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Now that you’ve completed your vendor inventory, it’s time to classify them according to the risk they pose on your organization. Third-party classification is about rating your third-party providers according to the amount of inherent risk they present to your organization. The term”inherent risk” isn’t necessarily in everyone’s vocabulary, so let’s explain what it is. Inherent risk is the amount of risk that your vendor poses to your company based strictly on how you intend to use them. It’s a very simple process to classify your third-party providers according to inherent risk.  The point in doing this is to make sure we only spend your valuable time, and the valuable time belonging to your partners, on the risks that really matter.

Inherent Risk Questionnaire

The classification process starts with the Inherent Risk Questionnaire. This is a simple questionnaire that is completed by the person within your organization who is responsible for the third-party relationship.  This is usually the person who relies on the third party to complete certain tasks on behalf of your organization, or it’s the person who arranged for using the third party in the first place.

The questionnaire is very simple and straightforward, consisting of less than 10 questions.

VENDFENSE is very flexible and meant for all organizations. We pre-populate the system with default inherent risk questions to include in the Inherent Risk Questionnaire; however, we can also include custom questions.

Classification

Third-party providers are classified according to the inherent risk they pose to your organization. The classification is automatic, based on objective criteria defined and built into the SecurityStudio Classification Scoring System. The responses provided in the Inherent Risk Questionnaire lead to a classification of High, Medium, or Low. You could choose different words or different classifications, depending on your needs. The point is that the classification criteria should be objective, be a representation of inherent risk, and the classification levels you choose should be simple and logical.

A very important reason for classifying vendors according to inherent risk is to support the reasoning that not all vendors should be subjected to the same level of scrutiny because not all vendors pose the same amount of inherent risk.

High and Medium Impact

High and Medium impact (or inherent risk) third parties require additional review.  The third parties that were classified as High or Medium impact are moved into processing at Phase 3 – Third-Party Risk Assessment.

Low Impact

Low impact third parties are not a significant concern for most organizations. The processing of Low impact third parties is done after the classification. Low impact third parties are usually not reviewed again until the next cycle (quarter, semi-annual, annual, etc.)

In some cases, the percentage of third parties who are Low impact risk is as high as 80%. This is important to note. If an organization has 1,000 third parties that they work with, as many as 800 (or more) of these third-parties don’t need any further review beyond the initial inherent risk classification. This also means that there are 800 less questionnaires to keep track of and 800 less third parties that we need to secure.  Also important is the fact that we have demonstrated our due diligence by ensuring that all third parties were classified according to objective criteria.

Once the Classification step is complete, you’re ready to start  Phase 3 of VRM – Assessment.

In the simplest sense, a good vendor risk management program is made up of four phases: Inventory, Classification, Assessment and Treatment. These four phases make up a well-designed third-party information security risk management program.

Phase 1 – Vendor Inventory


We can’t effectively protect the things we don’t know we have from the things we don’t know about. Every third party that the organization does business with must be included in the third-party inventory. It’s not that every third party poses a significant risk, it’s that we must show our due diligence regardless.

Everything starts with third-party inventory. The inventory of third-party providers is what feeds the SecurityStudio system. The purpose of the inventory phase is to get all your third parties into the system and ensure that your third-party inventory remains current.

The bulk of the work comes during implementation. After the system is set up and running, you rarely make any significant changes. Occasionally, you may decide to audit the third-party inventory by comparing the list of third parties maintained within SecurityStudio with the list of third parties maintained in other areas of the business. After the initial system setup, the inventory can be easily audited on an ongoing basis.

There are two parts to vendor inventory if you’re just getting started: the initial inventory and the onboarding process. Once you’re up and running, you will mostly focus on third-party onboarding.

Vendor Inventory

Most organizations don’t know who all their third-party providers are, and the place to start building your third-party inventory is through your finance department. The theory is that if you have a third-party provider, you must be paying for them somehow. There are three places to look for third-party providers initially for your inventory:

  • Third-party providers who are sending you invoices
  • Third-party providers who are being paid with a corporate credit card
  • Third-party providers who are paid by an employee who is being reimbursed for the expense.

