Third-party risk:
If a breach happened in the data of the third party, it is called the third-party risk and this data is compromised and exposed to various other people. These people can use this data for illegal activities. The third-party risk is an extremely big threat to the organizations' employee and customer data, financial information and operations of a company. Third-party refers to vendors, suppliers, partners, contractors, or service providers.
Following are some of the third-party risks:
Reputation risk: This risk arises because of the negative relation of the third parties with the public. Dissatisfied customers, poor interactions with customers can cause it.
Operational risk: It is the risk that occurred from incompetent internal processes, people and systems or from external events.
Transaction risk: this risk is related to the service or product delivery. The third-party slow response towards the product causes it.
Compliance risk: This risk involves violations of laws, rules, or regulations, or from intentional or inadvertent non-compliance with internal policies or procedures. Laws are defined by the government and the leadership of the company.
Information security risk: This risk involves illegal access, use, disclosure, disruption, modification, inspection, recording or destruction of information. Data can be used for various illegal activities.
Strategic Risk: This risk involves the decision-making group. It occurs when a bad decision is taken by the group and the failure to implement business decisions into real life. It makes it unable to achieve the company goals.
Third-Party Risk Management or TPRM
TPRM is a type of risk management process. In this form of a risk management process, organisations try to identify and reduce risks relating to the use of third parties. Third-party risk management is important because it helps a business to run efficiently and smoothly. On one hand, third parties help you save extra money, on the other you can also get the experience of others who are not present in your organisation.
Following are some notable steps to take for Third-Party Risk Management
Focus on sensitive and personal information - Make note of the data and vendors with whom you share your data. Also, make a list of the vendors you do not share data with.
Make de-identification the default: Companies data is mostly de-identified. This should be set as a default setting.
The data you are sharing with the third party should be closely monitored continuously. There must be a list of how data flows and a list of inventory.
The company should have knowledge about which business process depends on third-party partners. It will help the company to decide which data is shared with which vendor.
Reporting and recording about the vendors are necessary. Record of the Total number of vendors and different data each vendor needed should be prepared.
There should be a dedicated team that can take governance and framework decisions efficiently.
Secuvy AI provides various techniques to counter Third-Party Risk and in the management of risk. Vaibhav Mehrotra is the CEO and co-founder of the Secuvy AI company. Prashant Sharma is the CTO and another co-founder of the company.