Prevent third-party data breaches

What are the risks of using third-party service providers? We take a closer look at how you can mitigate the risk and prevent them from happening.

02-04-2024 - 6 minute read. Posted in: tips.

Prevent third-party data breaches

Many companies use a third-party service provider to help them with different tasks. Businesses can use a third-party vendor to help them within its specialized fields to ease their workload so they can focus on their main goal.

However, by using third-party service providers, you introduce another point of security breaches. We’ll take a closer look at these risks - but more importantly, how you can mitigate the risk and prevent them from happening.

Why organizations use third-party vendors

Many organizations may find a good use in hiring a third-party vendor to do specified tasks within the organization. You’d think smaller businesses utilize third-party vendors more than bigger corporations; however, no matter the size of the organization, many use the service that third-party vendors provide.

You can save time and money by getting experts to do the tasks for you - this is the main reason why third-party vendors are so appealing to many organizations.

Some examples of third-party vendors are:

  • SaaS-providers
  • Lawyers
  • Contractors
  • Ethical hackers
  • Financial auditors

One of the important things to remember though, is to do a proper background check of the third-party as you’d want to have a genuine business collaborating with you - and not some scammer who solely wants access to your data.

Risks of third-party providers

Outsourcing can be really helpful to any company; you can get experts to work on tasks for you, and you can in many cases lay your complete trust in them. It’s a more efficient way to work and organize tasks like SaaS or contracting, but there’ll always be risks connected to outsourcing.

One of the greatest security risks connected to third-party service providers are cybersecurity risks. In order for you to communicate and share files and data with your third-party service provider, you’ll need to have a shared cloud-drive or other types of shared archive. This is inevitable as you’ll want to be able to share data - even more importantly, you’ll want to be able to see exactly which files the third-party vendor can access.

However, with this type of access to company data in the cloud, you risk either exploitation from the third-party vendor, or hacking of the cloud data. All it takes is an inattentive employee who either clicks a phishing mail or accidentally shares a file.

As a business you possess a great deal of personal and confidential information. In most cases, the third-party vendor has to access this to some degree, in order for them to do their job properly. If the personal data is treated incorrectly, you violate the GDPR; non-compliance with this leads to great GDPR-fines.

Another risk connected with third-party vendors is the financial risk. This problem arises when the third-party vendor cannot meet your requirements and deadlines in time, leading to overtime work and thus overtime-payment.

You might also face an operational risk if the third-party vendor is unable to provide their promised service. This poses a risk and delay in your organizational workings which thus creates a plug in your day-to-day tasks.

Mitigating the risk

So, you might be wondering how you can mitigate and hopefully prevent any major damage to your organization if you use third-party service providers.

The first thing any company should do before starting a collaboration with a third-party vendor is to make a business plan and strategy with the third party. Find an alignment of expectations and get the third party to do a security questionnaire - you don’t want to skip quickly over this as it creates the foundation for your collaboration.

You can also make a risk assessment of the third party so you know of any potential security risks connected to the collaboration. When you’re aware of potential risks and threats you have a better chance at mitigating these and furthermore work to close the gaps in your security.

To improve the security surrounding your business and third-party vendor, you can continue to monitor the activity between your organization and the third party. What you want to monitor is any potential security gaps in the software you use, e.g. cloud-sharing or email accounts. In connection with this, your organization can make an incident response plan, where you streamline and plan what you do in case of a data breach and how you manage it.

Follow the principle of least privilege

The last, and probably best advice we can give you when it comes to collaborating with and using a third-party service provider, is to follow the principle of least privilege.

This concept narrows and limits the data access to a certain employee, system, or in this case, third-party vendor. The core of many data breaches connected with third-party vendors is that they have access to too much data - and a lot more than they actually need access to.

This usually happens if the organization doesn’t make a proper contract with the third party or that the organization simply isn't prepared properly to begin with. You should always know the importance of your data as well as who should have access to it. With the principle of least privilege you sort and categorize your data, which thus gives you a better understanding of what the third-party should use.

If you follow the principle of least privilege you:

  • Limit the attack surface
  • Mitigate insider threats
  • Strengthen your data protection
  • Minimize software vulnerabilities

All in all it’s a great way to control your data access. While you’re categorizing the data for the third-party vendor, you might want to consider doing it for the entire organization. This way you improve your cyber security as well as comply with GDPR which any European country is attributed to follow.

Third-party service providers can improve your organization greatly. All we ask is that you consider the risks connected with outsourcing as well as take some precautions when it comes to starting a collaboration with a third-party vendor.

Author Caroline Preisler

Caroline Preisler

Caroline is a copywriter here at Moxso beside her education. She is doing her Master's in English and specializes in translation and the psychology of language. Both fields deal with communication between people and how to create a common understanding - these elements are incorporated into the copywriting work she does here at Moxso.

View all posts by Caroline Preisler

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