The all-pervading Information Technology (IT) has brought unfathomable changes to global business today. While IT capabilities have grown exponentially, with newer business technologies introduced nearly every quarter, if not month, it has also ensured the successful exploration of fresher avenues in business operations – from everyday activities to trend forecasting and from compliance to customer service. The IT road to success has hardly been paved smooth.
Evolving technology bringing in numerous devices coupled with the rising penetration of social media is rendering the cybersecurity space vulnerable. One of the key segments that have remained exposed is the third party service – an aspect that is as ubiquitous as the IT. Although the susceptibility varies based on the industry, no enterprise dependent on service providers is immune to data breach at the vendor’s end. Risk incidents involving vendors continue to be in limelight, affecting both large and small business establishments. On the other hand, the rising cost of breach penalties is costing businesses their fortunes.
Inadequately protected vendor IT infrastructure leading to the theft of sensitive consumer data has impacted institutions in innumerable ways. While information security breach and the resultant lack of confidence in the organization’s ability to safeguard data turn the customer away for good, it is followed by irreversible loss of reputation and business. Then there is the regulatory scrutiny which is increasingly working towards slapping hefty penalties for all infractions.
Regardless, third party service providers continue to be a key component in the global business environment. Vendors will continue to hold the key as IT is not the core competency of all businesses that drive the world business cycle. Healthcare, retail, financial, etc. industries need to depend on IT service providers to make their infrastructure functional. Thus a vendor’s IT capacity becomes the custodian of an organization that stores and processes consumer information.
Concerns and countermeasures
The concerns in the vendor risk assessment arise from multiple factors, which are often interlinked and combine to render the defense put in place, if any, ineffective. For one, organizations are found lacking in adequate decision-making insights key for preferring one vendor over the other. This is often accompanied by a tendency to overlook crucial parameters in the service provider’s defense system, its culture and the resultant capacity to defend sensitive consumer data.
Enterprises usually go by past record and present reputation of a third party. While this could be the main deciding factor while choosing a service, lack of past breach history does not make it breach-proof for the future. A detailed and independent analysis should play the decisive role. It is by no means an easy proposition, but a sincere attempt would surely unfold some key information. Further, periodic assessment and review of the security scenario could never be exaggerated.
Spending capacity and intention also play a crucial part in vendor sourcing. While no organization would like to stretch the capacity, what is baffling is the intention of those capable of allocating adequate amount. Companies belonging to the later group view IT expenditure on vendor management as a burden that should be managed as cheaply as possible.
In the process, these companies end up tying up with not-so-well-equipped third parties. There is no denying that financial crunch clip IT spending capacity across sectors. However, it should not make organizations compromise on information security as data breach at the vendor’s end is as equally punished as in the case of in-house risk events.
The reliance on vendors is only going to increase due to the evolving nature of the business space. It also means an increasingly unavoidable scenario of risk exposure. Organizations across business segments have been found to be lacking in capacity to resolve son enough after an issue is discovered. Also, several institutions exhibit inefficiency to tackle situations post an information security breach. While it is no easy task to keep composure after inescapable loss of business and reputation, diligently nurtured true risk management policies and procedures will enable organizations to reasonably protect themselves against adverse information security risk incidents at the vendor’s end.