5 Risks Associated With Third-Party Vendors and How Cytellix Can Help

Brian Berger • July 15, 2022

Many businesses work with third-party vendors in one form or another. It doesn't make financial sense to manufacture and store everything you need in-house unless you're a powerhouse enterprise. Even then, you can get high-quality products or services for less if you opt to work with third-party vendors. While there are many benefits to this type of work relationship, several risks can be involved. With the added steps involved in a vendor-business relationship, you create more opportunities for things to fall through the cracks. Risk management is key to avoid costly problems. With risk management services from Cytellix, you can protect your data, finances, productivity, and efficiency. Here are some of the top risks we protect against.


Data Accuracy and Quality

One of the risks that come with working with third party vendors is a drop in the accuracy and quality of data. As the old adage says, "if you want something done right, do it yourself." Of course, most businesses physically cannot do everything by themselves, hence why third party vendors are so popular. That being said, you have to give up some control in terms of data. The vendor is responsible for keeping track of their end of the deal, and you just have to trust them to hand over accurate data. If you want certain reports, you may or may not be able to get them depending on the data collection of the vendor company. If you are fortunate enough to gain access to the data you request, you cannot check the validity. You must trust that the vendor uses accurate processes to collect information and that they are sharing the true values with your business. Let's say you make metal widgets and rely on a third party vendor for the machining or final assembly. That vendor could say that all the parts check out and are good to go, but you really cannot validate their statement. Hopefully, your contracts allow private inspectors or auditors to confirm for you; otherwise, you could run into serious trouble. If you install these widgets into aircraft that you are manufacturing and something goes wrong, it's your contracts on the line, not the third-party vendor's. By giving up control of the data checks and quality validation, you risk someone else's mistake negatively impacting your business.


Actionability of Data

The second risk you face when working with third-party vendors is the actionability of any and all data you receive from them. Actionable data is information that can be acted upon or that gives insight into future, proactive actions. As a business owner, you know the types of data that you want to collect that will be actionable. You likely have processes in place specifically to collect, organize, and analyze this actionable data so that you can keep improving your company. When you rely on data from a third-party vendor, it may not always be actionable in a variety of ways. Firstly, as we previously discussed, unless contractually obligated, the vendor may not be required to collect any data that you require. They may have a different set of KPIs to look at, and they focus solely on those. Without the data you need, you may be limited in insights to make future plans. In terms of more immediate actions, you have even less control. A vendor is a completely separate entity that has autonomy over itself. You may notice a problem in the data, but you have no way of putting solutions in place; that's up to the vendor, and you need both contractually enabled changes or have a very flexible vendor. 


Lack Of Continuous Monitoring

Cytellix understands how important it is to monitor all aspects of your business continuously. When you have "eyes" on all aspects all the time, you significantly reduce the risk of things falling through the cracks. The Cytellix Cyber Watch Portal was created to give clients a 360-degree view of their business’s inner workings. However, because a vendor is a separate company, continuous monitoring does not apply to them. You can continuously monitor your relationship with the vendor and any transactions taking place, but you cannot see inside their business to know anything about risk management, cybersecurity, and other things that ensure safety. Continuous monitoring is key for spotting problems before they cause chaos. We always suggest finding vendors that deploy their own measurable cybersecurity practices and continuous monitoring as you do so that you don't need to worry about the vendor electronically transferring new risk to your business. 


A Slower Risk Assessment Process

We all know that processes take longer whenever there are more steps or people involved. Businesses almost always require numerous "stops" as something travels through management. Risk assessment is the same way; the more departments you have to check, the longer it takes. A vendor would add another layer to risk assessments, slowing them down and giving cybercriminals more options to attack before risks are identified and removed. Risk management is necessary to protect data and make good business decisions, and the more vendors you work with, the longer you'll have to wait for each analysis to be finished. Time is money, especially when data and sensitive information are at stake!


More Opportunities For Security Breaches 

Finally, working with third party vendors can create serious risks to cybersecurity. Yes, you and the vendor work together, but you each have your own cybersecurity plan. You could have top-tier protection with all the bells and whistles, only to be breached because a cybercriminal found a way in via the vendor. A team is only as strong as the weakest link, so if the vendor is lacking in the cybersecurity field, they put you at risk by association. Hackers can break into the vendor and then find their way into your business through them. All of the safeguards you have in place will be useless if a hacker gets in from the back end. A risk management process is essential if you want to find vendors that are as security-conscious as you. We encourage you to take a look into the following cases of vendor-related security breaches from the past few years:


  1. Equifax, 2017- roughly 147 million users' information was leaked, including names, social security numbers, contact information, and even bank account numbers.
  2. Target, 2013- around 41 million payment accounts were leaked as well as personal information for roughly 70 million customers. 
  3. General Electric, 2020 - bank account numbers, passport numbers, contact information, and other sensitive data of employees past and present were leaked. 
  4. Instagram, 2020- thousands of Instagram accounts were compromised when passwords were leaked.


As you can see, this is an ongoing problem in the business realm that can be detrimental to companies and consumers alike. It's critical to ensure that vendors meet your standards and expectations regarding cybersecurity measures, or your business could be the next big scandal!


