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Top 5 Third Party Security Risks

Sep 19, 2022
| by:
Shimon Brathwaite

As technology advances, so do the ways in which we are able to access information. While this is mostly a positive evolution, it has also increased the opportunities for security breaches. When discussing third party security risks, we are referring to the vulnerabilities that exist when companies allow outsiders to access their internal systems.

In this blog post, we will explore the top 5 third party security risks. From unsecured cloud storage to social engineering, we will discuss the dangers that exist and how you can protect your company from them with third party vendor best practices.

Why is Third-Party Risk Management Important?

Third party risk management is the process of identifying and mitigating risks that can arise when working with external vendors and partners. This is important because as businesses become more reliant on third-party providers, they can be exposed to a variety of risks, including financial, reputational, and legal risks.

Third party risk management helps protect businesses from these risks by ensuring that proper due diligence is conducted on all third party vendors and partners. This includes assessing their financial stability, understanding their business practices, and verifying their compliance with applicable laws and regulations. By carefully managing these risks, businesses can protect themselves from potential harm.

What are Common Risks Introduced by Third-Parties?

Security Risks

As more and more businesses move their operations online, the risk of vendor security breaches becomes a greater concern. Third party security risks are defined as the potential for unauthorized access or disclosure of confidential information by a third party. This could include a vendor, contractor, or other outside organization that has access to your company's data.

There are several ways to mitigate third party security risks, including data encryption, access controls, and monitoring. However, it is important to remember that no security measure is 100% effective. Therefore, it is important to have a plan in place to deal with the consequences of a breach should one occur.

Legal/Compliance Risks

As your company grows, you will likely come into contact with third parties with whom you will need to share sensitive data. You must take measures to ensure that these third parties are compliant with data privacy and security regulations.

If you fail to do so, you risk facing steep fines, damage to your company's reputation, and loss of customer trust. To avoid these risks, you should perform due diligence on all third parties and put contractual measures in place to ensure their compliance.

With the regulations like the Personal information Protection and Electronic Act (PIPEDA) now in effect, it is more important than ever to be vigilant about third-party compliance. Make sure your company is protected by taking the necessary steps to ensure that third parties are meeting all applicable regulations.

Reputational/Financial Risks

As a company, you always want to be aware of reputational and financial risks when conducting business. A third party is any individual or organization that is not directly related to your company. When doing business with a third party, you need to be aware of the risks that they may pose to your company. A 2020 study by IBM and the ponemon institute found that “data breaches caused by a third party, extensive cloud migration, and IoT/OT environments were also associated with higher data breach costs.” approximately $4.33 million per data breach. 

Top Third Party Risk Cyber Gaps

Leveraging Vulnerable Unpatched Technology

Technology is constantly evolving, and it can be difficult to keep up with the latest updates and patches. However, it is important to keep your technology up-to-date in order to avoid security risks.

If your technology is not up-to-date, you may be at risk for attacks from viruses, malware, and other security threats. These threats can result in data breaches, loss of information, and even financial loss.

Therefore, it is essential to ensure that your third party vendors regularly patch their technology in order to reduce the chances of these security risks. 

Open Port with High-Risk Service

Open ports are those that accept unsolicited incoming traffic from the Internet. They are a necessary part of any network connection, but they can also pose a security risk if they are not properly secured. Hackers can exploit open ports to gain access to a network or device, which can lead to serious consequences such as Data Breaches or Denial of Service attacks.

That's why it's important to understand the security risks of open ports and ensure that your vendors take steps to mitigate them. The best way to do this is to ensure that your vendors routinely get penetration testing done for their environment. As part of the penetration test security professionals will scan the network for open, publically accessible ports and test them for any vulnerabilities.

Failing to Use HTTPS for Significant Web Assets

In today's digital world, HTTPS is more important than ever. Not only does it help keep your website safe from attack, but it also provides a better user experience and helps you rank higher in search engine results. The main benefit of HTTPs is that it provides encrypted communications, which means that an attacker can’t intercept the communications and read it without authorization. This makes HTTP invaluable for having secure communications with your third party vendors.

Failure to Rely on Web Application Firewall

Web application firewalls are a critical security layer for any organization that relies on web-based applications. By filtering and monitoring traffic to and from these applications, a WAF can help to prevent attacks and safeguard sensitive data.

However, despite their effectiveness, many organizations fail to properly deploy and configure their WAFs. This can leave them vulnerable to a wide range of attacks, from SQL injection to cross-site scripting.

To properly protect your organization, it is essential that your vendor deploy a WAF and to ensure that it is properly configured. This will help to ensure that their/your web-based applications are safe from attack.

Untrusted Web Asset Certificates

The use of digital certificates to secure web assets has become increasingly common in recent years. However, there have been a number of cases where these certificates have been issued by untrusted Certificate Authorities (CAs). This can lead to serious security implications, as untrusted CAs can issue certificates for any domain, including domains that they do not own.

If your vendors are using digital certificates to secure their/your web assets, it is important to ensure that they are issued by a trusted CA. You can check the CA's reputation with a service like Mozilla's Certificate Patrol. If you find that a CA is untrusted, you should Revoke the certificate and stop using that CA.

Best Practices for Third Party Risk Mitigation

Prioritize Vendor Risk Management

As a business, you will likely work with a number of vendors to provide goods or services. While these vendors can be essential to your operations, they also present a risk to your business. Vendor risk management is the process of identifying and assessing risks associated with your vendors and taking steps to mitigate those risks.

There are a number of reasons why you should prioritize vendor risk management. Vendor risks can lead to financial losses, reputational damage, and operational disruptions. By taking steps to manage vendor risk, you can protect your business from these potential consequences.

If you're not already doing so, start incorporating vendor risk management into your overall risk management strategy. By taking proactive steps to identify and assess vendor risks, you can help protect your business from potential harm.

Detecting Third Party Software Security Risks

As more and more businesses move their operations online, they become increasingly vulnerable to third-party software security risks. These risks can come from a variety of sources, such as untrustworthy third-party providers, malicious insiders, or even employees who accidentally introduce security risks into the system.

Detection of third-party software security risks is a critical part of keeping your business safe from harm. There are a few different ways you can go about detecting these risks, such as conducting audits, reviewing security reports, and analyzing user activity. 

Consistent Security Posture Evaluations

An organization's security posture is the overall effectiveness of its security controls and processes. This can be evaluated by conducting a security posture assessment (SPA), which is a systematic review of an organization's security posture.

The goal of a SPA is to identify weaknesses and vulnerabilities in an organization's security posture so that they can be addressed. SPAs can be conducted internally or externally, and can be done manually or with the help of automated tools. Two common types of security posture evaluation you should perform include penetration testing and code reviews. Penetration testing is the process of having security professionals attempt to hack into your organization and then reporting on the vulnerabilities they found and exploited. A secure code review is when you manually or through the use of security tools evaluate source code for any potential vulnerabilities in an application. 

Conclusion

Third party risks are a serious problem for companies of all sizes. The security risks posed by third parties can be catastrophic, so it's important to be aware of them. This article provided a list of the top five third-party security risks. 

Sources

What’s New in the 2021 Cost of a Data Breach Report

The 5 Most Expensive Types of Data Breaches

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About the Author

Shimon Brathwaite
Shimon Brathwaite is a cybersecurity professional, Consultant, and Author at securitymadesimple. He is a graduate of Ryerson University in Toronto, Canada. He has worked in several financial institutions in security-related roles, as a consultant in incident response and is a published author with a book on cybersecurity law. My professional certifications include Security+, CEH and AWS Security Specialist.
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