A company may spend thousands of dollars protecting its network, training employees, and securing business data, yet overlook vendor security risks linked to an account used by an outside service provider. If an attacker gets hold of those login details, the company’s security measures may not stop them from entering through an already trusted connection. Software suppliers, cloud providers, outsourced IT teams, and other business partners can introduce risks that are difficult to spot from inside the organization.
How Third-Party Cybersecurity Risks Create an Entry Point for Attackers
External partners may need access to company systems to fix problems, maintain applications, or work with business data, but risks can arise when they have access to more than they need or when their access is not checked regularly.
Access That Goes Beyond the Work
An IT support company may receive administrator permissions to fix network problems, while an accounting provider may need access to payroll records. If either account is compromised, an attacker could gain access to information or systems connected to that account.
Access problems can happen in several ways:
- Staff get admin rights even when their work does not require them
- Vendors share login details, making it hard to find out who used an account
- Accounts stay active after a vendor employee leaves
- Remote access remains open even after the work is finished
Software Can Carry Risks Into Other Businesses
Companies use outside software, apps, and tools to connect their systems. If one of these products has a security flaw, it can put many customers at risk, even if they take good care of their own networks. This is why vendor security involves more than checking who can log in; it also requires attention to the software and services used by the business.
A supply chain attack can occur when attackers exploit a weakness in a supplier’s software or systems to reach other businesses that depend on them.
Why Traditional Vendor Checks Can Miss Problems
Security forms and certifications may not reveal every supplier risk. Problems can also appear after the initial assessment.
- New employees receive access to company systems
- Vendors start working with new subcontractors or service providers
- A security flaw is found in the software and needs quick action
- Vendors change their security practices without being checked again
- The company cannot clearly see which other providers its suppliers depend on
A vendor’s security should therefore be reviewed throughout the working relationship, with more frequent checks for suppliers that handle sensitive information or support critical operations. Regular reviews help identify vendor security risks that may develop after the initial assessment.
What Happens When a Vendor’s Security Fails?
A vendor-related incident may expose customer information, interrupt essential applications, or require days of investigation.
The business impact may include:
- Exposure of customer, employee, or financial information
- Interruptions to daily operations and business applications
- Investigation, recovery, and notification costs
- Legal or contractual consequences, depending on the circumstances
- Loss of customer confidence and reputational damage
How to Manage Third-Party Cybersecurity Risk
Start by listing the outside companies that use business systems or handle sensitive information. Give more attention to suppliers that could cause serious problems if something goes wrong. Reviewing supplier access and security practices helps businesses identify vendor security risks before they affect important systems or data.
Vendor risk management helps businesses identify suppliers that may expose company data, review their security practices, and decide which risks need attention first.
1. Keep a Record of Every Vendor
Make a list of suppliers that work with company data, access internal systems, or provide important services. Include the following details for each supplier:
- The service provided
- The type of data handled
- The systems and accounts it can access
- Any important subcontractors
- The internal employee responsible for the relationship
2. Give Vendors Different Risk Levels
A newsletter service that receives a limited list of email addresses does not create the same exposure as an IT provider with administrator access. Group vendors according to the sensitivity of the data they handle and the damage their failure could cause.
- Low risk: vendors who can see the basics about a business
- Medium risk: providers who work with employees’ personal information or business data
- High risk: suppliers who work with sensitive documents, systems, or networks.
3. Limit Access and Check It Regularly
Vendors should only be able to use the systems and data they need for their work. A few basic steps can help keep their access under control:
- Turn on multi-factor authentication (MFA) for vendor accounts
- Give each person their own login rather than sharing passwords
- Set a date for access to expire whenever possible
- Review which vendor accounts have administrator rights
- Remove vendor accounts when the service is no longer required
Teams can explore SterlingNext security training to better understand access controls and other cybersecurity practices.
4. Watch for Changes in Vendor Security
A check during onboarding is not enough to track a vendor’s security over time. Keep an eye on new security alerts, software flaws, reported incidents, and changes in the services the vendor offers.
5. Put Security Duties in Writing
The contract needs to explain how the vendor will keep company data safe, report security issues, and help find out what went wrong. It can also cover:
- Security rules and limits on system access
- How soon the vendor must report an incident
- The company’s right to check the vendor’s security practices
- Rules for bringing in other service providers
- How company data will be returned or deleted when the contract ends
Vendor Types and Their Supplier Security Risks
| Vendor type | Potential security risk | Recommended control |
| Cloud provider | Exposure of stored data or business applications | Review permissions, security settings, and recovery arrangements. |
| Managed IT provider | A compromised administrator account could affect several systems | Use MFA, restrict privileged access, and review account activity. |
| SaaS provider | Unauthorized access to customer or employee data | Check authentication, data access, and incident reporting terms. |
| Software supplier | A vulnerable update could introduce security problems | Track security advisories and apply verified patches. |
| Payroll or accounting provider | Exposure of employee or financial records | Limit shared data, use MFA, and review access logs. |
Prepare for a Vendor-Related Security Incident
Even a supplier with good security practices can experience an incident, so businesses need to know what to do if a trusted connection becomes unsafe.
A response plan needs to explain what to do when a vendor-related security issue occurs:
- Decide who will contact the vendor and handle the investigation
- Limit access to affected accounts or connections
- Check the systems and records that may be affected
- Recover important data from safe backups
- Keep essential business activities running during an outage
For example, if a cloud provider reports a security problem, the company should know which applications depend on that service and how essential work can continue. A backup provider may be appropriate for critical services, although the cost and operational requirements should be considered first.
Conclusion
Vendor security needs attention for as long as a supplier works with the company, since changes to systems, user access, or daily work can bring new risks that were missed earlier. Regular checks of vendor records and account activity, along with restricted access and clear security duties, help prevent problems from going unnoticed, while a response plan gives staff a clear idea of what to do, who should handle the issue, and how to keep important business activities running during an incident.