Vendor Onboarding

Onboarding is focused on ensuring that all new third-party providers are accounted for in the vendor risk management program before they begin providing their product or service. Uploading third parties into the SecurityStudio system is a snap. You can either upload them one at a time or do a mass upload using a spreadsheet. Employees and finance personnel can enter new vendor information directly into SecurityStudio or we can link to an existing intranet site that you already have set up.

Once the Inventory and Onboarding steps are complete, you’re ready to start  Phase 2 of VRM – Vendor Classification.

Information security programs are around to protect the data of the businesses they are a part of. Understanding risk is an important part of that, but ultimately it’s the business’s job to make decisions on what types of risks they are willing to accept. It’s the information security program’s job to make informed recommendations about those risks. Sometimes, though,  those recommendations are ignored.

While it’s important to make decisions that are best for the business, deviating from security recommendations can pose challenges. It’s important that you maintain a simple, standardized, and defensible information security program (and vendor risk management specifically). Certain business decisions detract from that.

Simplify

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We fully understand that a business’s first goal is to make money. That’s why businesses exist. Security programs are meant to create efficiencies that align with your business objectives to be a driving force for profit— not the other way around. However, if you chose to make decisions independent of our security teams’ recommendations, you can actually do the opposite.

Information security programs (and their vendor risk management initiatives in particular) can have a monumental impact on the efficiencies of an organization— especially as it pertains to employee time.

People in information security programs are often required to chase down vendors. You need to have an inventory of all of our vendors so that we know who poses threats to you. In order to do that, your security team will start at accounts payable, get a list of the current vendors your business works on, and then spend ludicrous amounts of time trying to understand the level of risk that vendor poses.

Because your information security professionals have a limited understanding of what each vendor does, they have to get an idea from the person who works with them most closely how their interactions may pose security threats. You now have two employees taking up their time to get this information figured out.

Once this is finally determined, the information security employee is going to send out a questionnaire or spreadsheet to the vendor in hopes that the person on the other end is the right contact, that they’ll fill it out correctly, and that they won’t have to be chased down every three weeks to see if it’s been completed yet.

Do you see how time-consuming this can be?

A vendor risk management tool automates many of these processes. It eliminates the chasing, the back-and-forth, and the manual entry your information security employees would otherwise go through. Because of this, their time can instead be used on the things that will make the most positive impact on your bottom line. The same is true with the non-security employees that have to assist.

You may decide that you don’t want to spend the money on an automated solution to help you smooth down these processes. Doing these things without systems, though, creates unnecessary complexities— and complexity is the enemy of security and business.

Standardize

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Standards are crucial when it comes to information security. There are rules, guidelines, principles, and best practices that should help feed your information security decision-making.

Information Security Industry Standards

Certain industries have requirements and regulations they are asked to follow with regards to information security. If your organization fits their threshold, you likely have no choice but to comply. While these standards don’t necessarily provide the perfect example of what security is, they do provide good foundational rules to follow. Deviating from the rules of industry standards can have two effects.

This is actually an example of where deviating from rules and standards can be a good thing. As mentioned before, security standards often provide a good foundational base for your security programs, but they are often just that— a minimum requirement that helps you get started. Businesses can (and should) deviate from industry standards by adding to them. Adding measures on top of what the industry standards suggest you accomplish in your security program is an important step in bolstering your protections.

The opposite side of that coin is choosing to skip or ignore standards that are required by your industry regulations. Doing this can severely damage your business. Payment card industry (PCI) compliance is a good example of this. Many small businesses choose not to go through the steps of being PCI compliant because of the time, effort, and money that goes into complying. However, a breach that impacts your customers’ credit card information often creates irreprehensible financial and reputational losses that could end up forcing you to close your doors permanently.

When it comes to vendor risk management, the same concern applies. You can choose to deviate from acceptable industry norms, here too. Some organizations choose to change up the assessment questions that they ask their vendors to complete regarding their risk. Doing so may push you outside the compliance threshold within your industry standards and it also requires someone to justify the changes. Justification relies on subjectivity, rather than objectivity, and makes it significantly more challenging to explain if you needed to defend your decision.

