Vendor risk management is one of the most overlooked aspects of cybersecurity for small businesses, and it may be the gap that can cost them the most.
Let’s walk through a common scenario together. You have a friend, someone you have known for years, someone you trust completely. You even give them a spare key to your house because it just makes life easier; they can let in the repairman while you are at work, water your plants when you travel, drop off something you forgot. The arrangement works perfectly, and you never think twice about it.
Now imagine that friend is not as careful with that key as you are with yours. They leave it on a hook by their front door, and unfortunately their house gets broken into, and the burglar, now holding a copy of your key, walks straight into your home, not because you were careless, but because someone you trusted was.
That is vendor risk management in a nutshell. Many small businesses work with outside vendors, and this discussion is one of the most important security conversations you can have.
What Is Vendor Risk Management?
Vendor risk management is the process of identifying, assessing, and managing the security risks that come with giving outside parties access to your business systems, data, or operations.
Every time you bring a vendor into your business, whether it’s an accountant who needs access to your financial software, a cleaning company that moves freely through your office, an IT provider who connects to your network remotely, or a software tool your team uses daily, you are creating a connection, and every connection created is a potential entry point.
This does not mean vendors are bad or that working with outside partners is a problem; it simply means that when you get into any sort of collaboration that requires access to your business systems, collaborative security measures are also required.
How Vendors Become a Security Risk
First off, you need to understand that vendors do not necessarily become security risk due to personal malicious intents. In most cases, their systems have gaps that become potential entry points for cybercriminals. Let’s consider some of these gaps.
- They May Not Have the Same Security Standards You Do: You might have strong passwords, multi-factor authentication, and a solid IT partner keeping your systems secure. But if the vendor you are sharing sensitive files with has none of that in place, your information is only as safe as their weakest password. Think about it this way; you have spent time and money securing the front door of your home, but if you regularly hand your keys to someone whose own front door has no lock, the security of your home is compromised by association.
- Negative Consequence of Digital Collaboation: Modern businesses collaborate digitally in ways that would have been unimaginable twenty years ago. We have collaborations through shared cloud folders, project management platforms, remote desktop access, shared inboxes etc. While all of these make working with outside partners faster and more efficient, they also mean that a vendor has a degree of access into your digital environment.
If a vendor’s account on a shared platform gets compromised through a phishing attack, a stolen password, or a data breach on the platform itself, an attacker can use that access to reach your files, your communications, and potentially your broader systems.
- Poor Password and Access Hygiene: A vendor who reuses passwords, does not use multi-factor authentication, or shares login credentials among their team members is creating vulnerabilities that extend directly to your business if they have access to any of your systems or data. As we have discussed in earlier posts on password hygiene and MFA, these are not optional security practices, they are foundational ones that you must take care of to ensure optimal security.
- The Departing Employee on Their Side: Here is one that catches a lot of businesses off guard. When a vendor’s employee who had access to your systems or data leaves that company, does the vendor revoke that access promptly? Not always! Remember we talked about this in our posts on access control and data breaches: inactive accounts are one of the most quietly dangerous security gaps in any environment.
When a vendor is breached and your data is caught in it,your bs=usiness deals with similar consequences just as if it were targeted directly, and if you fall into that situation, your clients are not primarily concerned with whether it was through your system or a vendor’s. Your reputation and that of your business could suffer greatly for it, and if not properly managed, it can lead to legal consequences.
What Good Vendor Risk Management Looks Like
How then are you expected to work with vendors to ensure your systems are well secured, no matter the level of access they have to your system. Here’s how to ensure that:
- Know who has access to what: Before any vendor relationship begins, be clear about exactly what access they need and give them only that; a vendor who needs to review a specific set of files does not need access to your entire file system. Limiting access to what is genuinely necessary is one of the simplest and most effective ways to contain risk.
- Ask about their security practices: It is completely reasonable to ask a vendor what cybersecurity measures they have in place before giving them access to your systems or data. Do they use MFA? How do they handle passwords? What happens if one of their employees leaves? A vendor who takes security seriously will have no problem answering these questions.
- Put it in writing: Vendor agreements should include clear expectations around data handling, security standards, and what happens in the event of a breach on their end. Stating this in writing in clear terms will help them also be on their utmost watch, because they know that if an incident comes up, they will be legally liable for the consequences.
- Review and revoke access regularly: Vendor relationships change, and projects end when contracts are not renewed. Make it a regular practice to review who currently has access to your systems and data, and remove access that is no longer needed. Set up a system for this, and ensure it is routinely done.
- Vet the tools that come with the relationship: When a vendor introduces a new platform or tool into your shared workflow, treat it the same way you would treat any tool your own team wants to use; ask questions, understand the security implications, and make sure it meets your standards before it becomes part of your workflow.
- Work with a managed IT partner who maintains oversight: Managing vendor access across a growing list of relationships is genuinely difficult to do well without the right systems in place. A managed IT partner can help you maintain visibility over who has access to what, flag unusual activity, and ensure that your broader security posture accounts for the connections that exist outside your own walls.
The businesses you work with are important to you; you likely chose them because you trust them, and that trust is well-placed. However, trust alone cannot protect your data any more than trusting your friend with a spare key protects your home if their security practices are not as careful as yours. Getting vendor risk managementright protects your business, your clients, and the vendors themselves.
At StonePoint Technology Partners, we help small and mid-sized businesses build security strategies for several risks, including the risks that come through the relationships from vendor collaboration. If you are not sure whether your current vendor relationships are creating gaps in your security, we would love to take a look. Send us an email at Info@stonepointtech.com or call us at (727) 478-7355. We are here to help.