Guest submission by: Nazy Fouladirad, President and COO of Tevora, a global leading cybersecurity consultancy.
Many modern companies grow their operations by working with remote teams and cloud-based systems. However, as cybersecurity threats are growing and data protection laws are becoming more strict, data security, in particular with third-party entities, is of utmost importance.
Third-party audits verify vendor practices align with security and regulatory requirements to protect sensitive information. As businesses navigate their digital transformations, these audits strengthen vendor relationships while ensuring data integrity for everyone.
What Are the Potential Dangers Businesses Encounter With Third-Party Vendors?
Threats to Cybersecurity
Engaging with third-party vendors brings cybersecurity to the top of the priority list, especially when it involves sharing sensitive information or system access.
Negligence in cybersecurity practices by these vendors can expose both parties to severe cyber risks, such as data leaks and virus attacks. It’s imperative to prioritize comprehensive cybersecurity strategies to effectively shield against these threats.
Impacts on Brand Credibility
The reputation of your brand is a fundamental pillar of your business value. Any mistakes or missteps made by a third-party vendor can unintentionally damage the image of your brand.
This becomes especially problematic when customers associate the vendor’s failures directly with your organization, potentially undermining the trust and loyalty you have carefully built with your audience and impacting your position in the market.
Compliance Hurdles
Engaging with vendors can sometimes complicate adherence to regulatory requirements. Your organization is likely governed by a multitude of standards related to data security, environmental protocols, labor regulations, and many other factors.
If your vendors do not conform to these essential regulations, the organization could face significant consequences, including regulatory fines and legal issues.
Understanding Security and Compliance Audits
Security and compliance audits are foundational to a robust risk management strategy, particularly vital in dealings with third-party vendors.
These assessments ensure that an organization’s operations conform to required security and compliance standards and help in the identification and mitigation of any potential vulnerabilities that might endanger the security and integrity of a company’s data and systems.
Below are some commonly used audit types:
ISO Audits
ISO audits thoroughly analyze a company’s information security management system, which is constructed with a framework by the International Organization for Standardization.
Unlike audits that are purely technical, ISO audits adopt a holistic approach, assessing compliance with security measures across several areas. The primary aim of these audits is to spot security lapses and to enhance the organization’s ability to withstand new threats.
SOC Audits
SOC audits are fundamental for service-oriented businesses to assess their data protection controls. SOC 1 audits address the financial aspects of operational integrity, while SOC 2 audits extend this evaluation to include operational activities against five trust service principles – security, confidentiality, availability, processing integrity, and privacy.
This broad scope makes SOC 2 especially suitable for companies dealing with sensitive client data or those providing tech-based services, helping to establish and maintain trust with clients by demonstrating a solid commitment to safeguarding data and maintaining high operational standards.
SOC 2+ is an extension of SOC 2 audits that recognized the need to address industry-specific regulations. This framework allows auditors to incorporate additional subject matter (ASM) into the standard SOC 2 report which lets them demonstrate compliance with certain industry-specific regulations, including HIPPA, PCI DSS, and GDPR.
HITRUST Assessments
HITRUST assessments, which are anchored in the HITRUST Common Security Framework (CSF), offer a detailed protocol suite to support regulatory compliance and risk management. The CSF is invaluable for healthcare entities, blending security, privacy, and regulatory mandates into one framework.
The process of gaining HITRUST certification involves a thorough review of various industry standards, which are critical for organizations bound by healthcare regulations or those collaborating with healthcare providers.
Initiating a Third-Party Security and Compliance Audit Procedure
To mitigate risks from third-party partnerships, adopting a systematic approach to conducting compliance assessments is necessary. Essential steps include:
Identify All Current Relationships
Effective management of third-party relationships begins with creating a thorough inventory of all existing agreements.
This inventory should include every vendor, supplier, contractor, and external collaboration involving your company. It is crucial to recognize that no partner should be overlooked, as even minor collaborators can pose a risk if their security measures are insufficient.
Create a Risk Assessment Strategy
Crafting a detailed strategy for evaluating the risks associated with each vendor is critical. This plan should incorporate a uniform method for examining their security protocols, adherence to legal standards, and other pertinent risk elements.
It’s also essential to define clear criteria for what constitutes an acceptable level of risk from vendors and to specify the actions required if a vendor does not comply with your predefined criteria.
Engage Partners Pre-Audit
It’s crucial to engage with all partners prior to launching the audit. Clarify that an assessment is forthcoming and detail its goals, coverage, and the necessary preparatory actions they need to take. This approach promotes a partnership mindset, motivating vendors to take an active role and improving the overall effectiveness of the audit process.
Assess, Analyze, and Document
Once the audit is complete, take the time to thoroughly review the outcomes and compile a detailed report of your discoveries. Highlight any risks or problems detected and suggest actionable improvements.
Distribute this report to each of your vendors and collaborate on creating a plan of action to remedy any highlighted concerns.
Safeguard Your Third-Party Vendor Relationships
Securing your vendor network is an ongoing commitment. By conducting regular evaluations and implementing updates to your security protocols and audit procedures, you can minimize your risk exposure and build strong, long-lasting partnerships with your vendors.
Nazy Fouladirad is President and COO of Tevora, a global leading cybersecurity consultancy. She has dedicated her career to creating a more secure business and online environment for organizations across the country and world. She is passionate about serving her community and acts as a board member for a local nonprofit organization.
Linkedin: https://www.linkedin.com/in/nazy-fouladirad-67a66821
