{
    "title": "A common sense approach for assessing third-party risk",
    "url": "https://expel.com/blog/a-common-sense-approach-for-assessing-third-party-risk/",
    "date": "Jul 26, 2018",
    "contents": "Subscribe \u00d7 EXPEL BLOG A common sense approach for assessing third-party risk Security operations \u00b7 12 MIN READ \u00b7 BRUCE POTTER \u00b7 JUL 26, 2018 \u00b7 TAGS: Example / How to / Planning \u201cHow secure is your supply chain?\u201d It\u2019s a question that can strike terror into the heart of a CISO \u2013 even one who\u2019s in charge of a mature security organization. With the move (sprint?) to cloud-based infrastructure, and business departments subscribing to SaaS apps left and right (\u201cOops! was I supposed to tell IT?\u201d), every day we rely more and more on other peoples\u2019 services to serve our customers. Here at Expel, we\u2019re a \u201ccloud first\u201d organization. Our entire enterprise\u2019s physical infrastructure fits easily on one desk. But we use the capability of nearly 50 vendors to bring our services to our customers. That\u2019s a lot of infrastructure that\u2019s not ours. And we\u2019re a relatively small company. Large companies may depend on hundreds of outside services. Understanding how all those services keep their customers (meaning \u2026 you) secure is no trivial matter. But it\u2019s super important. CISOs manage cyber risk in their own infrastructure every day. But once you leave your own infrastructure, it gets harder. And there aren\u2019t a lot of playbooks for how to manage the risk of someone else\u2019s infrastructure. Third parties are out of your control. You give them money, they provide a good or service in return. Sometimes, there\u2019s even contractual language that says \u201cwe\u2019ll do our best to secure your data.\u201d But, in practice, those words don\u2019t really mean much. What matters is the practices, procedures, and policies your vendors follow. At Expel, like many companies, we\u2019ve created a third-party assessment program for our vendors to try to manage our supply chain risk. We\u2019ve used other companies\u2019 third-party assessment programs as input, consulted our vendors and done a lot of research. It works well for us, and so we\u2019re sharing it with you, along with the third-party risk assessment questionnaire we\u2019ve developed. Watch the video overview \u2026 or keep scrolling to read on First \u2026 be realistic about who chooses your suppliers Unfortunately (at least for CISOs), security doesn\u2019t control who the organization does business with. Business owners do. And the questions they have on their mind are very different than what most CISOs are wondering. As you roll your program out, it\u2019s important to understand the business owner\u2019s mindset so you can figure out when, where and how to insert your own process into theirs. When a business owner has a problem, they probably want to fix it fast. They want to know if the product or service they\u2019ve got their eye on will do the trick. If the answer is \u201cyes\u201d (and they\u2019ve got the budget) they\u2019ll move forward, negotiating contracts, agreeing on cost and ultimately making the purchase. Meanwhile, the CISO is thinking, \u201cDoes this vendor create an acceptable level of risk?\u201d Getting answers means acting fast \u2013 while the business owners are chasing down answers to their own questions. If a potential vendor doesn\u2019t address security in a way you\u2019re comfortable with, the sooner you know that the better. It\u2019s much easier to guide the business away from potentially toxic companies early in the process than to stop a contract that\u2019s gone through all the redlining and negotiation and is one inch from the finish line. Next \u2026 set realistic expectations (aka understand the constraints) Setting realistic expectations for your third-party assessment program requires understanding two important equations that\u2019ll govern how much time you and your vendors are willing to put in. They seem simple. But it\u2019s easy to get so caught up in the weeds perfecting your process that you lose sight of them. Violate equation number one and vendors will start stretching the truth to get through all of your questions or bury the bad stuff to try and get your business. Violate the second equation and you\u2019ll find yourself giving away a free risk assessment or pen test to every potential vendor (more on that later). Remember, SaaS providers are getting bombarded left and right with third-party assessments. Short, easy questionnaires will get their attention before long complex ones. Likewise, you don\u2019t have a lot of time to dedicate to this either. The more complex the questions, the longer you\u2019ll have to spend vetting the results. Short, simple and to the point is far more likely to get to a result that\u2019s useful \u2013 both for you and your vendors \u2013 than some crazy, multi-page questionnaire. Keeping things simple has multiple benefits. When in doubt, use the \u201c50 at 50\u201d rule Striking the balance between thorough yet brief, reminds me of a saying from when I used to crew for a friend that raced cars out in West Virginia. The sanctioning body for the races required that cars be painted in a professional manner. Anyone that\u2019s been around amateur racing knows that very little about it qualifies as \u201cprofessional.