NIST Privacy Framework for Third-Party Risk Management
As data breaches continue to rise, regulators are demanding strict compliance with privacy regulations. Many organizations are turning to the NIST Privacy Framework to strengthen their data privacy practices and meet these challenges. When integrated with a third-party risk management (TPRM) program, the NIST Framework provides a structured approach to managing privacy risks, enhancing transparency, and fostering trust. It helps organizations effectively identify, assess, and mitigate privacy risks associated with third parties while incorporating privacy considerations into products, services, and vendor relationships.
In this post, we’ll review the structure of the NIST Privacy Framework and examine best practices for integrating its guidelines into TPRM.
What Is the NIST Privacy Framework?
The NIST Privacy Framework is a structured and flexible set of guidelines developed by the National Institute of Standards and Technology (NIST) to help organizations manage privacy risks. It is designed to enhance data privacy by providing tools and practices that align with regulatory requirements, encourage transparency, and foster trust between organizations and their stakeholders. When integrated with third-party risk management (TPRM) programs, the NIST Privacy Framework helps organizations identify, assess, and mitigate privacy risks that arise from their interactions with third parties.
Key Components of the NIST Privacy Framework
The NIST Privacy Framework consists of three main components that together provide a foundation for managing privacy risks:
Core
The Core defines a set of privacy-related activities and outcomes that apply to different organizational levels, from executives to operations. It is divided into functions, categories, and subcategories that help organizations manage their privacy practices effectively. Core’s structure facilitates communication about privacy priorities and helps ensure privacy practices align with business goals.
Profiles
Profiles are customized selections of functions, categories, and subcategories from the Core. They enable organizations to tailor their privacy management activities based on specific needs, risk levels, and business objectives. Profiles can represent either the current state of an organization’s privacy practices or its target state, providing a roadmap for improvement.
Implementation Tiers
The Implementation Tiers provide a scale for assessing an organization's privacy risk management maturity. There are four tiers:
- Tier 1 (Partial): Basic awareness of privacy risks with minimal control.
- Tier 2 (Risk-Informed): Moderate awareness and incorporation of privacy risk management.
- Tier 3 (Repeatable): Consistent application of privacy controls and processes.
- Tier 4 (Adaptive): Advanced and dynamic privacy risk management practices that evolve with changes in the ecosystem.
The NIST Privacy Framework provides guidance on integrating third-party risk management (TPRM) into these components by:
- Defining roles focused on managing privacy risks associated with third-party relationships.
- Using implementation tiers to assess and improve third-party risk management practices.
- Ensuring that privacy risk management is integrated into broader enterprise risk management practices.
- Emphasizing the importance of collaboration and communication in setting clear expectations and responsibilities with third-party vendors.
What Are the 5 Principles of the NIST Privacy Framework?
The framework's five core functions guide organizations in managing privacy risks across their operations, including third-party interactions:
Identify
This function involves cataloging and mapping all third-party interactions and the data they handle. It includes assessing the privacy risks associated with third-party data processing activities, performing risk assessments, and understanding the business environment in which third-party relationships operate.
Govern
The Govern function establishes governance structures that align third-party operations with organizational privacy policies. This includes developing privacy policies, defining roles and responsibilities, and ensuring compliance with relevant privacy laws and regulations.
Control
Organizations must implement controls that regulate third-party data processing. This involves setting privacy controls across the entire lifecycle of third-party engagements, including onboarding, offboarding, and managing data processing agreements to ensure compliance with privacy requirements.
Communicate
Effective communication is key to transparency. The Communicate function helps ensure that third parties understand and comply with privacy expectations. It involves establishing clear communication protocols for discussing privacy practices, incident reporting, and policy updates.
Protect
This function focuses on safeguarding personal and sensitive data handled by third parties. Organizations must ensure that third parties implement appropriate security measures, such as encryption and access controls, and have incident response plans to address potential data breaches.
Each function enables organizations to effectively manage risks from data processing activities. It also ensures that privacy protections are properly implemented and communicated within the organization. For a more detailed look at how each function can be tailored to third-party risk management, download our white paper, Adapting the NIST Privacy Framework for Third-Party Data Security.
NIST Privacy Framework for TPRM
Don't leave your data privacy to chance. Download Adapting the NIST Privacy Framework for Third-Party Data Security now and strengthen your third-party risk management with proven strategies.
Benefits of Using the NIST Privacy Framework
Enhanced Privacy and Compliance
The NIST Privacy Framework helps organizations align their privacy practices with major regulations like GDPR, HIPAA, and CCPA, simplifying compliance and reducing legal risks.