Cytellix has been leading the charge in the cybersecurity realm for years. We've worked with hundreds of companies to help them build their security systems, manage risks, and keep their information safe. We offer the patented Cytellix Cyber Watch Portal to offer risk management and real-time continuous monitoring 24/7. This turnkey solution is unlike any on the market and identifies risks and problems, and offers implementation of solutions on your behalf. Our state-of-the-art security measures will safeguard your company as effectively as possible while monitoring all connections for bad actors, data leakages, and user behavior changes. Even government agencies trust us to protect their most sensitive data from prying eyes. Get in contact with us here today!

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MSP SPOTLIGHT: Go Beyond Baseline Security.

By Walt Czerminski • August 30, 2023
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The Clock is Ticking for CMMC 2.0: Here’s Everything You Need to Know – START NOW

By Brian Berger • August 23, 2023
The Department of Defense (DoD) has formally presented the CMMC regulation for official evaluation, marking the start of its journey toward formal announcement. Every regulation proposed by the executive branch, including this one, undergoes scrutiny by OIRA, a division of the Office of Management and Budget (OMB). The significance of this step is that the previously mentioned "delays" in the CMMC process were due to the time taken for the DoD to forward the rule to OIRA. With this action now taken, the subsequent stages of the rulemaking procedure are underway. Nevertheless, due to the intricate nature of federal rulemaking, several more stages need to be navigated before the CMMC becomes a part of contracts. The following scenarios should be considered for preparation for compliance and certification for the Defense Industrial Base (DIB). Scenario 1: Proposed Rule Submission to OIRA: The Department of Defense (DoD) has officially submitted the CMMC rule for regulatory review to the Office of Information and Regulatory Affairs (OIRA). Review and Publication: After OIRA's review, which takes an average of 66 business days, the CMMC rule is expected to be published in late October 2023. Public Comment Period: A standard 60-day public comment period will follow, ending in December 2023. Finalization: The CMMC rule will be published as a "proposed rule", which means it will only become effective after the agency responds to public comments in a final rule. Based on historical data, the average time for DoD proposed rules to be published as final rules is 333 business days. This means the CMMC final rule is expected between February and April 2025 . Phased Roll-Out: The DoD plans a 3-year phased roll-out for CMMC contract clauses. Assuming the final rule is published in Q1 2025, all relevant DoD contracts will contain CMMC by 2028. Scenario 2: Interim Final Rule Immediate Effectiveness : If the CMMC rule is published as an "interim final rule", it will be effective before the agency responds to public comments . This means the rule would be in effect and appear in contracts in Q1 2024 . Rarity of Interim Final Rules: Such rules are rare and bypass the usual democratic process of "notice and comment" rulemaking. They are typically granted in urgent situations, like the need to enhance national security. So when should you start preparing? Before we start with the background and changes, let’s talk about the "Big Elephant” in the room. Clearly, the updated compliance and certification process developed by the DoD and the non-profit organization liaisons has been long overdue with a lot of anticipated deadlines that never materialized. And with the latest announcements it does seem to be mildly reminiscent of the movie comedy and colloquial meaning of Groundhog Day. Since the Library of Congress selected the film for preservation in the National Film Registry I found humor in relativity, not cynicism. Opinion: This is different and the information we have in the DoD supply chain must be protected from our adversaries. This is a serious issue and needs clear and precise guidelines as the supply chain will not spend money on the protection of the information that protects national security unless they must as it is deemed as a complex undertaking. That’s an unfortunate reality. We have seen the start and restart of the cyber programs for DoD for the past 5-years, what makes this different? The implementation of the CMMC rule in contracts will be phased in over a period of 3 years, with all relevant DoD Defense Industrial Base (DIB) contracts containing CMMC by 2028. For a company with 50-100 employees operating in the DoD supply chain, it takes an average of 12-18 months to prepare for assessment and audit for eventual certification, with certification being the ultimate requirement for compliance. Therefore, the time is now to start the process if you plan to hold government contracts in 2024/2025. There are also varied flow down requirements that need to also be taken into consideration. Understanding Plan of Action and Milestones (POAM) There is now the ability to present interim status vs 100% compliance as we have with the current DFARS and NIST requirements. These interim reports can be handled in the traditional manner by presenting a Plan of Action and Milestones (POAM) that have a less than 180-day completion date for allowed baseline gaps. Unallowed gaps will have a “No POAM” designation and need to be implemented. If you have any doubts, work with a highly skilled 3 rd party who has expertise in these standards and a track record of enabling comprehensive successful standards-based cyber programs. The information presented by the suppliers in POAM’s or claiming 100% compliance will be evaluated and can and will likely trigger audits if certain high-level cyber controls are not met or the 100% compliance score creates suspicion of a false claim. Be careful to present accurate and validated information. So, what does this all mean? You must be compliant with DFARS clause 252.204.7012 and NIST 800-171 today. This is a requirement of your current contracts, and the False Claims Act applies to all cyber compliance representations. If you are not compliant, you could be subject to civil penalties and criminal charges. You need to start preparing for CMMC 2.0 today. The deadline for the final rule is 18 months from now, and it will take an average company in the DoD supply chain 12-18 months to become assessment ready. Waiting is not an option. Waiting is a bad idea. Why you ask? It is very clear that most suppliers and Small and Medium Businesses are not cyber ready and nowhere near compliant with any cyber framework. The timeframe for a typical business to understand, develop and implement full compliance is more than 1-year assuming they have the skills and personnel to complete the objectives. CMMC 2.0 clearly aligns with DFARS and NIST, so it is the best way to protect your organization's sensitive data. Don't delay, start preparing today! *If you have any questions, please reach out to our experts – [email protected]