\u201d The rule of thumb the officials used was \u201c50 at 50\u201d\u2026 that is, when you looked at a car traveling 50 miles per hour from 50 feet away, did the car look like it was painted? If the answer was \u201cyes,\u201d you were good to race. That\u2019s sort of how I view third-party assessments. If your process gives you the same level of assurance about your vendors\u2019 security processes as \u201c50 at 50\u201d gives racing officials, you\u2019re doing things right. Sure, there are some situations that require far more diligence than that (stay tuned!), but in most cases, you\u2019re just trying to get a general feel for things. Ultimately, even organizations with great practices and procedures will screw up sometimes. Nothing you do in your third-party assessment program will change that. The common sense process for third-party assessments There are three big chunks to any third-party assessment program: creating the questionnaire, designing the process and running it (told you it would be \u201ccommon sense\u201d). Of course, not every situation will fit neatly into your process. We\u2019ll cover the outliers too. But, to get started, you need to create your questionnaire. 1. Creating your questionnaire The questions you ask your vendors will be taken seriously by them \u2026 or at least they\u2019ll look at them seriously and try to figure out what you mean. It\u2019s important to write crisp, clear questions that vendors can easily understand and have a clear way to answer. The meat of your questionnaire is the questions themselves. We\u2019re providing our third-party risk assessment questionnaire as a starting point for you. Hopefully this\u2019ll let you speed through this step. We like these questions because they cover a wide swath of cybersecurity without being too detailed. They\u2019re also aimed at making it easy for vendors to re-use work they\u2019ve already done. Asking about existing certifications and the results of previous testing reduces friction in the process. Really, we want to ask questions we think will get answered truthfully and quickly. Focusing on reuse is one strategy for that. We\u2019ve also designed our questionnaire to sleuth out how much thought and care a vendor has put into security in general. For example, when we ask \u201cDo you have a formally appointed information security officer?\u201d we get a different vibe when the answer is \u201cYes, here\u2019s our CISO\u2019s contact info,\u201d versus \u201cNot really. Our lead developer cares a lot about security though.\u201d Simple questions like this give you a great window into how a potential vendor thinks about security. 2. Building the process Developing the questions is only one piece of the prep work that you\u2019ll need to do. How you\u2019re actually going to manage the process is equally important. The process we\u2019ve designed breaks down into the following six steps. Your exact process will, no doubt, have to be tailored a bit to the way your organization buys products and services. We\u2019re not suggesting that you can do a direct cut-and-paste of our process. But hopefully it can be an advanced starting point for you. Here\u2019s a quick overview of how we thought about each step as we created our own third-party assessment process. Step 1: Kicking off the process We created a set of criteria to determine which external vendors need to go through the process. Vendors that make the cut include: Services that will impact production systems Services that contain customer or other sensitive data Systems which aggregate data from multiple data sources. If someone is trying to use a new service that fits one of these situations, they send a request for review to a security review email alias containing what the service is, how we\u2019re going to use it and provide points of contacts at the vendor. Step 2: Send an introduction It\u2019s a bit awkward to send an email to a potential vendor demanding a bunch of information without first introducing yourself, the process and what they should expect. At Expel, the first thing we send to the vendor is a cordial email describing our process, the relatively casual and light touch nature of it and an invitation to ask questions or engage if they have concerns. We also let them know our desired timeliness (usually we ask for a response within about two weeks). Step 3: Send the real email Next, we send the real email. We use our secure file sharing system to send this email so that all communications are encrypted and their response is protected on its way back to us. You don\u2019t have to do this, but it\u2019s advisable, especially if you\u2019re asking for copies of sensitive documents such as their SOC2 and pen test executive reports. Step 4: Send a reminder After a week and a half has