Cybersecurity is a major headache for every organization, but small and medium businesses (SMBs) face their own special migraines. They contend with the same threats as larger corporations, including sophisticated cyber attacks, third-party breaches and vulnerabilities, employees working remotely from unsecured devices, and a complex regulatory burden, but they’re doing it all with a fraction of the resources, and like Ginger Rogers, backwards in heels. 

Cybersecurity for SMBs is run by small teams with limited budgets. They rarely have the time and resources for extensive employee cybersecurity training, detailed incident response plans, and advanced threat detection and response tools. Many SMBs even lack dedicated IT and cybersecurity teams; instead, employees manage cybersecurity alongside other responsibilities. 

Cybercriminals and malicious actors know about these challenges and consider SMBs to be attractive targets, which forces you to maximize the impact of the resources you do have. You need to spot emerging threats so that you can address them while they are still minor; resolve vulnerabilities that could result in breaches; leverage automated and AI-powered solutions that help you punch above your weight; and run effective third-party risk management (TPRM) that prioritizes the most critical risks for your attention. 

In this article, we’ll discuss the challenges that dog cybersecurity for SMBs in general and SMB third-party risk management in particular, and share practical, cost-effective steps for small businesses to strengthen their third-party cybersecurity. 

Why SMBs Are Vulnerable to Third-Party Cybersecurity Risks

Third-party cybersecurity risks aren’t unique to small businesses, but SMBs are particularly vulnerable. Smaller businesses are more likely to rely on third-party providers for vital services like IT support, customer helpdesk, and managed cloud and/or database hosting. Larger corporations might control some or all of these in house, reducing their dependency on third parties. 

While supply chain complexity makes it challenging for every organization to identify and monitor third-party risk, smaller businesses tend to struggle more. They frequently lack extensive in-house cybersecurity expertise, which handicaps their ability to manage risk, and might not have the resources to field a strong IT security team that’s strict about patching and updates. 

Some common third-party cyber threats that SMBs have to deal with include malware and ransomware, zero-day vulnerabilities, third-party data breaches, and phishing and social engineering attacks, which can be more destructive when each employee has access to multiple roles and systems. 

Understanding Third-Party Risk Management for SMBs

Given their greater vulnerability to third-party cybersecurity risks, it’s crucial for SMBs to maintain strong third-party risk management strategies. Effective TPRM ensures that they can identify, assess, and mitigate these risks, to prevent their beneficial third-party relationships from becoming shadowed by security breaches, data losses, and lack of trust. 

TPRM for SMBs involves a number of components. The first step is risk assessment, to identify the potential risks of working with this vendor and prioritize vendors according to the risk they pose. It involves understanding the services the vendor provides, the data they’ll need to access, and the consequences for your business of any risks that materialize. 

Next, you’ll carry out due diligence, which is a more thorough evaluation of the vendor’s security and risk posture. It includes sending and evaluating security questionnaires, talking to key stakeholders, and reviewing the vendor’s security policies and compliance and incident history.  

Once you decide to work with a particular third party, you’ll rely on monitoring and reporting to ensure you can quickly detect and address any issues. Continuous monitoring involves security audits, compliance reviews, and using monitoring tools to track third-party behavior for suspicious anomalies. Alongside these, you’ll encourage third parties to share threat intelligence and to swiftly report any incidents or changes to their risk profiles.

The Importance of Aligning Third-Party Cybersecurity Practices with SME Goals

When you make sure that your vendors, contractors, and service providers adopt cybersecurity practices that meet your own security standards, you’ll build resilience for your entire supply chain. This a number of benefits that go beyond cybersecurity for SMBs to help you meet your wider business goals, including: 

  • Protecting sensitive data and reducing the risk of data breaches
  • Mitigating operational disruptions and reducing unexpected downtime
  • Complying with regulations and standards
  • Maintaining business continuity for the long term
  • Enhancing trust with customers and partners 

Understanding How Cybersecurity for SMBs Protects Sensitive Data 

Many of your third parties have access to business databases, often including sensitive proprietary business data that’s critical for your business’ ongoing operations or competitive edge. 

