Whether it's a Software-as-a-Service (SaaS) service or an external system, using third-party services can significantly boost your business’s efficiency, productivity and customer offerings. In recognising the benefits, we must also recognise the potential Cyber Security risks. Failure to assess the Cyber Security measures of a third-party solution may expose your business to risks such as data breaches, legal liabilities, and reputational damage especially if customer data is involved. Some of the critical areas to consider when selecting a third-party service provider include:
Information Classification: Determine the types of data that will be uploaded and/or stored in the third-party solution. Evaluate the possibility of limiting the data that is to be shared or uploaded. The criticality and sensitivity of the data should guide the specific security measures required and whether compliance with certain standards is necessary.
Security Control Effectiveness: Understand the security controls implemented within the third-party solution, and how your data will be protected. This includes looking at encryption protocols, access controls, data storage practices, logging and auditing mechanisms, network security, and disaster recovery plans. Check whether the third-party provider adheres to industry best practices and holds relevant Cyber Security certifications.
User Access: Gain an understanding of the authentication mechanisms employed by the solution, including multi factor authentication, and user access management. Verify whether the solution allows customisable user roles and permissions and whether user actions are logged. Additionally, evaluate the level of access the third-party provider will have to your data.
Cyber Incidents : Assess the third-party provider's incident response capabilities, including their ability to detect, respond to, and recover from security incidents. Ensure that the third-party provider has a robust incident response plan in place and will promptly notify you in case of a data breach or other types of incidents. Consider the third-party provider's track record of handling past incidents and data breaches. It is also essential to have your own incident response plan prepared should an incident occur.
Subcontractors: Verify whether the third-party provider engages with subcontractors or other vendors and whether they will have access to your data and how this will be managed.
Privacy: Confirm how the third-party solution handles personally identifiable information (PII) and other sensitive data. Verify that the third-party provider has robust privacy policies and procedures in place to protect user information. Do inquire about the geographic locations where your data will be stored and whether it complies with applicable data privacy regulations.
Data Removal: Understand the division of responsibilities and liabilities between your business and the third-party provider regarding Cyber Security. Clarify the process for data deletion when terminating the contract with the third-party provider and whether you can export your data from the solution when required.
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