6 Tips for Managing Vendor Cyber Risk

One of the highlights in Venminder’s 2021 State of Third-Party Risk Management survey found that organizations continue to face third-party cybersecurity issues. Almost half of the respondents reported a cybersecurity incident during the previous year, and it’s likely that data breaches and other system attacks will grow in number and sophistication. It’s more important than ever to understand how to best manage vendor cyber risk.

How to Manage Vendor Cyber Risk

When deciding on a strategy to manage cybersecurity risk, it may be beneficial for the third-party risk management and information security teams to work together. Here are six tips for managing vendor cyber risk:

1. Establish a list of your vendors which have access to your information or systems. It’s impossible to manage what you don’t know, so maintaining an up-to-date list of vendors is the first step.
2. Remember, cyber risk isn’t one-size-fits-all. Categorize your vendors according to sensitivity of the information and systems they have access to.
3. Establish levels of review and frequency of monitoring based on the amount and type of vendor risk. Consider the vendor’s access to your information or systems, and the sensitivity of that information, which should determine the depth and occurrence of reviews.
4. Maintain ongoing monitoring to ensure you stay on top of evolving cyber risks. The threats and methods of attackers tend to change to overcome new defenses, so ongoing reviews are important to verify your vendors are prepared for emerging threats.
5. Establish a list of fourth parties, also known as your vendor’s vendors, that process or have access to your data or systems.
   
   Here are 3 reasons why:
   • It’s increasingly common for companies to outsource parts of their processes. As the list of entities that have access to your information increases, so does your risk.
   • It helps to ensure that your vendors take this critical step of monitoring their own vendors.
   • If the sensitivity of the data or the access to your systems and infrastructure is high, then it may make sense that you verify the cybersecurity measures in place for fourth-party vendors.
6. Obtain cyber risk insurance. Cyber risk insurance provides a layer of risk mitigation for cyber-related events.
   
   Two things to keep in mind:
   • If things go wrong, cyber risk insurance can help offset the cost associated with a major incident or breach. It can be the difference between surviving the aftereffects or being devastated by them.
   • There are several types of cyber risk insurance. Contact your insurance carrier to determine the right type and amount for your organization.

With the ongoing threat of vendor cybersecurity incidents like data breaches and ransomware, it’s critical to ensure your organization is well prepared for these types of risks. By following these six tips, you’re on track to help protect your organization from vendor cyber risk.