Internal Standards

Standards are one way to get everyone within your business on the same page about things like acceptable risk levels, information security spending, incident response measures, and more. Implementing a set of policies and procedures that are standard across your organization, and across organizations similar to yours, ensures that you’re taking the appropriate measures to mitigate risks and protect your business.

Deviating from your internal standards proves that they aren’t the right standards. If you feel that you need to make decisions that go against the standards of your organization, they clearly aren’t working for your business. And you won’t be able to expect others to follow them if you aren’t either.

Your risk increases as you deviate from standards too. Take the FISASCORE® for example. You can use risk assessment metrics like FISASCORE to set a risk threshold you want your organization and vendors to uphold. You might make a decision that everyone needs to be above a 650 in order to continue working with them. Sometimes, though, the business might feel the need to make a decision outside the standards set in place. You may work with an organization whose business is critical to the success of yours. Therefore, you may want to accept them as a vendor despite their FISASCORE being 550 instead. While it’s important you make these kinds of decisions if you feel they’re critical to the business, it’s also important to understand that this increases the likelihood your data is compromised.

Defend

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Ultimately, creating standards and sticking to them is all about making your organization more defensible in the event that something does go awry and your data is compromised. Breaches do happen. Often. It’s impossible to prevent all breaches.

Deviating from standards makes your business less defensible when a breach happens.

If your business feels they need to make exceptions to rules for its benefit, that’s fine. If you make a system standard, you just have to defend the standard. Make sure you’re taking a logical and objective approach to all of your exceptions before implementing them. This will help you stay defensible (and help you ensure that your decisions aren’t going to have a negative impact on your security).

If you make decisions that deviate from standards, customize systems too much, etc., it becomes increasingly more difficult to explain your case to those who are asking. Unfortunately, a breach’s impact stretches beyond your boardroom. Customers, news outlets, lawyers, and more will be asking questions about how and why things happened the way they did— and what you plan to do about it.

Particularly on the legal side and the industry regulator side of this, you’re going to have to explain why this incident happened. If you make exceptions to rules, you have to defend the logic behind the exception. Why you didn’t go with your standard? This is important to think about as we consider making decisions that extend beyond the scope of industry and internal standards that have already been implemented.

Conclusion

While it’s important for businesses to take information security recommendations seriously, it’s also important to remember that information security programs are around to supplement the business’s objectives. For that reason, businesses should be allowed to make decisions outside the scope of industry and internal security regulations. If they do though, there can and will be consequences. Weighing those consequences can be challenging, and it can be difficult to defend the logic behind any deviations. At the end of the day, make if you’re going to make decisions outside the recommendations of information security standards, ensure they still help your business simplify, standardize, and defend.

Despite vendor-caused breaches being common, organizations still struggle to handle vendor risk management practices properly. We can use organizations who have experienced vendor breaches to improve our own information security programs and strategies. Here is how the Target breach from 2013 can provide a roadmap for your organization.

Vendor security risk management is not easy. It’s often a monotonous combination of spreadsheets, questionnaires, following up with people, and uncertainty. It’s often frustratingly tedious, and it can actually cause otherwise strong information security programs to falter. The best relief is to take a three-step approach to vendor risk management. Simplify. Standardize. Defend.

Simplify

Managing information security risk amongst a population of vendors and third-parties is a complex problem for most organizations, and therefore most organizations either don’t manage vendor information security risk management at all, or they don’t do it well.

Don’t Manage Vendor Information Security Risk at All

There are five common reasons why organizations don’t manage vendor information security risk:

  • They don’t have enough confidence in their own information security program.
  • They don’t have experience managing vendor information security risk; where to start or what it’s supposed to look like.
  • They don’t know what questions or things that they should inquire about.
  • They don’t know who all their vendors are.
  • They have other priorities, and don’t get the time to tackle vendor information security risk management.

Question: Why don’t you do vendor information security risk management?

