Traditionally, the security focus on third-party risk management (TPRM) has been on how to protect data, not on outsourced services and resources. The Covid-19 global pandemic calls for a reevaluation of priorities and for new particularities to consider when managing risk. Below is a recap of our conversion about this with John Hochevar, IT Risk Manager at American Family Insurance, a Fortune 500 company with more than 90 years of history. Mr. Hochevar has a wide experience in conducting corporate security strategies and aligning activities across various security disciplines.
There’s a significant increase in Covid-19-related attacks on corporate environments, whether it’s phishing emails or ransomware campaigns, and that has certainly increased the focus on the data security elements of third-party risk management. With this increase organizations might be overlooking the business continuity and reliance aspect of their external relationships, which can actually impact organizations’ continuity of service and support immediately due to outsourced dependencies on systems or services.
There’s so much attention focused on data security that organizations might lose sight of some of these other things that may be impactful on their day to day operation. As the pandemic is global in nature, you could be affected by cloud computing systems support in various US-based locations as well as outsourced offshore relationships due to national shutdowns causing delays in onboarding or security agreements for various controls.
From a third-party perspective, there is a focus on trying to understand the cybersecurity posture of our third-parties that we’re looking to monitor. It often seems that we’re focused on how they’re protecting data, how good they are at protecting the confidentiality of the things that we’re sharing or what access they have.
I’m not exclusively talking about technology or business processes, I also mean basic things like onboarding new resources that rely on background checks. You perform background checks to identify issues or potential issues for confidentiality or nefarious activity, but you don’t necessarily evaluate how your third-parties conduct background checks when they onboard employees. If a country cannot process background checks, your organization has to make a business decision based on potentially more risk. That’s certainly a third-party risk with implications to your security posture, but it’s not how we’re traditionally thinking about TPRM.
It has to do with flexibility and customization. With the right TPRM tool, you’re not limited to asking about cybersecurity, you have the ability to ask about any type of information and technology risk that you may identify in your risk profile. So you can add all of this to your assessment and monitoring process.
If you’re sharing confidential data, you obviously want to ask questions about data security. If your third-party is performing a business process for you, you’ll have security issues but also availability issues (internet connections, human processes).
It all comes down to making sure you understand the risks associated with a third-party and that you’re asking appropriate questions based on those risks, instead of focusing too much on one area.
Don’t focus the entire conversation on developing a contract around data security. While that is of critical importance for the business, you need to compare that with the continuity of the operations if that is a concern in your risk model.
Do make sure you’re appreciating the overall IT risk, which in this case also includes the ability to perform the service, apart from protecting the information. You’ve chosen this outsourced resource for a key reason, so if there’s something that isn’t data security related that’s impacting this third-party service, that’s also a risk that needs to be considered.
Step back and reevaluate what you’re asking and what you’re trying to find out. Try to identify the business process that could be impacted from a continuity aspect. The priority is typically data security, but are you asking questions beyond that? Are you identifying risks with your third-parties’ business processes?
In the event that you have significant reliance on things that are outside of your control, you need to be prepared. You could have a tsunami impacting the ability to get access to hard drives, so if you have a business that’s depending on getting storage, maybe you need to focus on whether you prioritize a technology provider or an insurance company. Are you asking those questions and bringing them to your TPRM tool?
Imagine that you’ve onboarded a third-party and you’ve designed all security controls assuming that people can go to physical locations.
When a pandemic or a natural disaster or any other contingency dictates you can’t travel to the office and you have to stay home, you lose that entire control environment that you built into the contract. So you need to figure out how to keep providing security assurance… It’s trying to think ahead in case you can’t have the control you agreed.
Adding an Addendum to contracts upon the pandemic might certainly help. There are things you may not have considered when developing your offshore agreement. Or things you’ll want to consider in developing or redeveloping offshore agreements. Now is your time to think about that.
About John Hochevar
John Hochevar is IT Risk Manager at American Family Insurance. He is responsible for the organization’s IT Risk Management Framework. He holds a Bachelor’s degree in management of information systems and a Masters degree in Business Administration from the University of Wisconsin, Milwaukee.
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