Third-Party Risk Management: Stop Accidental Data Exposure

Third-party service providers play key roles in today’s data processing activities. In providing business and administrative services, Third-party service providers allow organizations to outsource business processes and lighten administrative loads. By processing an organization’s data for a contracted purpose Third-party service providers have become essential partners in today’s business environment.

When a company’s data leaves the confines and controls of the organization and is shared with another organization, a loss of control can occur. Trusting an outside firm to process sensitive company data can be risky as not all companies handle data security the same way. Understanding and documenting the business processes, the required data, and the required security controls for data to be outsourced is part of a vendor security assessment. Vendor pre-contracting security assessments require controls to be maintained by the service provider. These assessments help in ranking vendors by risk.

As defined by the GDPR, Third Parties or “processors“ are obligated to only process data for the organization or “Controller” as specifically documented in signed contracts that outline the provided services. For these reasons managing processors and the data shared with them is a foundational privacy principle. Data management platforms and frameworks that detect outside access to data can be used to understand and implement the controls needed to protect the personal information being shared outside the organization.

Typical control areas may include:

• Inventory & Classification – Maintain and categorize by risk a list of all vendors handling personal information. Current inventory should include; Contract status, Completed assessments, and ROPA documentation. The key point is to understand the risk level of each vendor. Provide regular updates to leadership on vendor risk posture.
• Risk assessments – Before engaging third parties, pre-engagement risk assessments should be completed to evaluate the company’s security controls. Vendors can be assigned risk levels based on the sensitivity of the data being processed, amounts, and frequency of transactions.
• Contracting & Security Requirements – Ensure appropriate security, privacy, breach and compliance clauses are included into TPRM contracts. Breach requirements should include response SLA metrics and timelines. 
• Offboarding & Termination – Upon termination of the contract ensure that all personal information provided has been returned or terminated. Revoke all access to company systems and resources.

Steps to Action – Third Party Risk Management

1. Vendor Inventory – Create a vendor inventory and categorize by risk and data access.
2. New Vendor Inclusion – Ensure that new vendors are properly contracted, risk ranked, and added to the central vendor inventory.
3. Conduct vendor assessments Assess and rank vendors’ risk annually.
4. Contract Management – Update contracts with privacy, breach notifications, audit rights, and data termination clauses.

Using Lightbeam to manage Third Party Risk

With Lightbeam’s Privacy at Partners capabilities organizations can easily identify and document which vendors/processors receive personal information, what categories of data are shared, the business purpose, and the related contractual and security obligations. This capability creates a continuously updated system-of-record for third-party processing and strengthens core control areas of Inventory & Classification by keeping a centralized, risk-ranked vendor inventory tied to the exact datasets/processing activities. 

Lightbeam’s Privacy at Partners enables vendor more complete risk assessments by linking data sensitivity, volume, and transaction frequency to vendors creating a vendor risk rating. Privacy at Partners turns third-party risk management from a periodic checkbox exercise into an evidence-driven workflow aligned to regulatory accountability—exactly the vendor governance needed to reduce risk.