What is a Third-Party Assessment?

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The majority of businesses today work in conjunction with a variety of third-party vendors. Their day-to-day operations often depend on these external relationships for needs like supply chain management and resource development. These partnerships are widely necessary in order to remain competitive in the marketplace — regardless of industry. Third-party vendors allow for greater convenience, faster production speeds, and lower costs.

However, these external relationships pose a significant cybersecurity threat to a business if gone unchecked. Every outside partnership runs the risk of opening the door to malicious actors invading their network and gaining access to sensitive information. A third-party assessment, also sometimes referred to as a third-party risk assessment, is an in-depth examination of each vendor relationship a business has established. This assessment looks to identify possible security risks associated with the vendors, and how these pitfalls can be mitigated.

It is no secret how devastating a successful cyber attack can be. On average, it costs businesses, regardless of the size, about $200,000 when a security breach occurs. While it may not be possible to prevent 100 percent of security threats, it pays to take mitigation seriously and invest in identification and monitoring practices to protect your business.

Why Invest in Third-Party Assessments?

Third-party assessments aren’t meant to poke holes in a business’s security measures, but instead, help educate companies on possible risks that exist within their partnerships. Therefore, decisions can be made on how to fix the threat or terminate the relationship if necessary. As business has grown to become more digital in nature, companies are starting to dedicate more time and resources to their cybersecurity efforts.

In fact, many businesses do have an incident response plan in place for when a breach does occur. Yet, many of these plans lack true detail or action steps to follow when the breach is the result of an external vendor relationship. Little knowledge is known on the timeline that follows and what must be done.

  • When should the third-party be notified? 
  • Who specifically should be contacted? 
  • What should be said? 
  • How will their role in breach be dealt with? 

By conducting an annual third-party assessment or whenever a new vendor is brought on, this investment helps ensure that your business may continue to operate under the safest possible conditions. As more businesses look to collaborate or outsource parts of their daily operations or production, the avoidance of third-party ties remains difficult. This causes businesses to conduct in-house or independent reviews of all partnerships in an act of self-preservation.

How a Third-Party Assessment is Done

A proper third-party assessment can usually be completed in a couple of days, depending on the number of vendor relations. When an assessment is conducted, an individual cybersecurity specialist or team of cyber professionals will audit every single external partnership, looking at a variety of aspects, such as:

  • Documentation management 
  • Licenses and certifications 
  • Insurance policies 
  • Network diagrams

Most auditors will employ a risk management framework from the International Organization for Standardization (ISO) or the National Institute for Standards and Technology (NIST) to analyze your third-party risk management program.

This breaks down by looking at: 

  1. Identifying potential risks associated with your third-party vendors.
  2. Classifying partnerships according to their access to your systems, networks, and data.
  3. Reviewing service level agreements (SLAs) to assure that vendors are performing their hired tasks.
  4. Determining compliance requirements for your organization to clearly outline what regulations and standards you and external partners must satisfy.
  5. Assessing risk for individual vendors according to their importance to your organization, access to sensitive information, and access to your digital network. Here vendors can be placed in categories based upon threat-levels.
  6. Questioning relationships with risk management questionnaires.
  7. Auditing select partnerships according to their answers and independent review. May include an on-site visit.
  8. Continuously monitoring for changes in their environment — as well as yours to make sure all regulations and industry standards are upheld.

Need a Third-Party Risk Assessment?

If you’re looking for more guidance on how to complete a third-party assessment or need immediate security assistance, CDG can help. Founded in 2016 by cybersecurity expert Lou Rabon, Cyber Defense Group was designed to address the growing demand for experienced cybersecurity consulting for innovative cloud-native and cloud-reliant organizations. Get in touch, and see what results are possible for your organization.

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