Page 61 - Cyber Defense eMagazine RSAC Special Edition 2025

The Growing Threat of Third-Party Data Breaches

Data breaches resulting from third-party vulnerabilities show increasing frequency and severity. The
Target, SolarWinds and MOVEit breaches clearly show the extensive harm organizations can suffer from
inadequate vendor supervision. The affected organizations suffered substantial damage to their
reputations and finances as a result of these events. The introduction of regulatory standards such as
GDPR and CCPA alongside NYDFS Cybersecurity Regulation has increased the stakes for
businesses. Organizations must implement proactive risk management strategies to protect sensitive
data and maintain operational stability because compliance alone is insufficient in the current regulatory
environment.

What is Third-Party Risk Management (TPRM)?

TPRM is a systematic framework used by organizations to identify their third-party risks and evaluate and
monitor these risks in order to minimize potential threats from vendors and service
providers. Organizations face risks that include cybersecurity issues such as hacking and data breaches
along with operational failures, financial instability, and data privacy violations which can damage a
company’s reputation and lead to major operational disruptions.

The growing dependency of businesses on third parties for improved operational efficiency and
specialized skills has led to a proportional increase in partnership risks. Business resilience depends
heavily on having a strong TPRM strategy that can adapt to changing conditions. An effective TPRM
program goes beyond regulatory compliance to protect corporate reputation, build customer trust and
equip organizations for upcoming challenges.

Elements of a Comprehensive TPRM Program

Successful TPRM requires continuous oversight. Organizations must approach risk management as an
ongoing process rather than a single event. A vendor relationship demands rigorous processes and
thorough risk assessment at every stage from selection through performance evaluation to effectively
control potential threats.

Categorizing Vendors by Risk Level

The first step in successful TPRM involves categorizing vendors according to their risk levels. Companies
providing essential services such as payroll or cloud storage present much higher risks compared to
vendors supplying non-essential items like office supplies.

Organizations can direct their resources to areas of greatest need through vendor risk classification into
high, medium, and low categories. Organizations must conduct more detailed evaluations and enforce
stricter security controls while continuously monitoring high-risk vendors to mitigate potential
threats. Medium and low-risk vendors do not need intensive monitoring yet periodic assessments remain

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