The year has just begun, and already significant changes loom on the horizon concerning third-party vendor risk management trends 2022.
EMERGING VENDOR RISK MANAGEMENT TRENDS IN 2022
Third, risk management has always been a rapidly evolving field through Nth party vendors. It requires seasoned and experienced leaders to stay abreast of current threats, trends, and market dynamics. A unique aspect of this segment is its requirement that stakeholders remain aware of these critical areas across a number of these markets that may not be traditionally thought of as related to the industry in which your business operates.
Supply chain concerns have impacted virtually every level of business, and a series of high-profile data breaches have highlighted significant risks and the quickly adapting risk profile. We'll discuss some emerging trends in the vendor risk management space.
REMOTE WORK CHALLENGES
The massive uptick in remote work resulting from the Covid-19 pandemic coupled with the plethora of cyber risks and the adaptive nature of cybercriminals combined to create an almost perfect storm. Not one month of 2021 passed without a significant cybersecurity event from the Microsoft Exchange server compromise to the Log4j threat. These challenges threatened supply chains and even business continuity across various industries.
Continually emerging Covid-19 variants of different strengths have also left organizations in a position requiring their business model to rapidly pivot to accommodate local governmental restrictions. Even industries that are traditionally incapable of working remotely have been hamstrung by vendors who were scrambling to find remote work solutions for Covid-19. Cybersecurity concerns are the overwhelming priority for third-party risk management programs.
RISK ASSESSMENT EXPANSION BEYOND THE THIRD PARTY
Do you consider the vulnerabilities that your systems experience from third parties? Of course, you do; that's why you're here in the first place. What about your third parties' third-party vendors or the next layer down? You can continue this exercise ad infinitum. Every vendor risk management team has to draw the line at some point.
Charting the flow of data and conducting a link analysis through your Nth party vendors should be on the mind of every vendor risk management team leader. Knowing how a compromise to one of those vendors could potentially affect your supply chain or personal information on your network can prove invaluable. These types of assessments are part of a paradigm shift from compliance-based TPRM programs to a more holistic, risk-based view.
PERIMETER SECURITY VERSUS ZERO TRUST
Gone are the days when you could assume that anyone within a trusted perimeter is friendly and can operate without limitations, restrictions, or monitoring. Implementing remote work across so many industries has significantly broadened the attack surface. Vendors with access to a portion of your network compromised from outside sources can allow in the exact threats you're guarding against. A compromised machine accessing a secure network defeats the very purpose of a secure perimeter in the first place.
Surveys have reported that over 50% of companies contemplate a shift to or at least an evaluation of zero trust policies. Many organizations have already implemented significant components of zero trust, albeit under different names. Network segmentation, device and asset management, and access controls based on the principles of least privilege are all zero trust policies.
CONTINUING EXPANSION OF THE RANSOMWARE THREAT
Ransomware attacks have proven to be some of the most financially devastating events in recent memory. This is particularly critical in healthcare and financial services industries, where business operations can be entirely crippled by losing specific systems. While adequate cybersecurity steps are generally taken by IT personnel to secure their data, gaps in due diligence procedures concerning third-party vendors can lead to network compromise anyway.
Some analysts predict that cybercriminals will less frequently target healthcare facilities soon out of a desire to limit physical harm to individuals. However, these same healthcare providers have an added incentive to pay off the attackers and quickly regain access to their systems. It is contrary to common sense to believe criminal entities will look away from profitable targets. Even if some were to take this tack, it remains likely that other less scrupulous attackers will fill in that void.
Smaller locations with fewer staff and fewer subject matter experts can quickly become compromised by poor security practices at third-party vendors. Vendor risk management teams can leverage industry experts and their experience by using proven contractors specializing in vendor risk management for small businesses.
SHIFT AWAY FROM TRADITIONAL SILO VIEWPOINT
There was a historical tendency to view and organize a company into compartments resembling silos. While that made for easy accountability, it was already a negative as it exponentially increased an entity’s internal fraud risk profile, and it's now an even more significant concern given the current circumstances. Even within risk management departments, it's no longer advisable to have dedicated teams working on isolated vendor risk profiles such as procurement or IT.
An overall bird's-eye view will provide the whole enterprise risk management approach necessary going forward. Just as third-party vendors become more intricately connected, risk management teams must shift to conducting vendor risk assessments from multiple perspectives and extending them further down the supply chain than was previously the norm.
ESG AND ITS IMPACT ON DUE DILIGENCE
As environmental, social, and corporate governance (ESG) reaches a higher level of international priority, there is mounting pressure on governments worldwide to enact laws to mandate such. The European Union has already done so, and with additional countries like Germany conducting similar debates, it is only a matter of time before this trend becomes more widespread. Fines, civil liability, and other sanctions have been proposed as penalties for doing business with companies that do not meet a minimum standard of human rights and environmental procedures.
The result is that your due diligence will now need to take those factors into account, and you will need to assess just how far down your supply chain you're going to take those assessments.
CONTINUED SPOTLIGHT ON INFORMATION SECURITY
As legislation mirroring the GDPR is enacted in more areas, it is estimated that over 75% of the world's population will be covered by some sort of consumer data privacy legislation by the end of 2023. The United States is not immune to this either, as the California Consumer Privacy Act shows. You need to ensure that consumer data is protected and that you are transparent with what is collected, what it's used for, how long it's stored, and how consumers can go about removing their information.
This doesn't necessarily seem to be a vendor risk management issue at face value. However, suppose your due diligence fails to uncover vendors with lackluster security procedures or who are non-compliant with regulations regarding data collection. In that case, you can find your organization mired in the bad press and potential legal consequences of violating these laws.
Don't let your company fall victim to any of these issues because of a lack of familiarity with various cybersecurity concerns. Venture Lynk provides teams of subject matter experts who can evaluate not just your procedures but those of your Nth party vendors, all within the confines of your vendor management portal.