Top 10 Things You Should Consider About Third-Party Risk Assessments

May 10, 2023

Third-party risk assessments allow you to get to know your vendors’ cybersecurity so that you can be sure to identify if they’re passing any risks down to you. This not only allows you to protect your company's reputation but also your business’ financial health. Here are the top 10 things you should consider about third-party risk assessments:

1. Third-party risk management is also often referred to as vendor risk management or supplier risk management. However, third parties don’t only involve vendors and suppliers; they also include infrastructure providers, contractors, and agencies. Some third parties will be bigger risks compared to others, making it necessary for you to classify suppliers by risk and access level.

2. Supply chains present some of the biggest threats. The problem with third-party risk assessments is that you don’t have visibility of all involved processes, particularly the supply chain. Risks can be introduced through every hardware and software vendor because they have their own suppliers.

3. Acquiring hard data from suppliers allows you to make more accurate risk assessments. Without data-powered insight, you would need to trust their word.

4. Many suppliers and vendors are confident about the cybersecurity of their products. In reality, they may still lack proper processes to mitigate supply chain risk. Therefore, your assessment should not only involve questions to identify whether their controls are aligned with yours but should also determine if they are reliable and trustworthy partners.

5. Utilizing a supply chain risk model allows you to focus on inherent product risk, vulnerability, threat risk, and supply chain risk.

6. Inherent product risk provides a comprehensive risk analysis of the overall device, including safety features, hard-coded credentials, and Software Bill of Materials.

7. Vulnerability and threat risk refers to risk that may lead to loss or damage, or destruction of assets, including data. Assessing threats allows you to develop controls and evaluate your response to an attack or incident.

8. Supply chain risk should focus on whether your vendors work with reliable “fourth parties” or “second-tier” third parties, which may be on industry supplier watch lists. Look into things such as manufacturing location and foreign ownership, control, and influence. (FOCI)

9. Third-party risk assessments should identify potential risks, classify vendors according to their level of access to data and systems, determine compliance requirements, and assess risk for individual vendors.

10. There are third-party risk assessment solutions that automate the entire process of assessing a product’s security to help you mitigate risks and achieve compliance.

Because of the potential risks that third parties can introduce to your product, it’s crucial to find suppliers and vendors that align with your goals. Every party in your supply chain should go through a thorough risk assessment. Best practice would be the query vendors about their risk management practices and audit them based on their answers. Be proactive and continuously monitor vendors for changes, such as changes to their leadership, environment, and standards.

It's crucial to thoroughly assess every party in your supply chain to ensure they align with your cybersecurity goals. It's also important to continuously monitor vendors for changes, such as changes to their leadership, environment, and standards.

At RED ALERT LABS, we offer comprehensive third-party risk assessments to help businesses identify and mitigate risks.