Most businesses today rely on third parties to help them run their enterprises. As described in a previous article, these relationships inherently carry various risks. The good news is that you can be proactive in mitigating your level of risk. In this article, we lay out several steps to protect your business from risk from the third parties with whom you do business.
Hire a dedicated individual to vet third parties
If you are a business owner or a member of the C-Suite, your time is obviously at a premium. Therefore, you should hire someone whose primary responsibility is to find and vet possible third-party vendors to meet your company’s needs. This individual should, above all, be qualified to carefully review the security policies and the level of enforcement of any third party you are considering. Also, they should be able to determine just how well a third party protects its own confidential information/data, as this will indicate how they will treat your organization’s confidential information.
Launch a detailed due diligence process
Approach this process with the mindset that you are literally conducting a background check on any third party you are considering. You should examine their financial stability and brand reputation, and make sure that their Cybersecurity practices and policies meet the high standards you have set forth for your own company. Your dedicated third-party manager should be allowed to examine how well-fortified the lines of defense are at your potential third party, as it relates to their IT and network infrastructures. Keep in mind that any security breach that impacts a third party could hit your business as well; Cyberattackers are always on the lookout for this kind of business relationship.
Create an ironclad contract with your third party
Before you hire a third party, you must have a contract in place that spells out in detail the responsibilities that the third party has to your company. This contract must be enforceable at any time. For instance, if you suspect that there could be a lack of enforcement related to internal controls, then you should have the right to inspect this and recommend a corrective course of action to be implemented immediately. The contract should also stipulate that you can conduct an audit any time you deem it necessary to make sure that your third party is living up to its contractual obligations.
This article has described some specific steps you can take to mitigate risks that are inherent in many third-party business relationships. It’s important that you follow a framework with preestablished guidelines.