Don’t Manage Vendor Information Security Well

There are five common reasons why organizations don’t manage vendor information security well:

  • Their vendor information security risk management program is incomplete; missing vendors, missing parts of information security, incomplete questionnaires, no scoring/comparison, shortcut inherent risk and/or residual risk, etc.
  • The vendor information security risk management program is painful to manage.
  • The vendor information security risk management is program is disorganized.
  • The vendor information security risk management program relies too much on subjectivity or opinion.
  • They’re just doing something for the sake of doing something. There’s no commitment to doing it right.

Question: What pains do you experience, or what concerns do you have about your vendor information security risk management approach?

Standardize

A vendor information security risk management program must be repeatable and standardized. Standardization enables the other two important features (Simplify and Defend). You need to be doing vendor information security risk management first to truly appreciate the value in standardization. A lack of standardization leads to run-away complexity and a program that is not defensible (against litigation, inquiry from regulators, etc.).

Defend

Defense comes in two forms:

  • Defense against the breach risk posed by your vendors
  • Defense against the lawyers, regulators, and angry customers if or when a breach occurs.

Defense from Vendors

We know that no matter what we do, we cannot possibly prevent all breaches from occurring. So, where are breaches most likely to occur?  According to a recent study conducted by Soha Systems, 63% of all breaches are attributed to a vendor, directly or indirectly. * It’s hard to deny the fact that a breach occurring through a vendor is one of the most likely breach events. There’s no excuse for ignoring the risks posed by vendors or taking a half-hearted approach to vendor risk.

There are five common mistakes organizations make in assessing risk related to vendors:

  • Vendor information security risk management is primarily done to meet a regulatory requirement or to “check the box.”
  • Shortcut solutions are implemented to assess and manage information security vendor risk.
  • The logic behind the vendor information security risk decisions is not tied to how risk works (inherent risk or residual risk).
  • Vendor information security risks are accepted without a clear understanding of the risks or the most effective methods of remediation.
  • High (inherent) risk vendor responses are not adequately validated.

Question: Where are there gaps in your vendor information security risk management program?

Defense from the Crowd

We already know that the most likely source of a breach is through a vendor. Even if we do everything that we can to reduce this risk, some risk will remain. When a breach inevitably happens, we need a defense against a whole new breed of attackers. Lawyers, regulators, public opinion, and our own customers become our attackers. They want answers and they want retribution.

Our defense becomes something called due care. Due care refers to the effort made by an ordinarily prudent or reasonable party to avoid harm to another, taking the circumstances into account.

Nobody expects perfection, but everyone should expect due care. Due care is where defensibility lives, and it’s imperative in our vendor information security risk management program. The question becomes, what would an ordinarily prudent or reasonable party do if they knew a vendor breach was eventual? Not accounting for vendor information security risk is indefensible.

For organizations with vendor information security risk management programs, here are some of the most common reasons why they could be less defensible:

  • Vendor information security risk decisions are subjective— or opinion-based.
  • Seemingly obvious information security risks are not adequately considered.
  • The personnel making risk decisions are not qualified to do so.
  • Roles and responsibilities for vendor information security risk management are not shared amongst qualified groups or are not formally defined at all.
  • The methodology used for vendor information security risk management is not shared by a group outside of your organization, or it is shared by a small group or organizations.

Question: Where is your vendor information security risk management program defensible, and where is it not?

Conclusion

SecurityStudio is the most comprehensive solution to simplify, standardize, and defend. It’s a vendor information security management solution that was built by former vendor risk managers who have walked the walk.

To learn more about how a solution like SecurityStudio can help your vendor information security risk management processes, schedule a demo.

 

Cyber insurance is a rapidly-growing extension of the insurance industry. Data is now an important possession the same way your car and home are. However, insurance companies are having challenges in determining how much to charge and how much coverage that gets you. Luckily, there’s a metric for that.

Most people are relatively aware of the Health Insurance Portability and Accountability Act (HIPAA). It was created to make sure that medical records of patients remain safe, and that the medical providers accessing them are doing their best to ensure that’s the case. When most people think of HIPAA, they often go right to medical providers and hospitals. It’s important to understand that dental providers are also expected to adhere to HIPAA requirements. However, being HIPAA compliant poses challenges for dental providers. Here are some of those challenges, and what dental providers can do to combat them.