If just one of them falls victim to a successful cyber attack or experiences a data breach, your own data could be leaked to the public realm. Ensuring that third parties have robust data protection measures and strong cybersecurity defenses is a vital brick in the wall of protection for your sensitive data. 

How to Mitigate Operational Disruptions

Most small and medium businesses depend at least somewhat on critical services provided by third parties, and a good number rely on them heavily. That means that if cyber attacks or malicious activity forces one of your important third parties offline, your own business operations could be disrupted.

But when your vendors and service providers are well-protected against cyber threats, it minimizes the chances of data breaches, system downtimes, and other cyber incidents that can cascade along supply chains and interrupt your service delivery and business processes.

Complying with Regulations 

Many regulations which require you to protect customer data and maintain robust security practices, such as GDPR, HIPAA, and PCI-DSS, also extend these obligations to third parties that handle your data.

When you use contractual obligations and clear agreements to ensure that your third parties adhere to the details of these regulations, you’ll reduce the risk of a vendor dragging down your compliance posture and exposing you to fines and legal penalties. Additionally, comprehensive third-party cybersecurity audits and continuous monitoring help you demonstrate due diligence in your own compliance audits.

Cybersecurity for SMBs to Support Business Continuity

As mentioned above, your business probably depends quite a bit on vendors and service providers. That means that your long-term resilience and business continuity is only as strong as your weakest third party organization. 

Fostering a proactive attitude towards cybersecurity ensures that your external partners can reliably protect against and respond to cyber threats. Overall, this helps to build a resilient supply chain that’s less likely to be hit by interruptions or delay, maintaining a smooth flow of business activities. 

Building Trust with Customers

Data privacy is a priority for your customers, as well as for potential partners and investors. When you enforce rigorous cybersecurity standards for your third-party vendors, it demonstrates that you value your customers’ privacy and security, fostering a sense of reliability and integrity. 

Entities who are thinking of buying from, investing in, or working with your business will appreciate your commitment to protecting sensitive data and ensuring secure business operations. Additionally, better third-party cybersecurity helps safeguard your reputation from damage through third-party breaches and regulatory non-compliance.

Cost-Effective Cybersecurity for SMBs

Advanced tech solutions help deliver robust cybersecurity for SMBs without breaking the budget. Automated TPRM platforms offer supply chain mapping, streamlined risk assessments, and continuous monitoring that flags potential threats. Some tools automatically carry out preset breach mitigation when an alert is triggered, with user-friendly dashboards and reporting features that help you maintain security oversight with limited resources.

Cloud-based solutions play an important role in cost-effective cybersecurity for SMBs. They are scalable and flexible, so you can pay for the capabilities you need as your business grows, without investing in expensive infrastructure. Together with AI-powered tools, which offer real-time threat detection and response at reasonable prices, SMBs can benefit from sophisticated cybersecurity that only larger enterprises used to be able to access. 

Taking a risk-based approach to vendor assessments enables you to focus your energy on vendors that pose the highest risk. Risk management platforms use factors like the sensitivity of shared data and the criticality of services to direct you to the most consequential risks, allowing you to allocate your cybersecurity budget more efficiently while maintaining high protection. 

Practical Steps to Enhance Third-Party Risk Management

Along with investing in effective and reasonably-priced cybersecurity tools, SMBs also need to establish the right processes and policies that enhance their third-party risk management. Robust TPRM strategies involve efficient procedures to protect your SMB from third-party risks. These include: 

  • Conducting thorough vendor due diligence
  • Writing security requirements into contracts
  • Carrying out regular vendor assessments and reviews
  • Continuously monitoring third-party activities 
  • Including third-party breaches in your incident response planning

Conduct Thorough Vendor Due Diligence

Enter every third-party relationship with your eyes wide open. It’s important to evaluate each vendor’s cybersecurity from every angle, so you know what risk they could pose to your organization. 

