Data Privacy and TPRM: 5 Best Practices

Types of Third-Party Data Privacy Risks

Large companies deploy advanced technologies to safeguard their systems, networks, and data, making it challenging for cyber criminals to breach them via conventional channels. However, these companies must not grow complacent; malicious actors persistently seek alternative entry points. Instead of relinquishing attempts to access valuable data, cybercriminals target smaller entities—third, fourth, and Nth-party business partners.

These smaller businesses, enjoying connections and access to coveted data, become potential gateways if breached. Alarmingly, almost half of all cyberattacks target smaller businesses. As global companies and economies digitize and integrate services and data, the stakes and likelihood of breaches escalate.

The absence of a comprehensive view across the extensive network of organizations in your vendor and supplier ecosystem hinders understanding data flow, its fate, and the level of protection it receives. Consequently, it's not surprising that an increasing number of high-profile data breaches occur through third-party vulnerabilities.

Increasing Pressure for Extended Data Privacy Compliance

In an era where data breaches are often traced back to third-party vulnerabilities, adopting robust third-party risk management practices is necessary and strategic. The entity collecting data is responsible for securing it, as emphasized by an increasing number of regulations. Organizations must ensure their vendors and partners adhere to robust data protection governance and controls, extending these requirements to their third-party partners.

5 Best Practices for Managing Third-Party Data Protection Risks

If third-party data risk management were simple, then everyone would be doing it. Yet, many organizations know they haven’t implemented everything their companies need to monitor and manage third-party security risks. The situation may be worse for specific risks such as data privacy. As with cybersecurity, companies often fall short because they haven’t taken care of the basics.

Here are the best practices we recommend:

1. Establish Accountability

Clarity in third-party data risk management accountability is crucial. A Forrester Research study revealed that even companies attentive to vendor and supplier risks often lack robust TPRM governance or accountability. The absence of a designated party overseeing third-party risks can result in weak controls or a complete lack thereof. Consider forming a cross-functional data protection team that includes legal, IT security, internal audit, and vendor management representatives to promote accountability, policy definition, and data protection commitment.

2. Align with a Framework

Regulations specify what needs to be done, but not necessarily how to do it. This complexity intensifies when dealing with numerous vendors across diverse locations, each governed by its own set of laws. Adopting a suitable Third-Party Risk Management (TPRM) framework tailored to your industry and requirements guides the process with established best practices. This ensures compliance with laws while maintaining data security. Frameworks like the Shared Assessments TPRM Framework, NIST 800-161, NIST CSF v.2.0 Draft, ISO 27001, and ISO 27036 offer comprehensive guidance.

3. Be Vigilant and Diligent Throughout the Third-Party Lifecycle

Data risks persist throughout a company's relationship with third-party vendors, extending beyond compliance audits and termination. Vigilant protection is essential from the outset to data elimination, encompassing several key stages:

Sourcing and Selection

• Look closely at potential third parties at the earliest stages.
• Prioritize data protection in your Request for Proposal (RFP), Request for Information (RFI), or other request type., emphasizing stringent controls.
• Verify vendor claims through external sources, assessing financial status, reputation, and security breaches.
• Request evidence of security measures – such as compliance with security frameworks, audit reports, and a potential security rating from an objective party – before finalizing contracts.

Intake and Onboarding

• Embed privacy controls in vendor contracts, specifying requirements clearly.
• Stipulate data-sharing protocols, ensuring notification when data is shared with third parties.
• Conduct due diligence tasks, such as:
  • Assessing vendor security controls against industry frameworks, such as those from NIST and ISO
  • Monitoring for cyber exposures, data breaches, financial issues, legal violations, adverse media, and other public-facing risks
  • Identifying potential fourth- and Nth-party vendor risks that were not apparent during sourcing and selection
  • Detecting reputational and compliance risks in the vendor’s extended supply chain
  • Certifying that vendors have met “flow-down” compliance requirements per GDPR, CMMC, HIPAA, and other regulations.

Inherent Risk Scoring

• Evaluate vendors' inherent risks, considering financial posture, security practices, and historical breaches.
• Utilize questionnaires and monitoring for internal risk scoring, categorizing vendors based on inherent risk.
• Create a matrix combining likelihood and impact to assess and prioritize vendors efficiently.

Periodic Third-Party Risk Assessment

• Conduct regular, in-depth risk assessments for vendors with higher inherent risks.
• Analyze privacy controls, assess adherence to regulations, and identify exposures, aligning with risk tolerance.
• Quantify risks based on potential organizational costs, ensuring continuous evaluation.

Continuous Risk Monitoring

• Implement automated, continuous monitoring to identify emerging privacy risks and validate vendor responses.
• Scan for cybersecurity posture, business ethics, financial status, and geopolitical context to ensure continuous vigilance.
• Adapt to changing vendor practices through regular risk assessments.

SLA and Performance Management

• Ensure ongoing adherence to privacy requirements outlined in vendor and supplier contracts.
• Regularly evaluate vendor performance, not just during renewal, to maintain consistent privacy standards.

Offboarding and Termination

• During contract conclusion, revoke vendor access to systems, especially those storing sensitive data.
• Verify complete data wipe from vendor systems to mitigate risks effectively.
• Address data protection risks at offboarding and termination, often overlooked by many companies.

By adopting these practices at each stage, organizations can establish a robust and efficient third-party risk management program, safeguarding data and maintaining privacy throughout vendor relationships.

4. Don’t Overlook Residual Risk

Residual risks persist even after vendors implement the required measures. Understanding your organization's risk tolerance is essential for managing residual risks effectively. Compensating for residual risks may involve requiring vendors to implement additional controls, especially for highly sensitive data. ISO 27001 emphasizes continuous monitoring to address and manage residual risks effectively.

5. Produce Relevant, Effective Reporting

Documentation of all vendor data-privacy risk management activities is critical for compliance and evidence for audits. Reports should demonstrate compliance with data protection laws, outline remediation efforts, and cater to the needs of various stakeholders, including compliance teams, security teams, executive leadership, vendors, and the board of directors. Utilizing a third-party risk management solution streamlines reporting, aligning with GRC and enterprise risk management systems.

Adopting these 5 best practices forms a robust foundation for comprehensive third-party data protection. In an ever-evolving landscape, a proactive approach ensures the security and privacy of your data throughout the complex web of third-party relationships.

How Prevalent Can Help

Prevalent delivers a single third-party risk management platform that teams throughout the enterprise can use to collaborate on third-party data privacy risks. The Prevalent TPRM Platform:

• Delivers visibility into where data is, how it flows, and who has access to it
• Speeds risk identification and remediation, mitigating breach costs and reputational damage
• Generates targeted reports for regulators, vendors, and internal stakeholders to collaborate on risk reduction
• Integrates with other vendor risk management processes for centralized third-party risk management

For more on how Prevalent can help your organization discover, manage, and reduce third-party data privacy risk, download the white paper or contact us for a demo today.