Last Updated on January 15, 2023 by Faiza Murtaza
Several years ago, many organizations concentrated their cyber defense efforts almost solely on their own organization’s security and Flexcube implementation, ending at the point of protecting their network perimeter. Today, many organizations have realized the need to broaden their cyber defense efforts. On the other hand, these same firms are becoming more worried about the cyber security of third parties.
A dynamic and ever-evolving corporate environment has been formed as a result of the introduction of digital transformation. In today’s world, consumers/customers expect to communicate with businesses in real-time given the advancement of Flexcube. Because of this, banks are increasingly relying on a network of partners and third parties to assist them in meeting their obligations. However, although outsourcing has enabled businesses to stay competitive, it has also enlarged their attack surface, putting them at a greater danger of cyber security breaches.
Attackers have also grown more creative over time; instead of performing direct assaults, they are opting for the route of least resistance, infiltrating an organization’s supply chain or major vendor as a way to acquire access to sensitive information.
The Target breach, which happened in 2013, is perhaps the most well-known example. Hackers were able to get the credit card information of 41 million consumers by obtaining network credentials from Target’s heating, ventilation, and air conditioning supplier. It was possible for the hackers to get access to the customer service database because of the excessive access privileges supplied to the third-party vendor and a poorly designed system. Target was ultimately fined more than $18 million and compelled to pay an additional $10,000 in compensation to each consumer the breach of confidentiality had impacted.
Unfortunately, expensive third-party data breaches like this are very uncommon, resulting in financial losses for both consumers and companies. It was discovered in 2017 that Equifax had been compromised via an Apache Struts application, exposing the personal information of over 147 million people and resulting in Equifax being responsible for more than $700 million in compensation.
Suppose a third-party cyber security breach may cause considerable financial, operational, and reputational harm to the new Oracle Flexcube 14.x. Why are so many organizations still lagging in effectively managing their third-party cyber risks?
Table of Contents
1. Third-party goods and services aren’t given the same weight as those owned by the company.
As a result, many companies fail to consider how their third-party suppliers’ goods and services change over time. Even though an organization has a connection with the same vendor, it is exposed to varying degrees of risk based on the nature of the relationship. For instance, one provider may not have an API to internal system and Oracle Flexcube, while another may be engaged in essential daily data exchanges. While safeguarding the former may not be a top concern, taking steps to reduce the harm posed by the latter is vital.
Prioritizing mitigation measures begins with identifying the most problematic linkages. By prioritizing threats based on severity, security teams may make the most efficient use of their time and resources.
2. Scalability and adaptability in the third-party risk management process are not built.
Third-party security risk management requires constant monitoring of third parties. This often entails the submission of a security assessment questionnaire to a third party regularly by the organization to examine the vendor’s security measures. As a consequence of the time and effort required to fill out extensive spreadsheets, these surveys may be time-consuming and frequently impractical to use.
As a result, many organizations fail to match their surveys to the importance of the service offered by the third-party vendor. When it comes to ‘low-risk’ or ‘noncritical’ third parties such as those who provide marketing or cleaning services, some people wrongly feel they don’t need to be monitored by their security team.
Organizations must categorize their third parties according to their importance and materiality and then build surveys that correspond to each of these categories.
3. Security assessments conducted by third-party vendors do not provide an accurate picture of a company’s cyber risk profile.
A strategy for continuous monitoring that does not enable the importance or criticality of a third party to define the scope and depth of a company’s security evaluation may be developed. In order to properly evaluate the operational efficacy of security measures, it may be necessary to conduct an on-site assessment of critical third parties. As a result, it is possible that the evaluations themselves may not adequately analyze third-party cybersecurity risk posture.
For this reason, organizations must design questionnaires that balance objective and subjective questions, such as avoiding nested questions, to get a clear picture of a vendor’s genuine position.
4. Inadequately qualified personnel to track and oversee third-party risk management.
Managing the security assessment replies from dozens or hundreds of third-party vendors becomes more complex as organizations grow their third-party ecosystems. Possible causes include, but are not limited to, and traceability is not integrated into the process since few people have the right capabilities.
Companies need to know at a glance when each questionnaire was delivered, how much was replied to, and when it was finished to monitor and assess security risk surveys regularly. A vendor risk management solution might be used to maintain track of the security assessment process.
5. Inability to take responsibility and regulate oneself
The end-to-end third-party risk management process often involves a number of departments, including procurement, IT, cyber security, and legal, among others. Because of this, suppliers may get many questionnaires covering different risk categories at the same time while doing due diligence checks or monitoring third parties. This may be confusing and frustrating for everyone involved.
Due to a lack of adequate governance, security and privacy teams are often left out of the loop when it comes to the end-to-end process, which makes it difficult for companies to manage third-party risk effectively.
Organizations need to have a single point of contact or owner for each third-party provider. As a general rule, the risk management function responsible for overseeing all aspects of third-party risk management should ensure that good teams are included in the process definition.