Data is one of the most precious assets belonging to your organization – and the most likely to be stolen. “Digital gold,” it’s often called, but unlike physical gold, its value lies in its utilization. However, every interaction, especially by your third and Nth parties, increases your data’s vulnerability to theft and unauthorized access.
Protecting data is not just about safeguarding proprietary secrets; it's a commitment to preserving the privacy of those who trust you with their information. Yet, as data travels further along the value chain – moving away from your organization – ensuring its privacy becomes progressively challenging.
This blog explores data privacy challenges and offers 5 practical solutions to secure sensitive data in the complex world of third-party relationships.
Many organizations lack visibility into the whereabouts of their most sensitive data once it leaves their systems. Suppliers, contractors, and business partners, along with their extended networks, may be handling or sharing your internal or customer data without your knowledge, potentially compromising its security.
Third, fourth, and Nth parties play critical roles in various organizational functions, from processing payments to delivering orders and enhancing services through APIs. The common thread is their reliance on data, posing challenges for effective risk management.
To navigate this complex landscape, your organization must unravel a web of expectations, demands, and restrictions amid a plethora of technologies generating continuous data streams.
Key challenges include:
Ensuring that third parties protect sensitive data is a key requirement of many global data privacy laws. With 80% of nations drafting or enacting laws, including unique state-level regulations in the U.S., organizations encounter a complex legal landscape. To comply effectively, businesses must stay informed and adeptly navigate this intricate maze of regulatory requirements. For detailed insights on specific regulations and frameworks, refer to our comprehensive TPRM compliance guide.
Since the 1948 United Nations Universal Declaration of Human Rights, privacy has been recognized as a fundamental human right. According to Prevalent’s TPRM survey, a third of risk management teams express concern about managing third-party data privacy and security. Organizations must address this concern, given that 63% are uncertain about complying with mandatory disclosure requirements and half lack the necessary monitoring tools in case of a breach. Meeting these expectations is crucial for building trust and compliance.
Despite available technologies that can automate tasks, save time, and enhance risk awareness, a significant portion of organizations (45% in 2022, up from 42% the previous year) continue to take a manual approach to third-party risk management (TPRM). Relying on spreadsheets and email communication hinders efficient tracking and management of suppliers, vendors, and partners. Organizations must shift towards automated TPRM technologies to streamline processes, boost efficiency, and respond effectively to the dynamic landscape of third-party data protection.
Get a Handle on Third-Party Data Privacy Risks
The Data Privacy and Third-Party Risk Management Best Practices Guide shares a prescriptive approach to evaluating data privacy controls and risks at every stage of the vendor lifecycle.
Large companies deploy advanced technologies to safeguard their systems, networks, and data, making it challenging for cyber criminals to breach them via conventional channels. However, these companies must not grow complacent; malicious actors persistently seek alternative entry points. Instead of relinquishing attempts to access valuable data, cybercriminals target smaller entities—third, fourth, and Nth-party business partners.
These smaller businesses, enjoying connections and access to coveted data, become potential gateways if breached. Alarmingly, almost half of all cyberattacks target smaller businesses. As global companies and economies digitize and integrate services and data, the stakes and likelihood of breaches escalate.
The absence of a comprehensive view across the extensive network of organizations in your vendor and supplier ecosystem hinders understanding data flow, its fate, and the level of protection it receives. Consequently, it's not surprising that an increasing number of high-profile data breaches occur through third-party vulnerabilities.
In an era where data breaches are often traced back to third-party vulnerabilities, adopting robust third-party risk management practices is necessary and strategic. The entity collecting data is responsible for securing it, as emphasized by an increasing number of regulations. Organizations must ensure their vendors and partners adhere to robust data protection governance and controls, extending these requirements to their third-party partners.
If third-party data risk management were simple, then everyone would be doing it. Yet, many organizations know they haven’t implemented everything their companies need to monitor and manage third-party security risks. The situation may be worse for specific risks such as data privacy. As with cybersecurity, companies often fall short because they haven’t taken care of the basics.
Here are the best practices we recommend:
Clarity in third-party data risk management accountability is crucial. A Forrester Research study revealed that even companies attentive to vendor and supplier risks often lack robust TPRM governance or accountability. The absence of a designated party overseeing third-party risks can result in weak controls or a complete lack thereof. Consider forming a cross-functional data protection team that includes legal, IT security, internal audit, and vendor management representatives to promote accountability, policy definition, and data protection commitment.
Regulations specify what needs to be done, but not necessarily how to do it. This complexity intensifies when dealing with numerous vendors across diverse locations, each governed by its own set of laws. Adopting a suitable Third-Party Risk Management (TPRM) framework tailored to your industry and requirements guides the process with established best practices. This ensures compliance with laws while maintaining data security. Frameworks like the Shared Assessments TPRM Framework, NIST 800-161, NIST CSF v.2.0 Draft, ISO 27001, and ISO 27036 offer comprehensive guidance.
Data risks persist throughout a company's relationship with third-party vendors, extending beyond compliance audits and termination. Vigilant protection is essential from the outset to data elimination, encompassing several key stages:
By adopting these practices at each stage, organizations can establish a robust and efficient third-party risk management program, safeguarding data and maintaining privacy throughout vendor relationships.
Residual risks persist even after vendors implement the required measures. Understanding your organization's risk tolerance is essential for managing residual risks effectively. Compensating for residual risks may involve requiring vendors to implement additional controls, especially for highly sensitive data. ISO 27001 emphasizes continuous monitoring to address and manage residual risks effectively.
Documentation of all vendor data-privacy risk management activities is critical for compliance and evidence for audits. Reports should demonstrate compliance with data protection laws, outline remediation efforts, and cater to the needs of various stakeholders, including compliance teams, security teams, executive leadership, vendors, and the board of directors. Utilizing a third-party risk management solution streamlines reporting, aligning with GRC and enterprise risk management systems.
Adopting these 5 best practices forms a robust foundation for comprehensive third-party data protection. In an ever-evolving landscape, a proactive approach ensures the security and privacy of your data throughout the complex web of third-party relationships.
Prevalent delivers a single third-party risk management platform that teams throughout the enterprise can use to collaborate on third-party data privacy risks. The Prevalent TPRM Platform: