Managing Cyber Security Risks from Third Parties

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You may have heard the saying “A chain is only as strong as its weakest link”. Recent cyber security attacks have shown why this quote is relevant to all organisations that handle data. This article will highlight why third-party risk management is essential for your organisation’s cyber security.

Modus Operandi

Organisations often use third party service providers to improve service delivery for their customers without properly understanding the implications. Third party services are used because they can enhance productivity and make business operations more efficient. Some third-party services may include mobile applications, computer software and website extensions, but these third parties often require access to the organisations data to allow them to provide services. Threat actor’s may target these third-party service providers because they may have less secure infrastructure.

Why does this matter?

Third party data breaches could mean your organisation is exposed to risks even though you may not have been the direct target of malicious actors. These risks include the following:

1. Reputational damage – If a third party has a data breach involving your organisations data, your company may have to publicly make a statement to inform customers of this breach. This may bring negative publicity for your organisation, which results in a loss of trust from your customers.

2. Financial damage – If organisations do not do their due diligence on the third parties they use, they could also be liable for fines. Many cyber insurance companies will not pay out for this type of risk if the necessary precautions are not considered when entering an agreement with a third party.

3. Service disruptions – Organisations that rely on third parties for an essential part of their service will be impacted if the third party is compromised. This can leave organisations unable to deliver services to its customers.

How to protect yourself and organisation

Some solutions to managing third party risks include:

1. Understanding your data flow – Organisations should understand exactly where the data they handle is located at all times. Records should be kept to manage this data and data security policies should be adhered to.

2. Understand how third parties protect data – Assessments should be conducted that identify what safeguards third parties have in place to protect data. Their previous data breaches should also be acknowledged when deciding whether to use their services.

3. Following industry standards and frameworks – Frameworks such as NIST [1] provide advice on supply chain risk management and how to assess how much risk a third party presents. These frameworks are comprehensive and following them reduces the mentioned risks.


This article highlights why effective third-party risk management should be a crucial part of an organisation’s cyber security strategy. Businesses are increasingly relying on third parties to fulfil important functions and so must be aware of the potential vulnerabilities they introduce. By understanding how third parties handle and protect data, organisations can proactively identify and mitigate their own cyber security risks.



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