Third-party data breaches continue to grow at an alarming rate. A survey conducted by the SecureLink and Ponemon Institute revealed that over 44% of organisations suffered a third-party breach in the past 12 months. Out of the organisations that suffered a breach, 74% said that the cause was access given to third parties.
The growing incidences of third-party breaches explain why vendor risk management is important, more specifically, why vendor security needs to evolve to protect your data. With that in mind, we examine the trends changing risk management and evolving to meet security needs.
Why are third-party breaches rising?
Before diving into security trends, it is worth examining why third-party breaches are happening. Here are some reasons behind the increase in cyber attacks.
Businesses are sharing sensitive information with several vendors
Businesses are becoming more dependent on their network of vendors to complete business operations. This greater dependency prompts businesses to share key information with several vendors—on average, organisations share sensitive data with over 100 vendors. Sharing data with different third parties increases the chance of a breach. Current risk management processes are not enough to ensure consistent security standards across hundreds of organisations.
In addition, as businesses expand their circle of vendors, it leads to another issue: the growing complexity of third-party networks.
Managing networks is becoming more complex
As networks grow, they become harder to manage and maintain. Vendor networks are slowly expanding to include third parties as well as fourth and fifth parties. Third-parties have their own vendors that access client data to complete their operations, leading to the creation of fourth-party organisations within the security network.
The advent of fourth parties makes it harder to enforce network security. Research shows that on average, 182 vendors access a company’s IT system every week, and these organisations will have 182 vendors of their own, which means over 33,124 potential organisations accessing the same block of data. With so many companies accessing the network, it is harder to secure the data.
The number of vendors is compounded by the negligence of security standards, specifically for fourth parties, with only 13% of businesses taking an active role in assessing their security standards.
The expansion of vendor networks and lax network security standards has led to an increase in third-party breaches. What is even more concerning, is that this means current vendor risk models are out-of-date and no longer enough to protect data.
Vendor risk management in the future
Vendor risk management models are evolving to mitigate the rising number of third-party breaches. Here are key trends shaping their evolution.
A shift towards continuous monitoring
Third-party vendor management practices are shifting from annual assessment to regular, real-time evaluation of vendors. Current security assessments are not frequent enough to capture the fluctuating nature of third-party relationships, which leaves vendor security systems out-of-date. But continuous monitoring allows you to assess vendor security regularly to determine if they are meeting security standards.
With a continuous assessment model (supported by the right technology), you can identify vendors that fail to meet security standards, making it easier to prevent data breaches.
A shift towards a standardised, centralised framework
Businesses are reassessing their vendor security framework and shifting to one that is more standardised and centralised. Previous versions of the security framework were unique but siloed, limiting visibility into vendor actions. To remedy this problem, the vendor security frameworks of the future will be more standardised (in line with regulatory requirements) and centralised. The new framework will ensure that businesses follow best security practices and monitor vendor actions more diligently.
Segmentation will be integral to security going forward
Segmentation risk is a significant development in vendor security management. Most businesses face problems determining who their third, fourth, and fifth parties are. They also have a hard time scoping the significance of different risk factors. Segmentation allows you to organise and categorise vendors (in terms of importance to business operations) and risks to improve vendor security.
Automated tools will play a crucial role in vendor security
With vendor security becoming a continuous, real-time process, you will need to invest in security tools that can complement the new norm for vendor security. Some automated tools include central repository data management systems, end-to-end workflow tools, and robust analytics capabilities that turn vendor security into an automated, data-driven practice.
As vendor networks become more complex, vendor security has to evolve into a standardised, centralised process powered by automated tools.
Keep up with the latest trends with RiskXchange
RiskXchange (RX) is the only 360-degree risk-rating platform that will give you an all-encompassing view of your vendor infrastructure to improve risk management and protect your data while your vendor infrastructure grows. The RiskXchange platform allows you to assess your vendor’s security posture in real-time and even trace their footprint across your vendor infrastructure and detect anomalies. You can also create an inventory of all your internet assets and categorise security risks to better allocate your resources so you can improve data security and meet compliance requirements.