This includes sending comprehensive security questionnaires, reviewing their processes and policies, checking that they comply with relevant regulations, and considering their financial stability. An in-depth assessment enables you to make informed decisions about how much access to grant them to your data, whether you can rely on them to deliver vital services, and if you should work with them at all. 

Implement Contractual Security Requirements 

Now that you know what you’re dealing with, you can set up your working relationship accordingly. Your contract with vendors is your main tool for influencing third-party cybersecurity, so use it wisely. 

You should specify the cybersecurity standards and regulations that third parties need to meet, define the policies they should implement, lay out reporting obligations, and set timeframes for audits. Make sure to include consequences for non-compliance, so that your security requirements have teeth. 

Regular Vendor Assessments

Managing third-party risk needs to continue once you start working with vendors and service providers. It’s crucial to schedule periodic reviews and audits, so that you can verify that third parties are keeping to their contractual obligations. 

Vendor risk profiles can change over time, due to factors like changing security threats, business operations, or regulatory requirements. Regular assessments keep you up to date with the shifting reality of your greater risk landscape, so that you can adjust your own risk management practices and cybersecurity policies to reflect the changing circumstances. 

Continuous Monitoring of Third Party Activities and Vendor Systems

Alongside periodic reviews, reliable cybersecurity for SMBs requires continuous third-party risk monitoring. With continuous monitoring, you’ll gain faster alerts about potential security incidents, which allows you to address them before they escalate into serious issues. 

Use advanced tools to track third-party activities and traffic through vendor systems in real time, so you can quickly identify any anomalies or suspicious activities that could indicate a breach or compliance failure. 

Incident Response Planning That Includes Third Party Breaches

Efficient incident response planning is crucial for any comprehensive cybersecurity strategy, but many plans overlook the risks of third-party breaches. It’s vital to prepare a rapid and effective response to third-party data breaches, attacks that originate from third party systems, and/or if vital third-party services are compromised or unavailable. 

Collaborate on incident response planning with your third parties so that your plans are more comprehensive, and run joint preparedness exercises and simulations to ensure a faster, coordinated response. 

Challenges SMBs Face in Managing Third Party Risks

It’s not easy for SMBs to keep third-party risk under control. Unlike larger enterprises, SMBs  have limited budgets which can prevent them from investing in advanced TPRM solutions and automated tools. For similar reasons, they might not have dedicated IT or cybersecurity teams, so risk management is carried out by people who lack specific expertise. 

Small and medium businesses often also lack professionals who are experts at industry regulations and standards, leaving them to navigate a complicated and frequently-shifting landscape without much guidance. You also need to ensure that third parties comply with regulations, which adds more complexity to third-party risk management. Unfortunately, falling behind on regulatory requirements puts you at risk of penalties and reputational harm. 

Additionally, SMBs tend to rely heavily on third-party vendors and service providers to help them scale operations and expand their product/service offering in the quest for business growth. Sometimes due diligence falls by the wayside when you rush to integrate new vendors in pursuit of growth opportunities. This can result in more vulnerabilities and increased exposure to cyber risks. 

Third Party Cybersecurity Solutions for SMBs

Robust third-party risk management is crucial for effective cybersecurity resilience for any organization, but it’s particularly important for SMBs. With their smaller resources, limited budgets and in-house expertise, and increased reliance on third-party service providers and vendors, SMBs need to work smarter as well as harder to protect their organization from threats. 

A proactive approach to third-party risk management is the best way to minimize your exposure to risks and maintain strong defenses. Strict due diligence, firm contractual obligations, continuous monitoring, and regular assessments ensure that you’re aware of third-party risks and can take appropriate steps to minimize and mitigate them. It also helps you address threats while they are still relatively minor and easy to resolve, and prevents you from being taken by surprise by serious incidents. 

Panorays’ TPRM platform provides valuable support for cybersecurity for SMBs. The cost-effective solution offers flexible pricing that grows with your business, with advanced capabilities such as supply chain mapping, automated security questionnaires, continuous third-party monitoring, and more. