Understanding Vendor-Related or Third-Party Cyber Risk

Uncover the complexities of third-party cyber risks and learn how to fortify your organization's digital defenses against these evolving threats.

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Bablu Kumar
November 24, 2023
Last Update posted on
February 3, 2024
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Shreya Talukdar

In today’s interconnected digital world, the security of an organization's data and systems is not solely determined by its own cybersecurity measures. The rise of third-party cyber risk has added a layer of complexity to the landscape of information security: Vendors, suppliers, and partners have also become prime targets for cybercriminals. We've seen this in high-profile incidents like the SolarWinds attack in 2020, the Log4j vulnerability in December 2021, and the more recent MOVEit attack in 2023, which have made big headlines and highlighted the importance of securing these trusted relationships.

What is Third-Party Cyber Risk?

Third-party cyber risk, often referred to as vendor-related cyber risk, is the potential threat to an organization's data, systems, and network security that arises from interactions with external entities. These external entities can include vendors, suppliers, service providers, contractors, and partners with whom an organization shares information, resources, or access to its networks.

Types of Third-Party Cyber Risks

Understanding the specific types of third-party cyber risks is crucial in developing a comprehensive approach to managing these threats. These risks can take various forms, and recognizing them is the first step in effective risk mitigation. In this section, we'll explore common risks associated with external entities and provide examples of real-world third-party cyber incidents.

Identifying Common Risks Associated with External Entities

  • Data Breaches & Unauthorized Access: Third parties may inadvertently or deliberately expose an organization's sensitive data. This risk can manifest when partners or vendors lack robust data protection measures.

Example: In 2013, Target, the retail giant, suffered a massive data breach when attackers exploited a vulnerability in its HVAC vendor's systems. This incident exposed over 40 million customer credit card details and resulted in significant financial and reputational damage.

  • Malware Injection: Adversaries may compromise a third party's software or tools, injecting malware that subsequently affects the organization. This often occurs through compromised updates or downloads.

Example: In 2021, attackers tampered with the Kaseya VSA software supply chain, inserting malicious code into the VSA software updates. This nefarious code enabled the attackers to encrypt the data of Kaseya's customers and demand a ransom payment.

  • Supply Chain Vulnerabilities: The supply chain is a web of interconnected suppliers and vendors. Vulnerabilities in this chain can lead to unauthorized access, data breaches, or service disruptions.

Example: The SolarWinds breach of 2020 is a prime illustration. Cybercriminals infiltrated SolarWinds' software update servers to distribute malware to its customers, including numerous government agencies and major corporations. This supply chain attack led to extensive data breaches and espionage activities.

  • Compliance Failures: Non-compliance with data protection regulations by third parties can expose an organization to legal and regulatory risks, especially if the breach involves customer data.

Example: Uber was fined for its third-party data breach reporting failures in the 2016 incident where hackers stole personal information from 57 million users and drivers. Uber's decision to pay the hackers to keep the breach quiet and not report it violated several data breach notification laws.

Third Party Cyber Incidents

Vendor Assessment and Due Diligence

When it comes to managing third-party cyber risks, thorough vendor assessment and due diligence are essential components of a robust cybersecurity strategy. Here, we'll delve into best practices for evaluating the cybersecurity readiness of external partners, including conducting risk assessments and security audits.

Best Practices for Evaluating Third-Party Cybersecurity

  • Establish Clear Criteria: Start by defining the cybersecurity criteria and standards that your organization expects from its third-party partners. These criteria should align with your organization's security policies and regulatory requirements.

  • Risk Profiling: Categorize your third-party vendors based on the level of risk they pose to your organization. Not all vendors have the same access or handle the same amount of sensitive data, so a tiered approach can help prioritize assessments.

  • Compliance Verification: Ensure that your vendors adhere to relevant industry standards and compliance regulations. This includes data protection laws, such as GDPR or HIPAA, which may require specific safeguards for certain types of data.

  • Certifications and Attestations: Review any cybersecurity certifications, audits, or attestations that the vendor has undergone. These include ISO 27001, SOC 2, or similar standards that demonstrate their commitment to security.

Tools and Solutions for Third-Party Risk Management

Effectively managing third-party cyber risks often requires leveraging specialized tools and solutions. In this section, we'll explore the software and services that aid organizations in this process, including the implementation of technology for automated risk assessment.

Software and Services for Third-Party Risk Management

  • Vendor Risk Assessment Platforms: These platforms are designed to streamline the evaluation of third-party vendors. They provide tools for conducting security questionnaires, risk profiling, and compliance checks. 

  • Security Information and Event Management (SIEM) Systems: SIEM systems offer real-time monitoring and alerting capabilities, enabling organizations to track third-party network activity and quickly respond to potential security breaches. 

  • Cybersecurity Rating Services: These services offer objective cybersecurity ratings for third-party vendors, allowing organizations to make informed decisions. 

