Third-party and supply chain risks are significant for data security and protection as they extend the risk landscape beyond the organisation’s direct control and address space. This requires stringent oversight, rigorous assessment, and continuous monitoring of third-party practices to safeguard sensitive data and comply with regulations.

WHAT IS THIRD-PARTY AND SUPPLY CHAIN RISK?

In the context of data security and data protection, third-party and supply chain risk refers to the potential vulnerabilities and threats that arise from working with external organisations such as suppliers, vendors, and service providers to support various business functions.

WHY ARE THIRD PARTIES AND SUPPLY CHAINS A THREAT TO DATA?

By joining your network with an external network, however simple, you add a dimension of risk that needs to be understood and managed effectively. If their systems, that are now connected to yours, become compromised or breached, your organisation is now inherently exposed to a level of that risk. Despite the trust between partnerships and supplier networks, individual organisations still need to police these data exchanges and have the correct controls in place to safeguard against these risks.

Here are some of the risks you need to be aware of when sharing data with third parties or other supply chain members:

1. Operational Disruptions A disruption in the supply chain due to a security incident at a third-party provider can halt operations, leading to data accessibility issues and potential data loss, affecting business continuity and data availability.
2. Compliance Risks With various regulations like the GDPR, organisations are responsible for ensuring their data-handling practices are compliant, including the activities of their third-party partners. Non-compliance by a third-party can lead to legal consequences and fines for the primary organisation. The soon-to-be-enforced DORA and NIS2 regulations will place a renewed focus on awareness, management and the recording of your supply chain and third-party risk.
3. Data Exposure Third parties may require access to sensitive company data, including customer, financial and strategic information. If these third parties suffer a data breach or misuse data, it can lead to significant exposure and loss of sensitive information, impacting data security.
4. Security Breaches If third parties lack robust security measures they can become the weakest link in the security chain. This can provide an entry point for cyberattacks to infiltrate broader networks and access critical data.

WHAT IS HAPPENING NOW, AND HOW DOES IT AFFECT YOUR DATA?

Never has so much emphasis been placed on the supply chain, and how that could potentially affect organisational output. Many recent newsworthy breaches have originated through the supply chain where, in an interconnected economy, weak links have provided the opportunity to exploit much larger and more prestigious organisations than was traditionally possible.

Almost all supply chain interactions, processes and communications take place in the digital space, regardless of the business operations, industry or size.

With new ways of working like SaaS applications or IT outsourcing provided by third parties, organisations are becoming increasingly interconnected and we are starting to see a legislative focus on how those relationships function, and how cautious businesses need to be.

HOW DO YOU MITIGATE RISK FROM THIRD PARTIES AND SUPPLY CHAINS?

Understand the Connections: By understanding the data types allowed and the normal behaviour patterns between platforms will allow an organisation to detect anomalies and reduce risk. Consider the connections between your customers, suppliers and your own organisation being in the middle. This effectively creates a link and a path between all these organisations with which data could be exploited.

Know the Policies and Types of Data Transferred: These egress and ingress points are how our businesses connect. These are where digital money is exchanged and orders are placed. Opening these ports in the firewall, on-premise or in the cloud, increase the attack surface and create new data routes. Understanding and policing the types of data that pass through these new routes, the start and the endpoints is an often-overlooked piece of the data security puzzle. Email has been through many years of maturity and technological support in terms of security and securing the data exchanged via it. Every delivery method within your organisation should be subject to the same scrutiny from the moment of adoption.

If you’re evaluating how you work with your third-party suppliers and require expert insights, additional resources, innovative solutions or a new perspective, we’re here to assist. Contact us at hello@handd.co.uk or request a call back and let us help ensure your project meets all requirements.

Learn more in our Guide ‘Data Security and Data Protection in 2024‘, where focus on more common projects, initiatives and areas that we feel need particular attention throughout 2024 and beyond.