Failure to Identify Your Dental Practice as a HIPAA “Covered Entity”

Covered entities are required to follow HIPAA requirements. A dental practice is considered a covered entity if it transmits an electronic claim, payment, etc. to a dental plan or on behalf of a dental practice. It’s very likely that your dental practice is a covered entity and should be considering HIPAA requirements.

Missing Business Associate Agreements (BAAs)

Outside people or entities often have access to patient records and information. If your dental practice works with third parties of this nature, it’s important that you’re keeping tabs on them. Third parties are often root causes of breaches and data exposure. Continuously review your third parties and be sure you have BAAs for them.

Security Policies and Procedures

Well thought out, written plans are needed to ensure that your practice stays in compliance. Your HIPAA compliance policy should clearly state the responsibilities of your office and each staff member in protecting your patients’ private health information. The policy should clearly outline how your office handles and remediates various kinds of security breaches.

Training

Training employees is a critical component to HIPAA compliance, even for dental practices. Once you have your policies and procedures in place, it becomes critical that you train your employees on them. If someone’s job is affected by a change in your HIPAA policies or procedures, provide training on the change within a reasonable time after the change becomes effective. Training employees will limit the risk of breach.

Texting and Email

HIPAA applies to emails and text messages sent to a patient, such as for scheduling or appointment reminders. HIPAA also applies to emails and texts sent to another provider about a referral, with diagnostic images, or to discuss treatment. Here’s the kicker—HIPAA applies when a dentist emails patient records or information from a work email account to a personal email account, even if the dentist is doing so simply to finish up work from home later that evening. While HIPAA doesn’t prohibit using email or text to communicate patient information, it is important it’s done the proper way.

Social Media

A restaurant is very likely to respond to a Yelp, Facebook or Google review to either appreciate what has been said, or try to take corrective action. Dental practices must be a bit more careful. It’s easy to respond in a way that violates HIPAA rules. Ensure you and your employees understand privacy rules before responding to your practice’s reviews.

Other Media

As photos or videos are being taken of a patient there is the possibility that other patients may be included inadvertently. These photos and videos are quite often shared through social media and this can compromise those patients’ privacy. In addition, staff members of the practice might be included in the photo or video and this violates their privacy. Be cognizant of what is going on in the background of your images and videos so you do not compromise patient information.

Reporting Breaches

Breaches happen. It can and will happen to anyone at any time. It’s crucial that you understand what you need to report, and when. Covered dental practices must report all breaches of unsecured protected health information to the Office of Civil Rights, as well as to individuals and, in some cases, to the media. The bottom line is, have a plan for what to do in case an incident does occur, because it certainly can.

How can you get a better understanding of these challenges, so you know how to avoid and face them? A security assessment is a great tool to do that. Security assessments helps you identify where your gaps in security are. Once they’ve been identified, you can also use the assessment to develop action plans for improvement, meeting HIPAA regulations and proving to examiners that you have a strong data protection program. While there are many challenges as a dental provider to being HIPAA compliant and safeguarding patient information, getting a security assessment puts you on the fast track to understanding and preventing your patients’ data being compromised.

Vendor risk management is a critical portion of every organization’s information security program. The number of vendors the average business works with is growing, and the amount of sensitive data we let them have access to is as well. Despite this, many organizations still struggle to effectively manage the risk of their third-party vendors. By not understanding and handling these risks well, your organization is more prone to experiencing an information security incident through one of these vendors. Do you know where you stand in protecting your data from vendor risk breaches?

Almost all organizations fit into one of four categories when it comes to managing the data risk their vendors pose— none, painful, partial, or good. Let’s find out where you fit.

None

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The largest category of the four is the “None” category, in terms of the number of organizations. According to our estimate, more than 50% of organizations in the United States do not have a third-party information security risk program.

Some of the reasons you may end up in this category include:

  • Not knowing any better.
  • Not knowing where to start.
  • You’ve tried before and failed or gave up.
  • You don’t see the value in establishing a good third-party information security risk management program.

If you’re in this category, what legitimate justification do you have?

