Managing Third Party Risks: How to Prevent Third Party Data Breach

What is a Third Party Data Breach & How Does it Affect you???

Third Party Data Breach Definition | Third Party Data Breach vs. Data Breach?

A third party data breach is a specific type of data breach that occurs when a third party vendor has been breached, resulting in the unauthorized access, disclosure, or compromise of your sensitive data.?

A data breach refers to when your sensitive data is accessed without authorization. This can happen through various means, including cyberattacks, insider threats, or accidental exposures.

?? Learn more about Data Breaches.?

In a third party data breach, the breach occurs not within your organization’s own systems, but through a third party that has access to your data. The definition of a third party is any organization that provides goods or services for your use. Some examples of a third party vendor include:?

• Software as a Service (SaaS) providers like Customer Relationship Management (CRM) systems?

• Suppliers?
• Marketing agencies?
• Outsourced Functions
• Contractors like an external accounting firm managing financial data or law firm providing legal services?

Consequences of Third Party Data Breaches?

When a third-party vendor or partner causes a data breach, it damages the trust in business relationships and could lead to strained communication, renegotiation of contracts or even termination of the relationship. Rebuilding these relationships takes time and effort, making it harder to work together in the future. Besides that, there are several other risks that can arise from a data breach caused by third parties: businesses also face financial losses, legal and regulatory compliance penalties, operational disruptions and damage to their reputation, which overall compromises customer trust and loyalty.?

Causes of Third Party Data Breach??

A third-party data breach is caused by a third party vendor holding your company’s data getting hacked. Hackers target vulnerabilities in the third party’s system and gain access to it, compromising the security of your sensitive information. This breach can occur due to various factors, including inadequate network and information security measures, insider threats, or social engineering attacks targeting employees of the third party:?

• Inadequate Security Practices: Third-party vendors may have insufficient security measures in place to protect sensitive data, such as weak password policies, outdated software, lack of encryption protocols, and other vulnerabilities that can be exploited by hackers.?
• Insider Threats: Employees or contractors of third-party vendors may pose an insider threat by intentionally or accidentally compromising data security. This could involve malicious actions such as stealing sensitive information or inadvertently exposing data through careless behavior or negligence.?
• Lack of Oversight: Businesses may fail to monitor their third-party vendors and may unknowingly partner with vendors that have weak security postures, increasing the risk of a data breach.?
• Shared Access and Permissions: Third-party vendors often require access to sensitive data or systems to fulfill their contractual obligations. However, granting excessive permissions or failing to implement proper access controls can increase the risk of unauthorized access and data exposure.?
• Social Engineering Attacks: Cyber attackers may use social engineering techniques to manipulate employees of third-party vendors into disclosing sensitive information or providing access to systems. Phishing emails, pretexting, and other tactics can trick unsuspecting employees into inadvertently facilitating a data breach.?

Understanding these causes can help businesses identify potential vulnerabilities in their relationships with third-party vendors and implement proactive measures to mitigate the risk of a data breach.?

How to Prevent Third Party Data Breach??

Preventing third-party data breaches requires a proactive approach to managing third party risks and mitigating them. Businesses can utilize third party risk management (TPRM) tools for this.?

Third party risk management (TPRM) tools like Alliance TPRM are specifically designed to assess and manage the security risks associated with third-party vendors and partners. These tools enable businesses to conduct comprehensive risk assessments, monitor vendor performance, and track compliance with security requirements and contractual obligations. By centralizing vendor risk information and providing visibility into the entire vendor ecosystem, tools like Alliance empower organizations to make informed decisions about vendor relationships and ensure that appropriate security measures are in place to protect sensitive data.?

Here is how Third-Party Risk Management (TPRM) tools like Alliance can help businesses strengthen their defense against third-party data breaches:?

1. Comprehensive Risk Assessment: TPRM tools enable businesses to conduct comprehensive risk assessments of their third-party vendors and partners. By evaluating factors such as security practices, data handling procedures, and regulatory compliance, businesses can identify potential vulnerabilities and assess the level of risk posed by each vendor.?

1. Continuous Monitoring: TPRM tools facilitate continuous monitoring of third-party vendors, allowing businesses to stay informed about changes in risk posture and security incidents. By proactively monitoring vendor performance and security practices, businesses can detect and respond to emerging threats or vulnerabilities in a timely manner.?

1. Risk Prioritization: TPRM tools help businesses prioritize risk mitigation efforts based on the severity of vulnerabilities and the criticality of the assets involved. By focusing resources on high-risk vendors or systems, businesses can allocate resources more effectively and address the most pressing security concerns first.?

1. Contractual Safeguards: TPRM tools also assist businesses in implementing robust contractual agreements with third-party vendors that include specific security requirements, responsibilities, and expectations. By incorporating provisions for data protection and breach notification into contracts, businesses can establish clear guidelines for vendor security and accountability.?

1. Streamlined Compliance: TPRM tools help businesses streamline compliance efforts by providing centralized visibility into vendor compliance with regulatory requirements, industry standards, and contractual obligations. By automating compliance assessments and reporting processes, businesses can ensure that vendors meet the necessary security standards and mitigate compliance-related risks.?

?? Check out our full article to learn the best practices on how to prevent Third Party Data Breach, as well as some example of a real life case of Third Party Data Breach.