Over the past two years, 98% of businesses have had at least one third-party relationship that experienced a breach.1
The message is clear: businesses need a robust third-party risk management (TPRM) strategy.
The typical organization manages around ten third-party relationships2, and each connection introduces potential risks. Therefore, cyber resilience isn’t just about defending your internal systems; it’s about securing your entire digital ecosystem to withstand and recover from inevitable cyber incidents.
Third-party risks become unavoidable as companies increasingly rely on subcontractors, clients, and partners. Without a strong TPRM strategy, businesses expose themselves to financial losses, reputational damage, legal consequences, and regulatory penalties. In an interconnected economy, no organization operates in isolation, which makes TPRM vital for safeguarding long-term success.
Third-party risks are growing in sophistication and scale, largely due to the increasing interconnectivity of supply chains and the expanding attack surface. The rise of Internet of Things (IoT) technology contributes to the challenge, with one study estimating that 125 billion IoT devices will be in use by 20303, opening numerous potential gateways for cyber attacks.
Cybercriminals are also increasingly targeting supply chains, with attacks surging by nearly 750% between 2019 and 2022.4 Cybercriminals have realized that infiltrating interconnected digital supply chains is effective and lucrative.5 Canada’s National Cyber Threat Assessment highlights that supply chain breaches are more complex than direct attacks, making them a preferred tool for state-sponsored threat actors and highly skilled cybercriminals.6
Today’s interconnected business environments heighten the risk, especially with the added complexity of third parties having their own supply chains. Threats originating from your third party’s suppliers or vendors, such as fourth or fifth parties — also known as Nth-party risk — add another layer of depth.
Given this major threat, strengthening your cyber resilience and TPRM practices is the next logical step. Start by thoroughly mapping out your supply chain and creating an inventory of third-party vendors, suppliers, and service providers to understand your risk exposure fully.
Here’s how you can effectively integrate third-party risks into your overall cyber resilience plan:
Begin by prioritizing third-party vendors based on their access to sensitive data and the potential impact of a breach. Following an initial risk assessment, schedule regular, adaptive assessments to monitor evolving vulnerabilities as your vendor’s operations or the overall threat landscape shifts. For example, if a vendor undergoes mergers or acquisitions or expands to new geographic regions.
Proper due diligence, including security questionnaires, audits, and certifications, is essential for identifying risks and ensuring compliance with your security standards. Real-time monitoring tools provide ongoing visibility into your third-party cybersecurity posture.
When an incident occurs, a swift and effective response is critical. Your incident response plan should specifically address third-party risks. It can involve creating scenario-specific playbooks, such as those for supply-chain attacks, and conducting simulation exercises with key vendors to test preparedness.
Clear communication is vital during an incident. Establish designated points of contact — like CISO to CISO — and secure communication channels to coordinate efforts across all involved parties.7
Remediation efforts focus on working closely with third and Nth parties to restore normal operations and prevent future incidents. It may involve patching vulnerabilities, strengthening security protocols, or revisiting vendor relationships.
A crucial part of recovery is the post-incident review. Even after containing the threat, there’s no guarantee it won’t reoccur. Studies show that 78% of organizations that pay a ransom face repeated attacks, often from the same threat actor.8 Conducting thorough post-breach evaluations helps you identify gaps and strengthen your cyber resilience strategy.
Businesses are more interconnected than ever, making preparation for supply-chain vulnerabilities crucial for long-term success. A third-party cyber breach typically costs around 40% more to resolve compared to an internal cybersecurity breach.9 The resulting downtime and service interruptions can severely impact profitability and overall business viability. Beyond the financial toll, third-party breaches can erode customer trust, strain partner relationships, and inflict long-lasting reputational damage.
Third-party risks are increasingly significant for investor decision-making. For example, a Security and Exchange Commission ruling now requires companies to disclose all material cybersecurity incidents, including those originating from third-party systems.10 The impact of a breach within your supply chain can create a ripple effect, extending beyond immediate security measures. To mitigate these risks, organizations must adopt a proactive cyber resilience strategy that fully integrates TPRM.
How aware and prepared are you for the third-party risks impacting your business? As cyberattacks increase and supply chains become more interconnected, overlooking these risks puts your operation and long-term viability at risk. A strong TPRM strategy is vital for safeguarding your business.
Fortify your business against third-party risk with Anisoft’s cyber resilience solutions. Get a cyber resilience assessment today.
1 https://securityscorecard.com/research/cyentia-close-encounters-of-the-third-and-fourth-party-kind/
2 https://securityscorecard.com/research/cyentia-close-encounters-of-the-third-and-fourth-party-kind/
3 https://www.tvbeurope.com/tvbeverywhere/125-billion-iot-devices-2030-ihs-markit
4 https://www.innovationnewsnetwork.com/confronting-the-alarming-rise-of-supply-chain-attacks/43754/
5 https://www.innovationnewsnetwork.com/confronting-the-alarming-rise-of-supply-chain-attacks/43754/
6 https://www.cyber.gc.ca/en/guidance/national-cyber-threat-assessment-2023-2024
8 https://www.infosecurity-magazine.com/news/orgs-repeat-ransomware-paying/