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Top Third-Party Software Security Risks

Third-Party Software Security Risks
Chris Adams
Chris Adams
April 15, 2022

Security risks from the use of third-party software are often far from the minds of executive-level employees. Whether because cybersecurity is not commonly viewed as being as critical as other possible revenue-generating areas or simply due to oversight, the failure to account for these potential security risks can leave you vulnerable to a wide variety of negative consequences. Failure to secure protected data, loss of intellectual property, regulatory failures, civil liability, and reputational damage are all potential outcomes of not integrating cybersecurity as a cornerstone of your third-party software.

Threat Vectors

Notification that your computer is at risk

While vendor risk management for small business can already be a challenge, there are as many possible sources of cybersecurity threats as you can imagine. We'll cover some of the more common security issues below, but this list is not exhaustive and leveraging experts in the information technology field should be seriously considered.

Open Source Code

Open-source software and open-source code are vulnerabilities in and of themselves. While it allows for access by other parties to develop integrated software or applications more easily, it also provides bad actors with the same code and the luxury of virtually unlimited time to discover vulnerabilities within the code.

Internal Compromise

The insider threat is often the most difficult to address. Disgruntled employees, those facing termination, or other compromised insiders present their own unique set of security threats. They can alter applications developed securely after their testing, write malicious code, blatantly transfer out data, or take any number of other steps that are difficult to combat when the actor has authorized access and nefarious purposes.

Poorly Written Code

Fly-by-night developers or those that do not take application security seriously can author poorly written code that leaves the software vulnerable to third-party hacking. Lackluster security testing can compound this risk, and even discovered vulnerabilities may not be effectively addressed during development.

Due Diligence for Software Vendors

Aside from standard vendor risk management procedures, you must carefully consider how to best combat the risk exposure presented by your third-party software vendors. The very first question that your team must ask any potential software developer is whether or not they have a documented process for their secure development lifecycle or SDLC. If that process is not documented adequately, then you need to run as far and as fast as you can from that developer. Security testing is a rigorous process, and the failure to document that process leaves some serious questions about the thoroughness of that company's testing procedures.

Secondly, you should consider the ultimate application of the potential software and allow that to govern your level of due diligence going forward. Vendors whose products will handle your money, significant data, or protect your own network should be evaluated with an on-site assessment. Other lower-risk vendors may be more cost-effectively addressed with a remote assessment or a similar approach.

Leveraging Automation

Software developer

Software development is a complex process and security testing that software is even more challenging. Humans consistently underperform computers when it comes to repeatedly completing mundane, monotonous, or repetitive tasks. Finding a security solution that involves machine-driven application assessments is a much more secure option than relying on human evaluation of the product.

Advances in machine learning have even made it possible for assessment programs to learn about the environment in which the application in question will be placed in order to tailor the assessments to the potential risks it may face. This can be extremely beneficial when you're looking at third-party software security risks in a cloud-based environment.

Detecting Third-Party Software Security Risks Is Critical

With so many potential avenues of attack, it's no wonder that research has shown that the average time of detection is roughly 200 days after the initial data breach occurs. That is a very long time for cybercriminals to have access to your data without your knowledge, and that explains why the average cost of a data breach was estimated at just shy of $3.9 million in 2020.

Even companies with robust security controls fall victim to vulnerabilities in third-party software. When almost one-third of companies don't reassess their vendors regularly and over one-fifth don't even monitor the security of their supply chain, it's only a matter of time before the next major data breach makes the news.

As we have mentioned in other articles, it's well worth tracking the security ratings (in this case the specific cybersecurity ratings) of your vendors and monitoring dark and surface web traffic for mentions of breaches or targeting of specific areas or companies. Any edge that you can gain in securing your network and data should be explored.

Cybersecurity As a Cornerstone

Lock representing cybersecurity

When you position cybersecurity as a cornerstone of your business practices and make your vendors aware of that, your third-party vendors are more likely to take a second look at their own security controls. Proposals that specifically reference the expected security postures of your vendors and the application and software security that is also expected of them leave your potential vendors very little wiggle room to claim that they were unaware of your goals and requirements.

Wherever possible, you should also work information security into your contracting process as well. Whether it's indemnification from liability due to a potential breach or a measurable KPI regarding security controls that's a part of continuous monitoring, having firm contract language to fall back on ensures that all parties know what is expected of them and the consequences of not meeting those expectations.

We know that risk management as a whole is a challenging field, and that's before even beginning to talk about the unique risks of vendor risk management or a niche field like information security. When those are combined into a subsection like third-party software and application security, it's easy to feel overwhelmed or realize that your company just doesn't possess employees that have the necessary expertise in that field. Venture Lynk specializes in vendor risk management and can provide you with a range of services including information security risk assessments, active daily cyber risk monitoring, cybersecurity reports, and more. Experienced subject matter experts working hand in hand with your own risk management personnel can help you make informed decisions to better secure your data and mitigate your risk.