gone by, we\u2019ll send a gentle reminder if we haven\u2019t heard anything. That\u2019s usually enough prodding to get us answers right under our two week request. Step 5: Receive and analyze the results Hopefully, when you get the vendor\u2019s answers back they make sense, are reasonably complete and if you\u2019re lucky they\u2019re even comprehensible. Sometimes we\u2019ve had to go back to ask vendors for clarification on an answer or two, and that\u2019s OK. Keeping in mind the \u201c50 at 50\u201d mentality, once you have the answers, balance them against the business request and determine if you\u2019re willing to move forward with the vendor or if there are concerns that need to be addressed. Step 6: Brief the business owner(s) Once we\u2019ve got our heads around all of the vendor\u2019s answers, we give the business owner our opinion. When the results are positive, the conversations are easy. When we have concerns, that\u2019s when things get more difficult. It\u2019s a good idea in those cases to involve more people on the business side than just the requester (team leads, managers, etc.). You\u2019re going to get into a risk-oriented decision about how important this specific vendor is to the company and what the security risks are. The results of that meeting can vary wildly, but usually will fall into one of four buckets: Yep. Cool. Go for it. We can put in compensating controls to make up for lack of assurance in the vendor. We need a deeper dive to better understand the risks. No. Nope. Negative. Not going to use them. It\u2019s very important not to treat these decisions as binary. The reason you\u2019re doing a third-party assessment in the first place is to manage risk. Risk is a continuum, as it were, and you should treat your third-party vendor assessment process the same way. 3. Running the process Once you\u2019ve got your questionnaire and process figured out, test it on a few vendors. Be very up-front with them; let them know this is your first time trying out your third-party vendor assessment questionnaire and you\u2019d love feedback on both the material itself and the overall process. You\u2019ll find some vendors are well prepared for these kinds of requests and will have a team dedicated to answering them. Other vendors will respond with \u201chuh, this is the first time anyone\u2019s asked us about security.\u201d Be prepared for that and everything in between. Take any feedback you get and stir it inappropriately with the work you\u2019ve already done and your objectives for your third-party assessment program. After you\u2019ve tested the process on a few vendors (or later \u2026 run the process for a year or two), iterate. Feel free to change it up. As you grow, your risk appetite changes. As the state of the art of your vendors improves, you might want to modify your process to suit your needs. You don\u2019t need a forever \u201capples to apples\u201d comparison over the years. Rather, you need each response to provide you the information you need right now to make the decision that\u2019s in front of you. That information will change over time, and your process should too. Keeping track of the results You\u2019ll likely get lots of confidential documents back from your vendors when they reply to your questionnaire. You\u2019ll want to make sure you protect them according to the terms of any non-disclosure agreements you signed with them. Be sure to follow whatever your internal procedures are with respect to protecting that information. Also, we\u2019ve found that it\u2019s helpful to create one place to track all of the assessments \u2013 upcoming requests, active ones, and assessments we\u2019ve completed. We store all the responses, supporting documents and our notes in one place. We\u2019ve chosen Confluence for that since we use the Atlassian suite for a lot of our engineering and security workflow already. You should choose whatever makes sense in your organization. But be aware, you\u2019ll build up quite a pile of information quickly, so being organized early will pay off as your program grows. Hooking the process into the way your organization buys stuff Having a process is all well and good. But, unless you socialize it and have a clear way to plug it into the way your organization buys stuff, your third-party assessment program can quickly turn into shelfware. It\u2019s important to set the hook early in the process to get the best results. That hook can take many shapes: The procurement process: When a business unit requests a new PO, your purchasing department can simply ask, \u201cWhat does Security think of this?\u201d Knowing a PO won\u2019t be cut unless there\u2019s a clear answer to that question will force business owners to engage your process early so you\u2019re not playing catch up. Contract review: A slightly different take, but the same basic idea. When a contract is put in front of legal to review, they can ask, \u201cWhat does Security think of this?