Ten Things to Think About® when assessing supplier information security risks

In today's interconnected world, businesses rely heavily on third-party suppliers for everything from software development to manufacturing. While this can offer operational and cost benefits, it also introduces another layer of vulnerability: information security risks. A data breach at a supplier can expose your own sensitive data and cripple your operations. To mitigate these risks, adequate due diligence is crucial. Here are ten key things to think about to consider when assessing a supplier for information security risks.

1. Security posture

• Evaluate the supplier's firewalls, intrusion detection systems, data encryption practices and other technical measures safeguarding your data.

• Assess the supplier’s physical access controls, visitor management policies and data storage methods to ensure physical data protection.

• Gauge the supplier’s cybersecurity awareness, including employee training programmes and overall security culture, to ensure awareness of cyber threats and best practices.

2. Compliance and policies

• Verify the supplier’s compliance with relevant industry regulations and data privacy laws, such as HIPAA and GDPR.

• Review the supplier’s internal policies on data access, incident response and data breach notification to ensure alignment with your own standards.

• Check for certifications or independent audits verifying the supplier’s adherence to security best practices, especially whether they are ISO 27001 certified.

3. Data handling practices

• Assess the supplier’s commitment to collecting and storing only the minimum data necessary for business needs, reducing your potential exposure.

• Evaluate the supplier’s data access control protocols. Only authorised personnel with legitimate needs should have access to your data.

• Confirm the supplier’s procedures for securely deleting your data when no longer required to mitigate long-term exposure.

4. Risk management and incident response

• Evaluate the supplier’s proactive approach to identifying, assessing and mitigating potential security threats within its systems.

• Review the supplier’s plan for responding to data breaches or other security incidents, ensuring prompt notification and effective mitigation strategies.

• Assess the supplier’s contingency plans for maintaining operations and minimising disruption in case of a security incident.

5. Transparency and communication

• Evaluate the supplier’s transparency in providing information about its security practices and potential risks.

• Assess the supplier’s willingness to provide regular reports on security incidents, vulnerabilities and remediation efforts.

• Gauge the supplier’s openness to collaborating on joint security initiatives and information sharing. Collaboration can optimise your overall security posture.

6. Supply chain security

• Map the supplier’s use of subcontractors and assess their information security practices. Vulnerabilities can ripple through the supply chain.

• Identify any third-party software the supplier relies on and evaluate its security track record and potential vulnerabilities.

• Understand the supplier’s data-sharing practices with other vendors and ensure appropriate controls are in place when sharing your data.

7. Size and complexity

• Consider the supplier's size and the resources it has dedicated to information security. Smaller companies may have limited capabilities.

• Ensure the supplier’s security measures can scale to accommodate increased data volume and evolving threats as your business grows.

• Assess the complexity of the supplier’s IT infrastructure and operations. Increased complexity can introduce vulnerabilities.

8. Cost of assessment

• Factor in the cost of conducting a thorough security assessment and weigh it against the potential for losses from a data breach.

• Consider the costs involved in ongoing monitoring of the supplier's security posture to ensure continued compliance.

• Evaluate the costs of mitigating potential risks identified during the assessment, such as additional technical controls or contractual language.

9. Contractual terms

• Include clear and enforceable clauses in your contract regarding data security, breach notification and liability.

• Secure the right to conduct audits of the supplier's security practices to ensurecontinued compliance with agreed standards.

• Define clear grounds for termination if the supplier fails to maintain adequate security measures.

10. Risk tolerance

• Evaluate your organisation’s internal risk tolerance for information security incidents and ensure the supplier's risk profile aligns with it.

• Stay informed about industry-specific best practices and benchmark the supplier's security posture against relevant standards.

• Recognise that security risks evolve. It is important to establish a process for regularly reassessing the supplier's information security posture.

By thoroughly considering these ten factors, you can effectively assess a supplier's information security risks and make informed decisions to mitigate potential vulnerabilities. Remember, your security is only as strong as your weakest link, so choose your suppliers wisely and establish a collaborative approach to maintaining a robust and secure ecosystem.