How to Ensure Your Vendors Comply with Cybersecurity Expectations

While cybersecurity became important the moment we decided to store and send our sensitive information online, last year underscored just how critical it really is. The pandemic unveiled an alarming number of weaknesses in many of our systems, processes and procedures, and bad actors came out of the woodwork to take advantage.

Add to that how the scope of vendor management is expanding, and undoubtedly one of the primary focal points for examiners will be vendor cybersecurity preparedness. So, the questions are, do you know where to start to review your vendors’ cybersecurity expectations and have you thoroughly reviewed your vendor's cybersecurity preparedness? Many organizations find this both overwhelming and confusing, but the good news is we’re here to help break it down.  

2 Critical Steps to Ensuring Vendor Cybersecurity Compliance

Step 1: Evaluating the Issues at Play 

The first step in ensuring your vendor is adequately complying with cybersecurity regulations is understanding the landscape itself. Two key factors here are:

1. Satisfying Regulators. The main question is how your vendors will comply with the increased focus on cybersecurity. It’s not enough for you to simply ask your vendors once a year if they’re checking the cybersecurity box, and you most certainly can’t assume or just take their word that they have it covered.
   
   The key to making sure you’re crossing your t’s and dotting your i’s when it comes to regulators, and your vendors are too, is understanding specific compliance rules and standards in the industry.
   
   Let’s take a look at few examples:

• Healthcare. The healthcare industry must comply with the Health Insurance Portability and Accountability Act (HIPAA).
• Cards/Payment Processing. Vendors that perform payment processing on your behalf will need to comply with Payment Card Industry Data Security Standard (PCI DSS) requirements.
• Financial Institutions. FIs in the US are required to comply with the Gramm-Leach-Bliley Act (GLBA) Meanwhile, the Financial Industry Regulatory Authority (FINRA) requires US broker-dealers to have written data protection policies to protect consumer data and outlines rules for detecting and managing potential cyber threats.

And if you haven’t guessed it already, regulations may also change depending on state, region and country. So, what if you do business across state lines or internationally?

• Region specific. Organizations that have international business relationships with other individuals or organizations within the European Union must toe the line with the EU General Data Protection Regulation (GDPR), and certain organizations with clients in California must comply with the California Consumer Privacy Act (CCPA).

2. Protecting Your Future. You’ll need to ask yourself when evaluating your vendors’ processes what is the true cost of incomplete or poor compliance standards and, if their processes aren’t as up to par as they should be, determine how that could impact your organization. When (not if) a cyber event happens, here’s what you need to consider:

How much will it cost your organization in dollars, reputation, lawsuits and lost customers?

Once you have an understanding of what your vendor is responsible for from a regulatory perspective, and you’ve ensured they’ve established the importance of cybersecurity compliance from a program-perspective, you’re ready to evaluate further how prepared they are.

Step 2: Determine The Vendor's Preparation  

To fully prepare they’ll need to have:

1. Clearly understood the risks they may pose your organization, how they’re addressing those as well as inherent risk their vendors pose. Organizations need a solid methodology to identify inherent risk from cyber threats. This includes defining the following:

• • Connection Types
  • Products and Services Offered
  • Technologies Implemented 

2. Ensure they have proper processes in place to secure data and understand what is subject to compliance. We’ve covered just a few of the specific compliance requirements by industry and region, but you’ll also need to know what specific kinds of information are regulated. Some of the major players include:

• • Personally Identifiable Information (PII). This includes information such as first and last name, date of birth and social security number.
  • Protected Health Information (PHI). PHI may include medical history, admission and/or prescription records as well as data around insurance or appointments.
  • Financial data. Social security numbers, credit and debit card numbers as well as credit history and ratings are among protected financial data.
  • Miscellaneous data. Additional sensitive information may include race, marital status, religion, email addresses and/or passwords as well as IP addresses and biometrics.

3. Confirmed they have adequate controls in place. Once a solid understanding of inherent risks and data types have been identified and documented, your vendor needs to focus on mitigating risk by implementing additional controls. Understanding whether or not your vendor is conducting a regular third-party audit of their controls to verify that their organization demonstrates it has the proper people, processes and technology in place to sufficiently protect your data is important.

You don’t want to risk not knowing if a vendor isn’t complying with cybersecurity expectations. Not only can their faulty process put your organization at risk, but it can lead to costly fines and lawsuits. The amount of data organizations manage is increasing all the time… and, as we touched on briefly, the complexity of regulations is growing too. When in doubt, break it down: your vendors should understand the risks, be researching the industry standards, creating a plan and leveraging assistance!  

Narrow down the areas of vendor cybersecurity you need to monitor by focusing on these 4 areas. Download the infographic.