Financial Firms Scrutinize Third-Party Supplier Risk

But executives arent confident in the accuracy of cybersecurity assessment data received from their vendors, a new study shows.

Financial services executives and managers responsible for the corporate checkbook would rather forgo business with a partner that is not serious about cybersecurity than run the risk of a breach, a new report found.
Some 97% consider cyber risk to be an important or critical issue, and 78% of those surveyed would refuse a partnership with a company that had poor cybersecurity performance, according to a new survey of 129 financial service professionals by security-rating firms BitSight and the Center for Financial Professionals.
These results not only talk to the importance of having a strong third-party risk management program in place, but - when you think about the implication that they have for a company doing business with financial firms - now you have to demonstrate strong cybersecurity performance or you might lose business, said Jake Olcott, vice president of government affairs for BitSight.
Suppliers and supply chains have become the latest focus of companies trying to reduce their cyber risk. In 2018,
a survey by the Ponemon Institute
found that nearly 60% of organization had a data breach caused by a third party, but that only 34% of companies had created an inventory of all their suppliers.
The most recent high-profile attack on a third-party supplier — the breach of remote work enabler Citrix — underscores the danger. The company
announced in early March
that the FBI had notified the firm that attackers had downloaded business documents from its internal network.
About half of all attacks involve jumping from one corporate network to another, a technique dubbed island hopping,
according to a recent report
.
Supply chains are easy and lucrative targets, Mike Bittner, digital security and operations manager at The Media Trust, a website security firm, said in a statement. In todays digital environment, they are extremely complex and dynamic, they lie outside the perimeter of the IT infrastructure, and they are, therefore, hard monitor.
For the most part, company executives believe — whether correctly or not — that they have a handle on the situation. More than 80% of respondents indicate that their executive management is confident in their approach to measuring and managing third-party risk, according to the BitSight/CeFPro survey. Yet, only 44% of boards had regular reports on their third-party risk.
The Attestation Situation
Among the greatest challenges facing companies are a lack of faith in the accuracy of cybersecurity assessment data received from vendors, as well as the timeliness of that data, the
survey
found.
Part of the problem is that companies often continue to manually poll their vendors, asking the firms to attest to certain security measures without conducting any sort of assessment. Such attestation requires a great deal of time on the part of both companies, resulting in a great deal of paperwork.
Yet, ask a supplier whether such attestation is effective, and most will say no, BitSights Olcott says.
It is definitely inefficient and most people think it is ineffective, he says. I think what we will see in the real world is that being replaced by real-time, automated and continuous data collection.
Automation and continuous data collection are already growing popular in another area of third-party risk: The management of open-source components used in software development. Companies such as Sonatype, WhiteSource, and Snyk are using a variety of scanning to take stock of the third-party libraries being used by developers.
The adoption of such technologies is a direct result of increasing pressure on software vendors to reduce the number of vulnerabilities in their products and online services. With enterprises increasingly focusing on their third-party cyber risk, software vendors wont be the only suppliers under pressure to up their security game, Olcott says.
Companies are increasingly trying to compete, not only on price and performance, but also on security, he says. This issue is becoming much more critical.
Related Content:
Whos the Weakest Link in Your Supply Chain?
Citrix Breach Underscores Password Perils
Tackling Supply Chain Threats
Two-Thirds of Organizations Hit in Supply-Chain Attacks
Everything I Needed to Know About Third-Party Risk Management, I Learned from Meet the Parents

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Financial Firms Scrutinize Third-Party Supplier Risk