  • Security Awareness Training: Many third-party breaches result from human error. Security awareness training solutions, such as KnowBe4 and Proofpoint, educate employees and third-party partners about cybersecurity best practices.

Software Supply Chain Risk Monitoring

CloudSEK SVigil assesses the risks and vulnerabilities introduced by third-party suppliers and vendors that may impact the security of an organization's products or services. Vendor Risk Monitoring is crucial due to the expanded attack surface, third-party system dependencies, supply chain risks, and the need for timely threat detection and robust incident response preparedness.

List of Common Issues Observed & Addressed by SVigil

CloudSEK’s SVigil platform has idenified and helped address some of these common issues across multiple vendors, thus enhancing cybersecurity measures:

  • API Endpoint Exposure: SVigil proactively detects exposed API endpoints in various environments (test, dev, prod) and code snippets on sharing code platforms with the mention of particular entities.

  • Leaked Credentials: The platform's advanced monitoring extends to the identification and mitigation of leaked credentials, sensitive documents, and presentations on platforms like Scribd, Pastebin, and Pdfslide.

  • Protection of Trade Secrets: SVigil ensures the protection of trade secrets, blueprints, and client data by identifying unintentional exposure on data platforms and cloud buckets.

  • Employee Data Security: The platform detects and addresses the exposure of credentials and personally identifiable information (PII) data of employees in text dumps uploaded on document-sharing platforms.

  • Web Server Misconfigurations: The platform identifies and mitigates internal application-related file exposure resulting from web server misconfigurations. Additionally, the platform is capable of identifying over 4000 CVE exploits and new CVEs being added every day.

  • Mobile App Security: SVigil extends its capabilities to the protection of mobile apps by identifying and addressing vulnerabilities related to third-party libraries. It can detect OWASP top 10 vulnerabilities in the applications, misconfigurations, malwares and hard coded secrets as well as scan the source code of applications to identify any sensitive content  like API Keys, tokens, etc.

  • Malware Detection: The platform has successfully detected and mitigated instances where partner/vendor systems were infected with stealer malware containing outdated credentials.

And, the SVigil platform also lets you explore 100+ integrations that make your day-to-day workflow more efficient and familiar. Plus, our extensive developer tools.

Schedule a customized demo of the CloudSEK platform by clicking here.

Author

Bablu Kumar

Bablu is a technology writer and an analyst with a strong focus on all things cybersecurity

Predict Cyber threats against your organization

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min read

Understanding Vendor-Related or Third-Party Cyber Risk

Uncover the complexities of third-party cyber risks and learn how to fortify your organization's digital defenses against these evolving threats.

Authors
Bablu Kumar
Bablu is a technology writer and an analyst with a strong focus on all things cybersecurity
Co-Authors

In today’s interconnected digital world, the security of an organization's data and systems is not solely determined by its own cybersecurity measures. The rise of third-party cyber risk has added a layer of complexity to the landscape of information security: Vendors, suppliers, and partners have also become prime targets for cybercriminals. We've seen this in high-profile incidents like the SolarWinds attack in 2020, the Log4j vulnerability in December 2021, and the more recent MOVEit attack in 2023, which have made big headlines and highlighted the importance of securing these trusted relationships.

What is Third-Party Cyber Risk?

Third-party cyber risk, often referred to as vendor-related cyber risk, is the potential threat to an organization's data, systems, and network security that arises from interactions with external entities. These external entities can include vendors, suppliers, service providers, contractors, and partners with whom an organization shares information, resources, or access to its networks.

Types of Third-Party Cyber Risks

Understanding the specific types of third-party cyber risks is crucial in developing a comprehensive approach to managing these threats. These risks can take various forms, and recognizing them is the first step in effective risk mitigation. In this section, we'll explore common risks associated with external entities and provide examples of real-world third-party cyber incidents.

Identifying Common Risks Associated with External Entities

  • Data Breaches & Unauthorized Access: Third parties may inadvertently or deliberately expose an organization's sensitive data. This risk can manifest when partners or vendors lack robust data protection measures.

Example: In 2013, Target, the retail giant, suffered a massive data breach when attackers exploited a vulnerability in its HVAC vendor's systems. This incident exposed over 40 million customer credit card details and resulted in significant financial and reputational damage.

  • Malware Injection: Adversaries may compromise a third party's software or tools, injecting malware that subsequently affects the organization. This often occurs through compromised updates or downloads.

Example: In 2021, attackers tampered with the Kaseya VSA software supply chain, inserting malicious code into the VSA software updates. This nefarious code enabled the attackers to encrypt the data of Kaseya's customers and demand a ransom payment.

  • Supply Chain Vulnerabilities: The supply chain is a web of interconnected suppliers and vendors. Vulnerabilities in this chain can lead to unauthorized access, data breaches, or service disruptions.

