What is Third-Party Risk?

Third-party risks are any risks companies introduce via external parties into your ecosystem, infrastructure, or supply chain. Third parties can include vendors, suppliers, partners, contractors, or service providers that have access to any internal data, whether systems, processes, Intellectual Property, customer information, or internal communications.

A critical point to remember about third-party vendors is that you may have solid measures and remediation plans in place, yet your third-party vendors may not uphold these same standards. Thus third-party relationships can increase vulnerabilities even in the most secure of companies.

Knowing who has access to your company’s data is paramount. Hyperconnectivity and expanding services via third-party options have allowed companies to grow and make specific business processes more accessible and efficient. Still, it has also raised risk exposure and the potential for more significant losses. Failure to manage third-party (or vendor) risks could mean regulatory action, financial loss, litigation, and reputational damage. 

What Kind of Third-Party Risks Are Out There?

Third-party risks are numerous and diverse. Many companies invest in security and risk management, so cybercriminals have found that targeting suppliers and partners with connections to larger entities are easier and far more valuable targets. An attack on a smaller vendor can rapidly expand thru cloud-based connections and infect principle companies’ systems (and all other partner networks) rapidly via connected devices and supply chains.

The risk landscape constantly evolves, and new threats arise daily. Typically third-party risks that impact principle businesses fall into the following five categories:

Financial Risks damage financial

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