The Third Party Problem: When Data Breach is Out of Your Reach

By Sneha Ramesh

Third-party data breaches are a growing concern for most organisations. They occur when sensitive data belonging to an organisation is misappropriated from a third-party vendor or when a third-party’s system is used to access an organisation’s sensitive information.


In today’s highly diverse market, most organisations are greatly dependent on using external vendors for a variety of services in order to gain that all important competitive edge. Although something often overlooked is the heightened security threats this approach poses.


A single data breach can expose millions of records, resulting in loss of reputation, monetary losses and a liability that can linger on for years. The main cause of this is that policies and the security standards of vendors are seldom under the control of the organization. The security systems and controls of the vendors directly or indirectly impacts the organization’s security.


There are several examples that highlight the harmful magnitude of these breaches. Recently, data associated with 700 million LinkedIn users was posted for sale in a Dark Web forum. Other stalwarts who have been victims of data breaches are YouTube, TikTok, Facebook, Marriott, Myspace, Twitter, eBay, Canva, Quora etc. It is no secret that large companies engage with multiple vendors to help support in a range of business functions. Unfortunately, vendors might not have the same security scrutiny as the organisation’s digital assets and processes.


A detailed report by Securelink, titled ‘A Crisis in Third-Party Remote Access Security’, states that over 50% organisations are susceptible to a data breach due to the undue access that is granted to vendors and other third-parties. While the awareness in this area has been growing, recent events have demonstrated the overarching effects of unsecured ties with third parties. According to the report, many organisations view third-party access as a security threat, but not as a priority. Organisations might not be taking the necessary steps to reduce the risk of third-party data access, making them vulnerable to multiple security hazards. The report shows that 65% of third parties are not required to fill out security questionnaires during onboarding and 74% vendors are not asked to conduct remote or on-site security assessments.


The most dangerous point during the introduction of a third-party vendor is when they are introduced to the organisation’s networks, servers, processes and system. It is important to enforce security at the entry point to prevent the worst from happening. This highlights the significance of proper vendor management, including the maintenance of a thorough inventory of all the vendors, no matter how insignificant or unimportant they may seem. It is also crucial to ensure that there are sound practices in place to safeguard the data assets that the vendors handle. Some other ways in which companies can safeguard themselves against such data breaches are by evaluating third party security practices, vendor assessment prior to onboarding, clear policies and statements in the contracts, encouraging forums to highlight the importance of information security concerns with third-party vendors.


Apart from tools and software needed to manage these risks, what organisations ought to have is a new and vigilant mindset. Much like the ongoing battle against the rampant COVID-19 pandemic, the struggle against third-party data breaches is an issue that requires careful reasoning and a resilient strategy. We at eXate are committed to addressing many such data privacy concerns and feel that such issues need to be addressed at the root-level, which will help to nip security fissures in the bud.

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