Using best practices for cyber vendor risk management (Cyber VRM), organizations can identify, assess, and remediate their third-party vendor risks specifically related to cybersecurity. Organizations can utilize information attained from security ratings, data leak detection, and security questionnaires to evaluate their third-party security postures using dedicated Cyber VRM solutions.
In addition, Cyber VRM solutions can help organizations prevent data breaches, maintain regulatory compliance, and build strong third-party security frameworks. As businesses begin outsourcing to third-party suppliers, these suppliers can also contract their own service providers, which creates new fourth-party operational risks. This variable in supply chain management means that cybersecurity risk continues to grow, signifying the importance of strong Cyber VRM practices.
This article will discuss Cyber VRM and the top practices for building a strong Cyber VRM program.
What is Cyber VRM?
Cyber vendor risk management (Cyber VRM) focuses on the cybersecurity risks of third-party vendors and suppliers. Cyber risks can include information security practices, information technology (IT) services and tools, and overall attack surface management.
Cyber VRM solutions help secure data for third-party vendors by using cyber solutions throughout the entire lifecycle and vendor due diligence process by assessing cybersecurity risk, cyber incident response plans, mitigation, and remediation processes.
Cyber VRM differs from third-party risk management (TPRM) and vendor risk management (VRM) in that it strictly assesses cyber risk. TPRM and VRM solutions are broader categories that may also manage other risks like financial, reputational, operational, or environmental risks.
Top 7 Best Practices for Cyber VRM Programs
Here are the top 7 best practices that all Cyber VRM programs need to implement to limit potential risks.
1. Managing Vendor Relationships
Managing third-party relationships is essential to scaling any Cyber VRM program and nurturing vendor cyber maturity. Organizations can work with a few dozen to thousands of third parties, which means overseeing each vendor can be time-consuming and resource-intensive. Implementing a vendor relationship management program is necessary for building stronger communication channels.
In addition to building stronger communication, vendor relationship management helps organizations:
- Measure the level of risk of each vendor
- Perform cybersecurity risk assessments
- Review contractual agreements
- Evaluate business costs
Because third-party vendors may not have the same security controls as the organization, it's important to monitor their security practices and if they meet minimum requirements. Even security breaches at smaller vendors can result in significant cyber attacks for all related parties.
Additionally, reviewing vendor relationships allows organizations to set clear cyber objectives for the future and reevaluate if the vendor continues to support the company's goals. This process can be done with security checklists, compliance reviews, legal support teams, and external business auditors to ensure the entire Cyber VRM plan is followed through on both sides.
2. Standardizing the Vendor Assessment Process
Before onboarding vendors, the organization needs to establish minimum security requirements, risk acceptance levels, and a third-party cybersecurity framework to assess vendors efficiently and quickly. Without a standardized vendor risk assessment process, it can be time-consuming and difficult to evaluate a new vendor properly.
Vendor questionnaires are one of the first tools that organizations should use to assess a vendor's cybersecurity posture. For many industries, they are also a regulatory requirement. However, the problem with traditional vendor questionnaires is they are point-in-time, subjective, and time-consuming to fill out.
Instead, organizations should use custom or pre-built questionnaires specific to the industry to better assess their vendors and significantly shorten the assessment period. Vendors classified as high-risk through the questionnaires and security ratings may be passed on if the organization feels their risk profile is not worth taking on.
3. Continuous Monitoring and Assessment of Vendors
After vendors are onboarded, part of the vendor risk management process is to continually monitor and assess their security performance. This monitoring process is necessary to ensure vendors are upkeeping their security controls.
For example, security ratings can be used as a quantitative measurement of security posture, similar to how a credit rating measures lending confidence. Higher security ratings mean better security postures, which is how organizations can measure vendor security.
A security rating can provide a real-time, non-intrusive measurement of the vendor's current security posture and identify any areas needing immediate remediation. Ratings provide an aggregate view of vendor performance and key risks shared across their vendor portfolio.
Third-party data leak detection tools are also important to get automated security alerts if data has been leaked or breached by a vendor. Third-party vendor monitoring solutions are critical to immediately remediate the source of the leak and notify the vendor of the security risk.
4. Defining Vendor Performance Metrics
Defining vendor cyber performance metrics is a great way for organizations to evaluate the success of a Cyber VRM program for vendors and service providers. Vendors that don't meet the metrics or key performance indicators (KPIs) outlined in a service-level agreement (SLA) may be removed as providers.
Metrics are especially important for vendors with access to sensitive data, such as PHI or PII. They should also be required to perform their own risk assessments on their vendors to minimize fourth-party risk.
For example, if the organization is a HIPAA-covered entity, they are liable for vendor data breaches. Data breaches cause significant reputational and financial damage even if the organization isn't legally liable. If you're not sure what metrics are important to your organization, UpGuard Vendor Risk can automatically assess your vendors against over 50 industry-specific metrics to determine their capabilities.
5. Monitoring Fourth-Party Vendors
Cybersecurity risk doesn't stop with third parties because there is a good chance they also have their own vendors, which introduces fourth-party risk. Fourth-party risk management requires even greater consideration than third-party risk management because organizations likely have no legal contract with fourth parties.
Many third parties fail to manage fourth parties the same way they are being managed due to different security requirements. Their security controls may not be sufficient, which creates a major risk management gap.
Fourth-party risk management should include the following:
- Remediation procedures
- Risk exposure management
- Provider selection processes
- Security rating services
However, monitoring fourth parties requires close communication and collaboration with third-party vendors. This includes having a dedicated IT security team and a strong vendor maturity model to help guide vendors that may not have as robust a security program.
6. Building a Cyber Resiliency Plan
Even with a third-party risk management program in place, cyber attacks can still occur, which is why it's important to build strong cyber resiliency. Cyber resiliency includes business continuity, disaster recovery, and incident response planning, which is a critical part of any Cyber VRM program.
A third-party management plan must account for vendors that fail to mitigate their risks in a timely manner, resulting in the contract's removal or discontinuation. The organization and its vendors should be working to improve their cyber maturity as their operations scale, as part of the overall Cyber VRM strategy.
7. Use Dedicated Cyber VRM Solutions
Building a strong cyber program can be difficult for new or scaling businesses. Managing attack surfaces, detecting data leaks, and third-party vendor security can be difficult and time-consuming. However, using Cyber VRM solutions like UpGuard Vendor Risk can help organizations better manage their third-party vendor security with managed services and remediation solutions.
How UpGuard Can Help Build Your Vendor Risk Management Program
UpGuard Vendor Risk can provide quick and easy risk assessments for third-party vendors by automating vendor questionnaires, providing instant security scores, and monitoring third-party attack surfaces. The UpGuard platform also provides end-to-end security and helps detect vulnerabilities, data leaks, and data breaches to include in one executive report for immediate remediation.