Vulnerable Vendors: Hackers' Gateway to Your Systems and Data

You’re working with dozens of vendors daily, from payment processors to software companies and retail partners. And each of them has access to your systems, your data, and your customers’ information. So, have you considered performing a vendor risk assessment for any of them? Here’s a wake-up call from the CyberFlow cybersecurity team: 35.5% of all data breaches in 2024 originated from third-party compromises.

This is why third party risk management has become one of the most critical security practices for your business. In this article, we will discuss how vulnerable vendors put your business at risk and what you can do to protect yourself.

The Growing Threat of Vendor-Related Breaches

The numbers don’t lie when it comes to vendor security risks:

• 61% of companies experienced third-party data breaches over the past year, representing a 49% increase from 2023
• Third-party risk accounted for 31% of all cyber insurance claims in 2024
• More than 98% of companies had a business relationship with a vendor that experienced a data breach in the previous two years

This means that your security is only as strong as your weakest vendor. No matter how much you invest in your own cybersecurity, a single compromised supplier can undo all that effort.

Why Vendors Are Prime Targets for Hackers

To understand why third party risk management has become so critical, you need to get the full picture of why vendors are now preferred targets for hackers:

They Have Centralised Access to Multiple Companies

Many vendors serve hundreds or thousands of businesses. Compromise one vendor, and hackers may gain access to all their clients. This makes vendors an extremely efficient target for cybercriminals. One single hit can result in multiple ransom payouts.

Their Security Is Often Weaker Compared to Their Clients

Smaller vendors may lack the resources or expertise to maintain robust security measures. They become the soft underbelly of an otherwise secure supply chain.

They Are Trusted Connections

Vendors typically have legitimate access to your systems, networks, or data. This trusted status means their activities often bypass security controls that would flag suspicious behaviour from unknown sources.

They Undergo Less Scrutiny

Many businesses invest heavily in protecting their own systems. But they fail to assess the security practices of their vendors adequately. This blind spot creates opportunities for attackers.

What Is a Vendor Risk Assessment?

A vendor risk assessment is a systematic process of evaluating the security practices and potential risks associated with your third-party suppliers and service providers. Think of it as a thorough background check combined with ongoing monitoring to ensure your vendors maintain appropriate security standards.

The goal of vendor security risk assessment is straightforward: identify which vendors have access to your sensitive information or critical systems, evaluate their security posture, and determine what risks they pose to your business.

Building Your Vendor Risk Assessment Process

Implementing third party risk management doesn’t have to be overwhelming. Here’s a practical approach for small and medium businesses:

Step 1: Start with High-Risk Vendors

Don’t try to assess every vendor at once. Begin with those who have the greatest access to your sensitive data or critical systems.

Step 2: Develop Standard Questionnaires

Create templates for security questionnaires appropriate to different risk levels. High-risk vendors warrant more detailed assessments than low-risk ones.

Step 3: Establish Minimum Requirements

Define what security standards vendors must meet to work with your business. This might include:

• Encryption of data in transit and at rest
• Multi-factor authentication for system access
• Regular security training for employees
• Incident response and notification procedures
• Specific compliance certifications

Step 4: Include Security in Contracts

Make vendor security requirements part of your contracts. Include provisions for:

• Right to audit vendor security practices
• Notification timelines for security incidents
• Liability for breaches originating from the vendor
• Requirements for data handling and destruction

Step 5: Create a Review Schedule

Establish how often you’ll reassess vendors:

• High-risk vendors: Annually or semi-annually
• Medium-risk vendors: Every 1-2 years
• Low-risk vendors: Every 2-3 years or when services change significantly

CyberFlow: Protecting Your Business Through Better Vendor Management

Vulnerable vendors have become one of the most significant cybersecurity threats to small and medium businesses. The good news is that vendor risk assessment provides a practical framework for managing this risk.

CyberFlow specialises in vendor risk assessment and third-party risk management for small and medium-sized businesses. Contact us today to start securing your supply chain and your valuable data!