\u201d as well. Again, if business owners know they can\u2019t get through legal without clearing security, they\u2019re going to engage you early. That\u2019s just the way it is: Rather than have a specific gate, you can communicate with leaders and purchasers that new products and services are subject to a third-party assessment as part of doing business. If it\u2019s discovered that someone bought something without an assessment, There Will Be Consequences\u2122. Just like there are when people buy product outside of purchasing, right? Right? Whatever you decide, be sure to communicate it widely and often. New processes that affect how you buy services tend to take a while for everyone to understand and accept, so putting together a good PR campaign can\u2019t hurt your cause. Also, be sure the \u201chow to submit\u201d part of your process is clear. At Expel we use Jira\u2019s Service Desk as the portal where users can submit third-party assessment requests and track progress. We already use Service Desk for IT and other ticket tracking so it was an easy solution. YMMV and all that\u2026 be sure to choose a method of engagement that works for you and your company. Vendors that are bigger than your breadbox There may be times when the product or service you\u2019re evaluating is too big, too important or represents too much risk to apply the \u201c50 at 50\u201d rule. In these cases, you\u2019ll likely end up doing a more formal risk assessment to understand the risks they present in more depth so you can compensate for any issues you can\u2019t get the vendor to fix. Risk assessments are complicated (I addressed them in an O\u2019Reilly Security talk here if you\u2019re interested). They can be done either by your own staff or a third party. Either way, I have two points of caution: Don\u2019t give out a free pen test If you engage a third party to assess your vendor\u2019s product it\u2019s easy for your vendor to ultimately get a free pen test that you unwittingly pay for. So, if you hire a third party, make sure they\u2019re working on your behalf and use your business needs as the backstop for their work. That\u2019ll make sure the final product is geared towards you and your business, not the vendor and their product. Make sure you don\u2019t accidentally do a pen test or risk assessment The other common mistake when you dive deeper is you don\u2019t realize that you\u2019re diving deeper. You get the questionnaire back and you have questions \u2026 so you ask the vendor a few more questions. Things are clearer, but still not clear. So, you ask \u201cHey, can we take it for a test drive?\u201d You get their product, configure it, start testing it and suddenly realize you\u2019re doing a product assessment and you\u2019re already 40 hours into the process and probably have 80 more hours to go before you\u2019re done. As you start peeling back the onion be aware that you\u2019re doing it overtly and for a reason. Don\u2019t spend more time and effort on a third-party assessment than you need to. Oh \u2026 and make sure to avoid these common pitfalls Finally, there are a couple of other pitfalls you\u2019ll want to make sure you avoid as you launch (or refine) your third-party vendor assessment program. Adding to the questionnaire Be wary of asking too many questions or diving too deep. You\u2019ll quickly reach a point where vendors don\u2019t want to answer and it takes you too long to assess the results. It\u2019s not worth it. If you decide to do a full-fledged risk assessment, then by all means, dive in the deep end. But if you\u2019ve got a question you feel you must add to your questionnaire, find one (or two?) that aren\u2019t giving you any value and swap them out. Again, the simpler and shorter your questionnaire is, the more likely you\u2019ll get accurate and timely responses. Believing all the answers It\u2019s human nature to not want to fail tests. That applies to vendors responding to third-party assessment requests. They want to be as compliant as possible, so you can expect they\u2019ll take a few liberties in their answers. While it\u2019s unusual to find a vendor that flat out lies (saying they\u2019re SOC2 Type 2 compliant when they\u2019re not, for example), you may find vendors occasionally stretch the truth enough to \u201cpass.\u201d So, when you\u2019re answering the question \u201cAm I OK using this vendor,\u201d assume their answers are eighty percent correct. That\u2019s it There you go. That\u2019s Expel\u2019s third-party vendor assessment program in a nutshell. There are many like it, but this one is ours. Hopefully it gives you a jump start on building your own program. Please, take a look at our questionnaire , and feel free to use, modify, and comment on it as you see fit. I\u2019d also suggest taking a look at our NIST cybersecurity framework self-scoring tool that I created. It allows you to create charts that show your current and future security posture based on the NIST CSF and it includes a section on supply chain risk. If you do have comments and you\u2019d like to share on this process, the questionnaire or the NIST tool, please reach out to us and let us know. We\u2019re always trying to improve and would love for you to help us with that."
}