Many small businesses are still struggling with cybersecurity best practices when securing their own networks, and it’s easy to see why: Dangerous threats seem to be multiplying every day, and the complexity of modern networks is growing as well. Honestly, it’s enough to make any company want to call it a day and leave the issues for the future. But cybersecurity risks never sleep.
Even organizations that have sophisticated cybersecurity programs stay at high risk if their business partners rely on defenses that are as solid as Swiss cheese. Unfortunately, third-party data breaches are a growing problem, and only those who address it can go to sleep, knowing they won’t be woken up in the middle of the night by a data breach alert. Or worse, get a call from one of their most important business customers blaming them for a cyber break-in.
What Are Third-Party Data Breaches?
Third-party vendors, suppliers, and other business partners are the often-invisible cogs that keep organizations running. They fix your HVAC, keep your website running, provide legal help, etc. In these days of networking, there are almost no small businesses that can survive without third-party vendors.
A vast majority of small businesses are taking advantage of the cloud, using almost five different cloud platforms on average to empower employees with modern technologies ranging across everything from improved collaboration to better scalability.
The problem is that the more cogs an organization depends on, the greater the chance of one of them breaking. That’s especially true since cybercriminals are actively going after the business partners of their main targets, hoping to find an easy way in.
According to a recent Ponemon Institute report, 51% of organizations have experienced a data breach caused by a third party, with 74% saying it was the result of giving too much privileged access to third parties.
Examples of Third-Party Data Breaches
One of the most pointed examples of just how far-reaching the consequences of a third-party data breach are happened in 2013.
By successfully compromising Target’s HVAC contractor, cybercriminals were able to gain entry into the company’s Point of Sale (PoS) system and steal the credit card details of millions of customers. The data breach ended with Target having to pay a settlement of $18.5 million. And you better believe they pointed at their HVAC vendor the entire time.
We should also mention the 2020 SolarWinds attack, which quickly spread to the company’s clients, directly impacting around 18,000 government and private users of its network monitoring software, Orion.
Consequences of a Third-party Data Breach
As the examples above illustrate, the consequences can be severe and highly disruptive because they usually include a combination of the following:
- Financial losses: The average cost of a data breach is steadily rising. Not only are organizations of all sizes generating and storing more data than ever before, but they must also comply with data protection regulations, many of which impose steep non-compliance fines.
- Legal investigations: In addition to non-compliance fines, organizations that fail to protect the data of their customers and business partners may also face costly state investigations and class action lawsuits.
- Reputation damage: Any data breach can result in immeasurably expensive and potentially long-lasting reputation damage, because customers don’t really care who’s fault the data breach is. They only pay attention to who’s involved.
How to Protect Against Third-Party Data Breaches?
Third-party data breaches are difficult to guard against because you can’t control the cybersecurity defenses of your business partners. You can, however, ask questions before you employ them and stay away from those that don’t take it seriously.
This step alone can elevate your safety above the average. The data backs this up because over half of respondents to the Ponemon Institute survey said that they do not assess the security and privacy practices of all third parties before granting them access to sensitive and confidential information.
Limit the number of partners
In addition to assessing your vendors and other business partners before onboarding, you should also limit third-party data access. By making sure that third parties can only access the data they absolutely need, you can greatly reduce the consequences of a third-party data breach.
To reduce the likelihood even further, you need to have a way of detecting the early signs of data breaches and respond to them properly by combining modern network security monitoring solutions with a comprehensive backup and disaster recovery plan.
Most small businesses struggle with this last one because as you can probably guess, there’s a lot of labor, assessing, planning, and designing that comes with it. If you need help creating a solid monitoring and backup plan, just contact us. These kinds of services naturally fall into the scope of what we offer our clients. If you want to take a look at these or the rest of what we provide, just reach out. We love security!