Example: The SolarWinds breach of 2020 is a prime illustration. Cybercriminals infiltrated SolarWinds' software update servers to distribute malware to its customers, including numerous government agencies and major corporations. This supply chain attack led to extensive data breaches and espionage activities.

  • Compliance Failures: Non-compliance with data protection regulations by third parties can expose an organization to legal and regulatory risks, especially if the breach involves customer data.

Example: Uber was fined for its third-party data breach reporting failures in the 2016 incident where hackers stole personal information from 57 million users and drivers. Uber's decision to pay the hackers to keep the breach quiet and not report it violated several data breach notification laws.

Third Party Cyber Incidents

Vendor Assessment and Due Diligence

When it comes to managing third-party cyber risks, thorough vendor assessment and due diligence are essential components of a robust cybersecurity strategy. Here, we'll delve into best practices for evaluating the cybersecurity readiness of external partners, including conducting risk assessments and security audits.

Best Practices for Evaluating Third-Party Cybersecurity

  • Establish Clear Criteria: Start by defining the cybersecurity criteria and standards that your organization expects from its third-party partners. These criteria should align with your organization's security policies and regulatory requirements.

  • Risk Profiling: Categorize your third-party vendors based on the level of risk they pose to your organization. Not all vendors have the same access or handle the same amount of sensitive data, so a tiered approach can help prioritize assessments.

  • Compliance Verification: Ensure that your vendors adhere to relevant industry standards and compliance regulations. This includes data protection laws, such as GDPR or HIPAA, which may require specific safeguards for certain types of data.

  • Certifications and Attestations: Review any cybersecurity certifications, audits, or attestations that the vendor has undergone. These include ISO 27001, SOC 2, or similar standards that demonstrate their commitment to security.

Tools and Solutions for Third-Party Risk Management

Effectively managing third-party cyber risks often requires leveraging specialized tools and solutions. In this section, we'll explore the software and services that aid organizations in this process, including the implementation of technology for automated risk assessment.

Software and Services for Third-Party Risk Management

  • Vendor Risk Assessment Platforms: These platforms are designed to streamline the evaluation of third-party vendors. They provide tools for conducting security questionnaires, risk profiling, and compliance checks. 

  • Security Information and Event Management (SIEM) Systems: SIEM systems offer real-time monitoring and alerting capabilities, enabling organizations to track third-party network activity and quickly respond to potential security breaches. 

  • Cybersecurity Rating Services: These services offer objective cybersecurity ratings for third-party vendors, allowing organizations to make informed decisions. 

  • Security Awareness Training: Many third-party breaches result from human error. Security awareness training solutions, such as KnowBe4 and Proofpoint, educate employees and third-party partners about cybersecurity best practices.

Software Supply Chain Risk Monitoring

CloudSEK SVigil assesses the risks and vulnerabilities introduced by third-party suppliers and vendors that may impact the security of an organization's products or services. Vendor Risk Monitoring is crucial due to the expanded attack surface, third-party system dependencies, supply chain risks, and the need for timely threat detection and robust incident response preparedness.

List of Common Issues Observed & Addressed by SVigil

CloudSEK’s SVigil platform has idenified and helped address some of these common issues across multiple vendors, thus enhancing cybersecurity measures:

  • API Endpoint Exposure: SVigil proactively detects exposed API endpoints in various environments (test, dev, prod) and code snippets on sharing code platforms with the mention of particular entities.

  • Leaked Credentials: The platform's advanced monitoring extends to the identification and mitigation of leaked credentials, sensitive documents, and presentations on platforms like Scribd, Pastebin, and Pdfslide.

  • Protection of Trade Secrets: SVigil ensures the protection of trade secrets, blueprints, and client data by identifying unintentional exposure on data platforms and cloud buckets.

  • Employee Data Security: The platform detects and addresses the exposure of credentials and personally identifiable information (PII) data of employees in text dumps uploaded on document-sharing platforms.

  • Web Server Misconfigurations: The platform identifies and mitigates internal application-related file exposure resulting from web server misconfigurations. Additionally, the platform is capable of identifying over 4000 CVE exploits and new CVEs being added every day.

  • Mobile App Security: SVigil extends its capabilities to the protection of mobile apps by identifying and addressing vulnerabilities related to third-party libraries. It can detect OWASP top 10 vulnerabilities in the applications, misconfigurations, malwares and hard coded secrets as well as scan the source code of applications to identify any sensitive content  like API Keys, tokens, etc.

  • Malware Detection: The platform has successfully detected and mitigated instances where partner/vendor systems were infected with stealer malware containing outdated credentials.

And, the SVigil platform also lets you explore 100+ integrations that make your day-to-day workflow more efficient and familiar. Plus, our extensive developer tools.

Schedule a customized demo of the CloudSEK platform by clicking here.