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Podcast Transcript
Hello everyone and thank you for joining me today for our Third Party Thursday podcast. I'm Stephanie DellaCamera here at Venminder. Today’s topic is based on monitoring fourt- party relationships.
What is a fourth-party?
It’s important to understand the term first. A fourth party is a vendor you don’t have a direct contractual relationship with, but your third party does. A fourth-party is a third party to your vendor that plays a crucial role in delivering your product or service to your customer or the company.
With the release of the SSAE 18 in 2017, provisions were added that require third parties to reveal who their service providers are. This is extremely helpful to companies in identifying fourth parties in order to determine the controls in place. In fact, the guidance expanded the point that if the traditional SOC 1 reports were not available with subservice providers (AKA third-party or fourth-party vendors) that examiners should interview, visit and test against standard controls to ensure that these subservice providers were in fact operating within agreed upon controls.
When is it important to care about a fourth-party?
If the fourth party is providing a critical service to your third-party. You will want to know that your third-party is managing the fourth party. It may also be important for you to monitor. Additionally, if the fourth-party has direct access to your customer’s data or your company’s data you should pay very close attention to them. An example of this could be a computer programmer who is working as a contractor for your third-party. By nature of their role, they may have access to your internal systems and data. Areas such as technology are heavily complemented by third and fourth-party vendors.
If this is an area of concern based on your existing relationships, then you should consider verifying by way of verifying with your third-party if any subcontractors are being used as part of the product or service which is being provided. Additional access audit logs and user access controls are a great way to help monitor who is in fact accessing your data and core systems.
So, what are really the oversight steps in managing a fourth-party?
- Acknowledge the importance of conducting due diligence on a fourth-party critical vendor. Fourth parties are just as important as third parties.
- Identify the fourth parties that you should monitor.
- Build out a matrix that includes the following:
- Who is a third-party?
- Who is a fourth-party?
- Who is a third and fourth party?
- Who is a fourth-party with a relationship with more than one of your third parties?
- Determine the elements of a fourth-party due diligence effort. Items such as, has the third-party performed any due diligence which would include background check, qualifications, resume, criminal, credit, OFAC. Is the fourth-party subject to a NDA? What will the scope of their duties be pertaining to the product or service which is being offered by the third party?
I’ve found the biggest issues with the concept of fourth parties is out of sight, out of mind. The risk and liability is often overlooked since the company does not have a direct relationship with the fourth party vendor. Remember, it’s important to always know your vendor and these waterfalls down to fourth parties in addition to third parties.
I hope you found this podcast helpful. Again, I'm Stephanie DellaCamera at Venminder and if you haven’t already done so, please subscribe to our Third Party Thursday series.
