What to Include in Security Risk Assessments

A staggering 98% of companies work with vendors that have had a breach. Today, businesses are more cautious in their decision-making processes, particularly when it comes to working with vendors. At the same time, it is nearly impossible for businesses to function and grow without vendors and third-party support. Vendors provide critical goods, services, and technology to support increasingly complex supply chains and fast-evolving business models.

While third-party vendors may never be able to guarantee complete security and peace of mind, security teams can conduct due diligence measures to make more informed decisions and mitigate risks as much as possible.

Security assessments are a critical part of third-party risk management, but how do you know that your assessment is thorough enough?

Proactive security reviews: A key to risk management

Relying on vendors is essential, but doing so without verifying their security practices is like playing with fire. Regular security reviews help businesses mitigate potential risks before they turn into costly incidents.

At its core, a security review is a comprehensive assessment of a vendor’s ability to protect sensitive data, adhere to industry regulations, and respond to potential breaches. This process involves evaluating several key areas, such as data encryption, compliance with standards like GDPR and HIPAA, and the vendor’s incident response protocols.

While no security review can guarantee 100% safety, it equips businesses with the insights they need to make informed decisions. By consistently conducting these reviews, organizations can significantly reduce their exposure to cyberattacks, data breaches, and regulatory fines.

Challenges faced during security review processes

While security reviews are essential to keeping your organization secure and compliant, they present a number of challenges, including the increasing complexity of questions, difficulty allocating resources to handle review volumes, and ensuring alignment on security priorities.

1. Security as a cost center – The Equifax breach of 2017 demonstrates the costly consequences of viewing security as a mere cost center. Failing to patch a known vulnerability led to exposed data of 147 million people and over $1.4 billion in legal fees and settlements. This example shows that security is an essential investment, not an unnecessary expense. Proper measures can prevent costly breaches and protect organizational assets and reputation.
2. Balancing speed and thoroughness in security reviews – Balancing thorough security reviews with business agility is crucial. Rushed assessments can miss vulnerabilities, while lengthy processes may impede operations. The 2013 Target data breach exemplifies this challenge. A hasty vetting of a third-party vendor led to a breach exposing 40 million credit cards, highlighting the importance of comprehensive assessments despite business pressures.
3. Constantly evolving threat landscape – The cybersecurity landscape is ever-changing, with new threats emerging regularly. The 2020 SolarWinds hack exemplifies the importance of adapting quickly to evolving threats and maintaining robust security measures, even with trusted partners.. Attackers compromised software updates of a trusted vendor, infiltrating highly secure organizations, including U.S. government agencies.
4. Determining an acceptable risk level – Determining an acceptable level of risk is challenging for security professionals, especially with emerging technologies like AI. While frameworks like NIST or ISO 27001 provide guidance, they may not fully account for unique organizational needs or rapidly evolving tech landscapes. Balancing innovation with security requires collaboration between security teams, business leaders, and stakeholders to establish a risk tolerance aligned with organizational goals. This is particularly crucial in industries where innovation is key, as AI adoption can blur the lines between acceptable and unacceptable risks.
5. Reluctance of vendors to provide full visibility – Gaining full visibility into vendor security practices can be challenging due to reluctance in sharing detailed information. This lack of transparency hinders accurate risk assessment. The Facebook-Cambridge Analytica scandal (2018) exemplifies the consequences of inadequate third-party vetting. Cambridge Analytica, a political consulting firm, exploited a Facebook app to harvest data from 87 million users without consent. This breach led to a $5 billion fine for Facebook and severe reputational damage.
6. Unwillingness of vendors to participate in reviews – Vendors may refuse security reviews due to resource limitations or privacy concerns. Smaller vendors often lack resources for thorough assessments, while others may cite internal policies preventing disclosure. This creates a dilemma between accepting the associated risks or seeking alternative vendors, potentially delaying operations.
7. Increased complexity of sub-vendors – Sub-vendors, or fourth-party vendors, complicate security reviews, but it’s essential to have comprehensive security assessments across all supply chain levels. In the 2021 Colonial Pipeline ransomware attack, a compromised vendor account disrupted fuel supply across the Eastern U.S., highlighting how sub-vendor vulnerabilities can have far-reaching impacts.

Best practices for conducting vendor security reviews

Efficient vendor security reviews are essential to mitigate risks and ensure compliance. Here are best practices for conducting thorough third-party security assessments:

1. Regular audits and continuous monitoring

Don’t rely on one-time reviews. Ongoing audits and real-time monitoring help track a vendor’s changing security posture and detect emerging vulnerabilities. Continuous monitoring ensures compliance and proactive threat detection, preventing gaps in security oversight.

The SolarWinds breach could have been mitigated with better continuous monitoring, which would have detected the malicious software update earlier.

A practical approach is to implement quarterly security assessments for vendors that handle critical infrastructure. These assessments can identify evolving risks, ensuring that a one-time review doesn’t leave blind spots in long-term vendor security.

2. Security standards and frameworks

Adopt recognized frameworks like ISO 27001, NIST, or SOC 2 to structure your reviews. These provide clear guidelines for evaluating vendor security and ensuring that all vendors follow consistent best practices.

Vendors with ISO 27001 certification demonstrate adherence to global standards for managing sensitive data, reducing the risk of breaches.

So, if a healthcare provider is working with cloud service vendors, it might require them to follow HIPAA compliance standards. By aligning with these frameworks, you ensure vendors implement the necessary controls to protect patient data and comply with industry regulations.

3. Automation and security tools

Leverage automation to streamline vendor assessments. Vulnerability scanners and compliance platforms automate repetitive tasks, improve accuracy, and save time, ensuring comprehensive reviews without manual bottlenecks.

Using AI-driven security tools reduces detection times for vulnerabilities, helping companies address issues faster.

Tools like Qualys or Nessus can automate vulnerability scans, identifying potential risks in a vendor's system. By automating these checks, you reduce human error and speed up review cycles.

By focusing on regular audits, established frameworks, and automation, your security reviews will be more effective, efficient, and capable of mitigating vendor-related risks.‍