What is Fourth-Party Risk?

Each company has its parts outsourced to several suppliers. These suppliers then outsource their operations. This is called fourth-party risk. Supplier suppliers pose a risk to your company. Digital transformation has reached the supply chain. Organizations, particularly those in financial services and banking, now deal with more third parties than ever. Gartner research has shown that 60% of organizations deal with over 1,000 third parties, which means cybersecurity is as important now as ever.

Although an organization might have good cybersecurity practices, vendors may not. This program, which is offered by a third party risk management company, helps to reduce the digital risks that come with this ever-growing attack vector.

It is important to keep in mind that the fourth party to your organization’s attack surface should also be considered and included into your cybersecurity risk management processes.

Click here to learn more about fourth-party risks and how to manage them.

What is a Fourth Party, exactly?

Your organization’s vendors are fourth parties. Organizations rarely have direct contact with vendors or third-party vendors.

Your information security team is still just as responsible as for third-party risks management (TPRM).

The System and Organization Control (SOC), reports of your vendor can help you identify the fourth party in your organization. To ensure that fourth parties are properly vetted, it is essential that third parties have a strong vendor risk management program.

What is the importance of Fourth-Party Risk?

All risk within your organization’s supply chain or ecosystem is yours. Although third parties are often more closely connected to your company than fourth parties it is just as important to monitor the suppliers, subcontractors and service providers of your vendors.

A fourth party can suffer a data breach if they are associated with another party, but this is not enough protection.

No matter where the breach occurred, your organization is responsible for comprehensive attack surface management. Your organization remains responsible for any reputational, financial or regulatory consequences that a third party might have on your company.

Important to remember that an organization can have up to 1,000 third-party relationships. This number increases exponentially when fourth party are added. IT Security teams need to recognize the significant impact fourth parties have on an organization’s attack vectors.

Does fourth-party vendors threaten your business?

You may not know who your fourth-party vendors are or if they have a contract with you. Your organization may not be aware of the cybersecurity risk management procedures your fourth party has in place because there is no documentation.

Your organization could be at risk if one of your vendors is affected by a security incident. You won’t know the business continuity plan of the fourth party, if any.

If your vendor is affected by a cyberattack, data breach, or any other security incident, it will have a direct impact on your organization’s operations.

Worse, if any third-party vendor has access, you could also be compromised in the case of a security breach. Your organization may also be unable to comply with regulations such as HIPAA, GDPR, and PCI DSS.

Other than cybersecurity risk, there are other possible risks that fourth-party vendors could pose.

• Operational risk
• Compliance, legal, regulatory and compliance risk
• Reputational risk
• Financial risk
• Strategic risk

This is the first step in mitigating these risks.

Cybersecurity Tips: What do you need to know about your fourth-party vendors?

Prioritize identifying the vendors of your critical vendors. These fourth parties pose the greatest operational and cybersecurity risk to your company, particularly if they are critical to your vendors.

Your organization will be able to respond appropriately during a security incident if it understands the services they provide.

Also, you need to make sure that vendors are able to communicate with vendors in a way that is transparent and effective.

Identify Fourth-Party risks in your supply chain

It is important to identify your organization’s most crucial fourth parties. You also need to determine who your mutual vendors are. Many vendors will have Amazon or Microsoft services as a common fourth party.

These vendors might not be a significant risk to your company on their own. The combination of vendors experiencing business disruptions due to security incidents from a third party is a cause for concern.

Should Vendor assessments include fourth parties?

It is likely that your organization has many fourth-party relationships. This would make it difficult to evaluate independently.

Third parties must be responsible for conducting risk assessments. They should also have a third-party risk management system in place.

A defined TPRM program will ensure that your vendors do their due diligence. It also tracks your fourth parties using appropriate cybersecurity metrics.

Monitoring Fourth-Party risk

Your organization should concentrate its efforts on the most relevant fourth parties in order to monitor fourth-party risks effectively. This will allow you to create a manageable program for fourth-party risks. Fourth-party monitoring methods that rely heavily upon third-party reporting are not very effective.

These reports may not be always accurate, and communication lapses could prevent the flow of current information.

Concentration risk in your supply chains is the best way to achieve this. Concentration risk is identified by identifying the most critical areas of fourth-party risk exposure.

This should include:

• Each fourth party’s security rating.
• The total number products that your vendors use.
• What percentage of your vendors use the fourth party?
• How to manage and evaluate fourth-party risks

Your third-party vendors must work closely with you in order to successfully manage and assess your fourth party. It can be difficult to scale your security team with a growing vendor base.

Automating vendor risk management automation can improve your organization’s vendor risk assessment speed and provide a complete view of concentration risks in your supply chain. You should also consider securing managed IT services.

Call SpartanTec, Inc. now if you need the help of experts to help your business.

SpartanTec, Inc.
Charleston, SC 29407
843-418-4792
https://manageditservicescharleston.com/

Serving: Myrtle Beach, North Myrtle Beach, Columbia, Wilmington, Fayetteville, Florence