Guidance for Dealing with a Data Leak from a Supplier
In today's digital age, businesses across various sectors, such as automotive companies, steel manufacturers, and prisons, face an increasing threat from cyberattacks. These attacks can have far-reaching consequences, ranging from identity and financial fraud to stealing valuable data for ransom or crippling a business's supply chain.
The Importance of Proactive Third-Party Risk Management
When a data breach occurs, it's crucial for businesses to secure their data immediately to minimise the impact on their operations. One effective strategy is implementing a comprehensive third-party risk management (TPRM) strategy. This approach involves prioritising risk assessment and due diligence, establishing clear contractual security expectations, developing robust incident response and recovery plans, limiting vendor access through security controls, integrating continuous monitoring and compliance checks, and including cyber insurance and risk transfer mechanisms.
Prioritising Risk Assessment and Due Diligence
Before onboarding vendors, businesses should evaluate them based on their security posture, business criticality, and potential harm to the organisation. Continuous monitoring and profiling of vendor risk throughout the relationship lifecycle is also essential.
Establishing Clear Contractual Security Expectations and Communication Plans
Contracts should define cybersecurity requirements and incident response protocols. Open, ongoing communication with vendors ensures coordinated responses to incidents and transparency on risks or breaches.
Developing Robust Incident Response and Recovery Plans
Collaboration with third parties is key to creating and maintaining agreed-upon response procedures that enable quick detection, reporting, containment, and remediation of breaches. Regular training and simulation exercises prepare all stakeholders to act swiftly to minimise operational impact.
Limiting Vendor Access Through Security Controls
Adopting security models like Zero Trust, which require continuous validation of vendor access rights, reduces the attack surface and potential data exposure.
Integrating Continuous Monitoring and Compliance Checks
Employing tools and processes to detect anomalies, assess compliance with evolving regulations, and ensure vendors maintain adequate controls throughout their engagement is essential.
Including Cyber Insurance and Risk Transfer Mechanisms
Businesses increasingly leverage cyber insurance, but insurers require that strong third-party risk controls are established prior to coverage.
This layered approach helps safeguard data, sustain business continuity, and reduce operational disruptions that arise from a third-party cyberattack. The key is proactive third-party risk governance combined with coordinated incident management involving both the business and its vendors.
Dealing with Vendor Data Breaches
About 56% of companies have experienced a data breach caused by one of their vendors. In such cases, it's essential to remain calm, take steps to protect the business, and avoid repeating earlier facts. Contacting the bank immediately to stop all transactions and reaching out to financial and legal counsel is necessary when a business is being impersonated due to a data breach.
If a significant breach of your vendor's systems has occurred, fix vulnerabilities in your systems, start moving your breach response team, inform and train your team, and integrate multifactor authentication methods. Ask your vendor if the data leak can compromise your system, and if they have cyber insurance.
Preventing Cyberattacks
Training employees to recognise phishing emails, messages, and phone calls is crucial for preventing phishing attacks, the most common type of cyberattack. This involves fake domains that resemble legitimate organisations, aiming to steal access credentials or introduce malware. Credential stuffing, another form of cyberattack, can occur if a vendor's security is breached. This can be prevented by integrating multifactor authentication software into cybersecurity or having employees change their passwords immediately.
Cyberattacks rose by 42% during the COVID-19 pandemic compared to 2021. To prevent such attacks, businesses should stay vigilant and proactive in their cybersecurity measures. This includes asking vendors if they will pay your legal fees if a lawyer is needed to evaluate breach notification obligations and if they have cyber insurance.
In conclusion, businesses must be proactive in their approach to cybersecurity, particularly when dealing with third-party vendors. By implementing a comprehensive TPRM strategy and staying vigilant against common cyber threats, businesses can significantly reduce their risk of falling victim to cyberattacks.
- In dealings with third-party vendors, it's important to establish clear contractual security expectations and communication plans to ensure coordinated responses to incidents and transparency on risks or breaches.
- Continuous monitoring and profiling of vendor risk throughout the relationship lifecycle is essential for proactive third-party risk management.
- Businesses increasingly leverage cyber insurance as a risk transfer mechanism, but insurers require that strong third-party risk controls are established prior to coverage.
- Employee training to recognize phishing attacks is crucial for preventing one of the most common cyberattacks, along with integrating multifactor authentication software and staying vigilant in cybersecurity measures during times of increased threat, such as during the COVID-19 pandemic.
