only are you paying people to do the work, but you also have to think about the potential fines and penalties associated with noncompliance. The average cost of non-compliance is approximately $14.82 million, including fines, forced compliance costs, and lost business.
Reputation risk cost
As a service provider, you know the total customer value (TCV) for a happy customer. However, the total loss value of a single unhappy customer is harder to quantify. We can assume that an unhappy customer will share the experience with peers. A customer who views you as a data breach risk will likely tell at least two to four others. Even worse, social media amplifies this, as unhappy customers often call out service providers publicly, increasing the reputation risk cost.
In other words, you need to think about how cybersecurity control weaknesses will lose you current customers as well the potential number of customers who will refuse to consider you as a service provider.
Why security ratings provide value for service providers
Security ratings provide you with objective, quantifiable insight into your risk profile, both your own and that of your own supply chain.
Security ratings platforms continuously monitor your environment and ecosystem to detect potential control weaknesses. Using publicly available information, these platforms allow you insight into a variety of threats, including IP reputation, DNS health, network security, web application security, endpoint security, patching cadence, hacker chatter, leaked credentials, and social engineering threats.
Security ratings platforms then take the information gathered, assign risk weightings to the factors reviewed, and provide easy-to-read scores that indicate the organization’s cybersecurity robustness. Some security ratings platforms provide individual scores for each factor they monitor. With these drill-down scores, you can better prioritize IT staff time and effort.
As a service provider, you need to answer an unending number of questionnaires to prove the quality of your cybersecurity program. With a security ratings platform, you can use the at-a-glance scoring systems to give your customers the needed confidence in your security profile. In some cases, you can even streamline the due diligence questionnaire exchange process. These services enable you to reduce the operational costs associated with responding to customer requests.
Decrease compliance and reputation risks
As part of your compliance program, you need to provide continuous assurance over your cybersecurity posture. Decreasing your compliance risk also decreases your reputation risk With security ratings, you both continuously monitor and continuously document your cyber controls’ effectiveness. Security ratings, especially ones that drill down to individual factors, can alert you to potential weaknesses so that you can remediate them faster, decreasing the potential for noncompliance. Since you can share your security ratings with customers, you also decrease reputation risk because you have objective, quantitative information that provides them the confidence necessary to continue to engage your services.
SecurityScorecard provides continuous assurance and value to service providers
SecurityScorecard’s security ratings provide any sized service provider data necessary to onboard more customers and to secure their ecosystems.
SecurityScorecard’s platform provides more than visibility; it also offers a common language so organizations can create a culture of security. We translate the highly technical findings your IT department needs for mitigating risk into an easy-to-read A-F reading scale, closing the gap between technical and line of business needs. Our research shows that organizations with a D or F rating are five times more likely to experience a data breach. Using SecurityScorecard’s security ratings, your organization can implement stronger controls to secure customer information.
You can also track and review the cybersecurity posture of your own third-party service providers. Since the ratings update in near real-time, you can proactively review your vendor risk and prove governance over your vendors’ cybersecurity controls.
Customers with our Atlas platform increase revenue by decreasing operational costs. Our platform streamlines responding to and collecting questionnaire responses while validating the answers using data gathered from our platform. With SecurityScorecard, you can verify the trust you place in your vendors.