If the numbers don’t lie, then you can assume that a data breach will happen by, or through, one of your third-party providers. An estimated 60% of all data breaches are caused by third-parties— directly or indirectly.  Your decision to not account for this significant risk is difficult to defend against in the court of public opinion, the court of law, or the court of regulatory compliance.

The bottom line is; not doing anything to address third-party information security risk is not defensible. It would a difficult defense to claim that you didn’t know. Either you did know and you’re not being truthful about it, or you legitimately were ignorant to how important this is. Both are bad defenses when trying to explain how and why you were breached. You’re admittedly and willingly avoiding one of the most significant information security risks facing your organization.

Painful

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This second category is organizations that are doing some type of vendor risk management, but it’s a painful process. This category is typically comprised of organizations who either want to do the right thing or are being forced to do the right thing.

Want to do the right thing

These are mostly well-run organizations that want to secure information because it’s the right thing to do in their opinion.

Forced to do something

These organizations are being pushed or forced into implementing a third-party information security risk management program by one or more regulatory (direct and/or indirect), legal, or contractual requirements.

The Typical Painful Approach

Regardless of why the organization has implemented a third-party information security risk management program, the program is painful. It is usually wrought with subjectivity, inefficiency, ineffectiveness, and disorganization.

Here’s a typical real-world example of a painful program. A person within the organization has been appointed as the “Vendor Risk Manager.” She begins by developing a policy and a process. The process includes vendor on-boarding, some training, and questionnaires. She inserts the first vendor into the newly designed process and quickly finds that there are some serious pain points:

  • She must run and maintain the entire process.
  • She doesn’t know each third-party provider, what they do for the organization, or how much information they have access to. The upfront research she needs to do is cumbersome and disruptive to her other duties. She tries to get the business to help, but the business views the process as a hindrance and isn’t enthusiastic about helping.
  • She sends questionnaires out to third-party providers with the best contact information she can find, but many of the questionnaires end up going to the wrong people. Some questionnaires even go to the wrong third-party provider.
  • Most of the third-party providers don’t really want to complete the questionnaires, and when they do, the subjective nature of the questions is interpreted in the best possible light for the provider, not the company trying to assess risk.
  • Tracking which questionnaires that were sent to which third-parties is difficult.
  • Following up with third-parties to get their questionnaires completed is often inconsistent or forgotten altogether.
  • Addressing third-party questions about the process and about how to complete questionnaires is time-consuming.
  • Reviewing each questionnaire and marking them for remediation is subjective and inconsistent.
  • Fighting with third-party providers for remediation of specific risks (or perceived risks) is contentious and draining.
  • Fighting with the business leaders within the company is useless.

Eventually, the third-party information security risk program falters as employees and vendors think it as more of an inconvenience than a way to improve the organization. If it’s made too painful for the vendors, they may even choose not to do business with our organization.

The painful approach is expensive and a waste of valuable resources. 

Partial

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The partial approach is where organizations end up if they either don’t fully understand information security risk or don’t care if they’re not addressing information security risk well. These organizations often ask for things from a third-party that don’t specifically address risk or attempt to employ an easy button that only addresses a part of information security risk.

Ask for Things

Are you an organization who asks for something like a SOC 2 report or maybe ISO certification?

Asking for these things just so that you can check it off a list is not sufficient.  It’s important to read the reports and certification documents to make sure they address which risks are applicable to you and your work with the third-party. The motivation for the third-party in obtaining these things is to do as little as possible to obtain the report or certification. They are motivated to narrow the scope and get to a passing grade as quickly and cheaply as possible.

This may or may not sufficiently address third-party information security risk, and needs to be properly vetted before the box is checked. Businesses who ask for things and don’t vet the responses are only practicing partial vendor risk management.

Easy Button

A popular partial option used by many organizations is to employ an easy button. There are products and services on the market today that pose as third-party information security risk management tools, but only address one or two parts of information security risk. The most popular of these easy buttons are threat monitoring tools, security ratings tools based on external and/or internal vulnerability(ish) scans, and continuous monitoring solutions.

Each of these tools are good at addressing one part of information security risk— most often external technical risks.

But information security risk is more than just external technical risks. Information Security is managing risk to information confidentiality, integrity, and availability, using administrative, physical, and technical controls.

