Outsourcing: It is quite common for many companies to outsource some, if not all, of their critical IT technology tasks to external vendors. While outsourcing to vendors or third parties increases efficiency, it also opens up many risks for businesses that they sometimes cannot address. To combat these unexplained risks, we need to educate and raise awareness. Below are three threats you may face when working with external vendors.
- Data breaches and ransomware
Even organizations with the strongest data security systems are susceptible to breaches through weaknesses in their external partners. In fact, 59% of respondents to a Ponemon Institute said their business has experienced a third-party data breach in the past. And several of the largest and most costly security breaches of 2018, including those at Equifax, Tesla, Saks 5th Avenue, Universal Music Group, and Applebee’s, resulted from third-party vulnerabilities.
With the increasing number of bad actors trying to steal data – either directly from you or through your external partners – businesses need to have full knowledge of all actions taken by third parties. One of the most important things you can do to control your external partner is to limit their access to systems and data, and only have access to what they need to do their job.
An even stranger situation concerns ransomware. Ransomware has the ability to quietly encrypt data for weeks or months, overwriting backups and leaving businesses vulnerable, with the option of paying the ransom or losing the data. Often, even when the ransom is paid, the data is never returned.
Even the most established and beloved in the business world can be exposed and their reputations damaged. One study reports that a negative reputational event, or “bad press,” creates an 80% chance that a company can lose more than 20% of its value within a month. Even if your business bears no financial or regulatory liability for the breach or failure, the damage to reputation and the loss of customer trust and data can have lasting consequences.
- Non-compliance
Non-compliance with legal and industry regulations can occur when an outsourced provider has inadequate control systems and knowingly or inadvertently causes the client to violate that regulation. The consequences of non-compliance for businesses in high-risk industries, such as financial and healthcare, can be particularly harsh.
Businesses are held liable for the illegal or negligent actions of their external partners under many new (and stricter) protocols, such as HIPAA, GDPR, CCPA, and more. These findings can lead to fines, penalties, and even license or charter revocation.
In light of growing compliance threats, many regulations now require organizations to monitor suppliers and service providers for potential risks. Businesses are bound by legal and regulatory mandates to mitigate non-compliance, security breaches, and data loss involving third parties. And the only way to do that is to implement an effective access management program for your external partner.
- The outage and downtime.
Even if a hacker fails to remove data from a targeted system, downtime can result from both the damage caused during the attack and the time it takes to restore the systems to an uninfected state. And in the cases of the aforementioned ransomware, the victim’s systems are simply locked down until the ransom is paid or a backup is restored (assuming they are not infected). This is bad enough for businesses in unregulated industries, where such downtime costs revenue and customer trust, but it is even worse for those working in industries with a high rate of scrutiny.
In organizations like hospitals, public safety, electrical grids, dams, and other critical infrastructure, downtime can cost lives. Hackers are working to infiltrate essential patient care systems like heart monitors and infusion pumps. National government circuit data has been found in electric utility systems. That’s a key reason why thieves have recently focused on small-town infrastructure and hospitals. These systems are critical to the lives of citizens and patients, and no one can afford to let these systems go down.
Do more than just mitigate it
Implementing a good outsourcing management system, including policies, procedures, and technology solutions, does more than just try to find a solution to disaster. It helps control costs, reduces risks associated with outsourcing, and optimizes the long-term value you get from your partners. Having all the information related to third parties in a single place can impact the decision-making process, resulting in simplified business, long-term cost savings, and improved profits.
Improve customer experience
Managing external partners also improves the customer experience. Fostering better relationships with your partners leads to increased efficiency and a better experience for customers and end users.
On the other hand, poor supplier relationships can lead to substandard customer interactions. Unclear policies and ineffective communication can lead to external partner activities that fall short of established business practices.
Save time and money
Problematic external partners can cost a business dearly, and often these costs are hidden. The right partner management program allows you to quickly identify the workflow. Early risk detection means you can act immediately, and you can “cut” what “doesn’t work for you.”.
Effective processes supported by technical controls can help new partners get up and running quickly, delivering their promising solutions sooner. Effective control systems can also help staff comply with auditor and regulator documentation requests, reducing compliance costs.
Improve visibility
Your data is more secure when you have visibility into all remote activity occurring on your network. With the right partner management program, you can easily see who is doing what on network , giving you a holistic view of all third-party activity. This allows you to monitor and control your partners properly by monitoring your network and all partners who have access to it.
The result
Using external partners is invaluable for organizations of all types and sizes. Third-party partners can help you scale your business and offer specialized knowledge to clients while you focus on your core business.
But you can’t manage what you can’t measure. When data is the lifeblood of your business, you need to see and control every factor, from your internal employees and systems to your external partners. Implement this system before an unfortunate incident occurs. Partnering with an employee performance management system for secure remote access is critical to the smooth running of your business – and your customers.
