Third-Party Security Assessments – We Need a Better Way

“According to a February 2013 Ponemon Institute survey, 65% of organizations transferring consumer data to third-party vendors reported a breach involving the loss or theft of their information. In addition, nearly half of organizations surveyed did not evaluate their partners before sharing sensitive data.” [DarkReading]

Assessing the risks associated with extending Financial Services operations into vendor/partner environments is a challenge.  It often results in less-than-crisp indicators of more or less risk.  Identifying, measuring, and dealing with these risks with a risk-relevant level of objectivity is generally not cheap and often takes time — and sometimes it is just not practical using our traditional approaches.  Some approaches also only attempt to deal with a single point-in-time, which ignores the velocity of business and technical change.

There are a number of talented security assessment companies that offer specialized talent, experience, and localized access virtually world-wide.  The challenge is less about available talent, but of time/delay, expense, and risks that are sometimes associated with revealing your interest in any given target(s).

There are also organizations which attempt to replace a repetitive, labor-intensive process with a non-repetitive, labor-saving approach that may reduce operational expenses and may also support some amount of staff redeployment.  The Financial Services Round Table/BITS has worked toward this goal for over a decade.  Their guidance is invaluable.  For those in the “sharing” club, it appears to work well when used applied to a range established vendor types.  It is also, though, a difficult fit for many situations where the candidate vendor/partners are all relatively new (some still living on venture capital) and are still undergoing rapid evolution.  Some types of niche, cloud-based specialty service providers fall easily into this category.  The incentive to invest in a “BITS compliant” assessment for these types of targets seems small, and any assessment’s lasting value seems equally small.

Some challenges are enhanced by increasing globalization – for example, how do we evaluate the risks associated with a candidate vendor that has technical and infrastructure administrative support personnel spread across Brazil, Costa Rica, U.S East & West coasts, Viet Nam, China, India, Georgia, Germany, and Ireland?  Culture still matters.  What a hassle…

None of that alters the fact that as global financial services organizations we have obligations to many of our stakeholders to effectively manage the risks associated with extending our operations into vendor’s environments and building business partnerships.

When the stakes are material – for example during merger or acquisition research – it is easy to understand the importance of investing in an understanding of existing and candidate third-party risks.  There are many other situations where it seems “easy” to understand that a third party security assessment is mandated.  Unfortunately, not all use cases seem so universally clear-cut.

When we are attempting to evaluate platform or vendor opportunities, especially when in the early stages of doing so, the time and expense associated with traditional approaches to full-bore third-party risk assessments are a mismatch.  Performing third-party risk assessments in-house can also reveal sensitive tactical or strategic planning which can negatively impact existing relationships, add unnecessary complexity to negotiations, or, in edge cases, even disrupt relationships with key regulators.  As an industry, we have got to get better at quick-turn-around third-party risk assessments that are “good-enough” for many types of financial services decision-making.

For years, “technicians” have been evaluating Internet-facing infrastructure for signals of effective technology-centric risk management practices – or for their absence.  Poorly configured or vulnerable email or DNS infrastructure, open SNMP services, “external” exposure of “internal” administrative interfaces, SSL configurations, public announcements of breaches, and more have been used by many in their attempts to read “signals” of stronger or weaker risk management practices.  A colleague just introduced me to a company that uses “externally-observable” data to infer how diligent a target organization is in mitigating technology-associated risks.  Based on a quick scan of their site, they tell a good story.*  I am interested in learning about anyone’s experience with this, or this type of service.

*I have no relationships with BitsightTech, financial or otherwise.

 

REFERENCES:

“BitSight Technologies Launches Information Security Risk Rating Service.” 9/10/2013
http://www.darkreading.com/bitsight-technologies-launches-information-security-risk-rating-service/d/d-id/1140452?

“Bits Framework For Managing Technology Risk For Service Provider Relationships.” November 2003 Revised In Part February 2010.
http://www.bits.org/publications/vendormanagement/TechRiskFramework0210.pdf

Shared Assessments.
https://sharedassessments.org/

The company a colleague mentioned to me…
http://www.bitsighttech.com/

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