Many companies let third parties access their data and information while trusting them. The involvement of third parties in business is important for many reasons too. They are beneficial for cutting costs, aiding the capability of the company and bringing outward innovation in business. They also reduce your chances of operational risks. The problem of the third parties is that they interfere with all the matters of the company once they become a part of the system. Other risks that third parties bring with them in a company are:
* They may have a reputational impact on the company.
* Businesses start depending on the third parties and therefore become vulnerable.
* The company can lose customer-confidence.
* Financial losses can be one of the bad consequences.
* Third parties, if have access to sensitive systems, can bring unknown risks for your company.
* The company may have to face cyber threats.
* The chances of resiliency risk increase.
* Compliance risk and strategic risk are also potential problems.
* Fraud and litigation should never be overlooked as possible risks.
The solution to third party risks is not the exclusion of the third party altogether. Running away is not the remedy. With proper management and the right amount of oversight and focus, you can save your organization from these risks. Following are some of the smart ways of preventing and dealing with third-party cyber risks:
See Where the Party Lies in the System
It is imperative to first understand where the third party lies in the organization. Not all third parties have the same job. Some work for service or product delivery and some just deal with the most important affairs of the company. To move forward, it should be known what the exact job of the third party is so that you can track its working according to the job assigned to it. Understanding their job makes it easy to keep track of their activities.
Perform Business Impact Analysis
Business Impact Analysis or BIA’s are used to assess the recovery objectives and functionality of a particular area of the system. The area may be a department, a location or any business process running in the system. Through this systematic evaluation, it becomes easy for the board of directors to judge the intervention of the third party in the whole process. BIA's determine the potential consequences of the actions taken by the third parties. So it is important to run this analysis.
Evaluate the Third Party Extensively
Before starting contracts or giving third parties any authority, evaluate those third parties in detail. See their previous record. Run the on-boarding process for the third party you want to work with. The board of directors and senior management should analyze fully and perform SLA's (service level agreements). Ask for the accountability of the third party and for that matter, the use of all the other parties. Evaluate the risks the organization may face by engaging with a third party before starting the process so you know whether you can handle the risks or not. If you can, then go ahead. If you cannot, look for solutions.
Limit Organization’s Information
The third party takes control of one part or a few parts of the company. Make sure you do not make all the personal data and information of the company accessible to the third party. The external parties can manipulate and exploit the organization by gaining knowledge about its most important private information. Do not let this happen. The area the third party deals with should be made accessible to it and the rest should be kept confidential.
Establish Policies and Standards
Establish a pragmatic code of rules for your company. Make clear the ownership principles of the system. When it is clarified how much control the third party should have, it will become easy for the management to have everything under control. Preventive controls should be given priority over detective controls. For creating more autonomy for the company, decentralized management will help a lot. But this will make the organization lose a common oversight. Create standards and policies that apply to everyone. A properly planned-out strategy by the senior management would do wonders as it would warn the company before the risks take place.
Govern Without Breaks
Map all the third parties working for your organization. Then keep their actions under surveillance. Do not take the risk of letting them do what they feel like doing. Take notice of every move. Adopt a programmatic and coordinated approach for dealing with the third party. Manage third party ties with the company from the beginning to the termination. Monitor all the risks involved and the performance of the third party to see the level of their commitment.
Business Engagement is Necessary
Business engagement means onboarding processing in this scenario. The ongoing relationship of the third party with the organization should be kept under surveillance. Third-party risk management includes the onboarding of new third party vendors. The operational and financial commitment of each provider should be calculated and their engagement must be assured. The detailed contracts like data storage, costs, legal documents, etc. should be kept in place by the management too.
Make Available Alternative Providers
Contingency plans should not be underestimated for companies that involve third parties. You cannot fully trust any outside party for your company so you should always have backup plans. Just in case the third party you chose does not do its job well or proves to be harmful for the organization, the board must have alternative vendors. These alternative providers should be able to meet required services within a limited time until a permanent solution is found.
Take Help from Technology
Use the internet, apps and gadgets as much as you can for decreasing the risk of third party involvement in your business. For governance and risk-prevention, many companies create their own software. Others mostly stick to GRC (Governance, Risk and Compliance) software. Every organization must update its technology so the chances of risks decrease to the minimum.