How do we address physical risk? After all, it doesn’t matter how well our firewall is operating if someone can steal our server.

People are often our biggest risk. It’s important that information security programs take administrative controls into account to mitigate the human error of information securirty.

The easy button solutions work well for the easy parts of information security, but they leave out the most significant risks. Use them for what they’re good at, but don’t assume you’ve got yourself covered if they’re all your using.

The partial approach is incomplete and leads to a false sense of security, which is sometimes worse than no security at all.

Good

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A good third-party information security risk program is one that doesn’t compromise any part of our previous definition of third-party information security risk. It conducts its information security program in a manner that is simplified, standardized, and defensible.

Simplified

The simplest approach to third-party information security risk management is one where all third parties are vetted, and where vetting is done in a consistent and objective manner.

Simplified and easy are not the same. Simplified means that there isn’t any waste, and everything in the program has a specific purpose. The components must all work seamlessly together and processes must be streamlined.

In the simplest sense, a good third-party information security risk management is made up of five components;

  • Policy (and supporting documentation)
  • Inventory
  • Classification
  • Assessment
  • Treatment

Standardized

A good third-party information security risk management program must be standardized. The same process must be followed every time. It’s not that we don’t continually refine and improve the program, it’s that we do so in a manner that is planned and consistent. In order to ensure standardization, the following must be true:

  • All third-parties must be assessed for inherent risk the same way.
  • All third-parties must be assessed for residual risk the same way.
  • Inherent and residual assessments must be objective.
  • Risk scoring must be consistently applied.
  • Thresholds must be set for all third-parties; driving risk treatment decisions.

Standardization can be achieved through rigid processes, but that could easily defeat our efforts to simplify. The best way to standardize is to use automation. Automation ensures that specific business rules are applied in a consistent manner, and it removes the non-standardization that often comes with human behaviors and decision-making.

Defensible

No matter what we do, we cannot prevent all bad things from happening. We live with a certain amount of risk, and there is no feasible way to eliminate it all. Organizations must consider how to defend themselves against the potential onslaught of regulatory investigations, civil suits, and loss of revenue.

Nobody expects a perfect approach to third-party information security risk management, but everyone should expect a reasonable approach to third-party information security risk management. Terms like due care, due diligence, and reasonable (or prudent) person are all very important when it comes to defensibility.

We aren’t lawyers, so we’ll borrow from publicly available sources to define these terms.

  • Due care refers to the effort made by an ordinarily prudent or reasonable party to avoid harm to another, taking the circumstances into account. It refers to the level of judgment, care, prudence, determination, and activity that a person would reasonably be expected to do under particular circumstances.
  • Due diligence in a broad sense refers to the level of judgment, care, prudence, determination, and activity that a person would reasonably be expected to do under particular circumstances.
  • Reasonable or Prudent man is a hypothetical person used as a legal standard especially to determine whether someone acted with negligence. This hypothetical person exercises average care, skill, and judgment in conduct that society requires of its members for the protection of their own and of others’ interests. The conduct of the reasonable man serves as a comparative standard for determining liability.

It seems perfectly reasonable for a person to establish a third-party information security risk management program according to the terms that we’ve defined. It’s easier to make the case that you practiced due care, which makes you more defensible.

Doesn’t Compromise

The last characteristic of a good third-party information security risk management program is that it doesn’t compromise what we define as information security or risk.

If we’re going to call it a third-party information security risk management, or something similar, it must account for information security risk. If we’re going to address only technical controls or the technical aspects of information security risk, then call it something like third-party IT risk management or third-party cybersecurity risk management. These things are different. The differences may seem subtle in wording, but they are monumentally different in practice. There are no shortcuts in third-party information security risk management, we must account for administrative, physical, and technical controls or aspects.

A good third-party information security risk management program accounts for administrative, physical, and technical risk.

Take Action

Almost all organizations fit into one of four categories when it comes to managing the data risk their vendors pose— none, painful, partial, or good.

If you need assistance in determining where your vendor risk management program sits, and how you can help to make your organization more simplified, standardized and defensible, schedule a demo.