Improved Trust and Transparency
Implementing the NIST Privacy Framework fosters trust between organizations and their stakeholders by ensuring transparency and accountability in managing privacy risks.
Risk Mitigation
Organizations can mitigate potential data breaches and other privacy incidents by identifying and addressing third-party privacy risks.
Business Continuity and Innovation
The framework supports adopting new technologies and processes safely, enhancing business continuity while managing privacy risks.
Cost Efficiency
Proactively managing privacy risks helps avoid the financial costs associated with data breaches, legal penalties, and reputational damage.
Best Practices to Integrate the NIST Privacy Framework in TPRM
Now, let’s examine practical strategies for implementing the NIST Privacy Framework in your third-party risk management operations.
Conduct a Privacy Assessment
Start by evaluating the current state of your third-party privacy risk management program, identifying gaps, and mapping existing policies to the NIST Framework.
Customize Privacy Profiles
Tailor privacy profiles based on specific third-party risks, ensuring that controls and processes align with the nature of the data being shared and processed by vendors.
Implement Core NIST Functions
Once a baseline is established and the privacy profile is tailored, the core functions (Identify, Govern, Control, Communicate, and Protect) can be implemented.
- Identify and Prioritize: Continuously identify and prioritize third-party risks by maintaining an updated inventory of third parties and the data they are authorized to access.
- Governance and Control: Establish strong governance structures to monitor third-party relationships, clearly define roles and responsibilities, and create contractual obligations to ensure compliance with the NIST Privacy Framework.
- Control Implementation: Implement controls to regulate third-party data processing, ensuring data minimization, purpose limitation, and secure data handling practices.
- Effective Communication: Maintain open communication channels with third parties, providing regular updates on privacy policies and expectations.
- Protection Strategies: Deploy security measures like encryption and access controls, along with incident response plans, tailored to manage third-party risks effectively.
Regular Risk Assessments
Conduct routine questionnaire-based assessments of third-party privacy risks, including data flow analysis, risk scoring, and auditing of third-party data protection measures and compliance.
Continuously Monitor Third-Party Risks
Implement regular monitoring strategies, using automation to track changes in third-party practices and ensure compliance with predetermined privacy profiles and potential privacy risks.
Refine and Improve Practices
Continuously refine data privacy practices and controls based on regular monitoring and assessment results. Privacy profiles should also be updated to address challenges or changes arising within the regulatory environment.
Get a Handle on Third-Party Data Privacy Risks
The Data Privacy and Third-Party Risk Management Best Practices Guide shares a prescriptive approach to evaluating data privacy controls and risks at every stage of the vendor lifecycle.
Next Steps to Enhance Third-Party Data Privacy Using NIST
Third-party privacy risk management isn’t something that organizations should take lightly. It requires time and collaboration between organizational teams and the third-party vendor ecosystem.
Here are essential steps to begin or enhance this process using the NIST Framework:
Establish Accountability
Create a cross-functional team, including representatives from legal, IT, internal audit, and vendor management, responsible for overseeing third-party privacy risk management.
Align with the NIST Framework
Ensure that all third-party privacy practices, controls, and processes are aligned with the NIST Privacy Framework, emphasizing the integration of privacy into your overall enterprise risk management strategy.
Continuous Monitoring and Improvement
Regularly assess and monitor third-party compliance with your privacy policies and controls, using automation tools, when possible, for ongoing oversight.
Address Residual Risks
Some risks might linger even after the vendor has taken all the precautions you’ve required of them. Identify and manage any residual risks post-engagement to align with your organization’s risk tolerance.
Effective Reporting
Systematically document vendor data privacy risk management activities to meet data protection goals and requirements while providing evidence for compliance audits. A TPRM solution can streamline the mapping of assessment responses to multiple compliance requirements, improving efficiency.
Training and Awareness
Educate your internal teams and third-party vendors on privacy best practices and keep them informed about emerging privacy risks, regulations, and updates to privacy protocols.
Incident Response Planning
Develop and test comprehensive incident response plans that involve third parties, ensuring that data breaches and privacy incidents are handled swiftly and effectively.
By incorporating the NIST Privacy Framework into third-party risk management, organizations can significantly strengthen their privacy posture, ensure compliance, and foster stronger relationships with third-party vendors and customers. To learn how your team can apply this framework in TPRM, download our white paper, “Adapting the NIST Privacy Framework for Third-Party Data Security,” or schedule a demo/strategy call with our team of experts today.
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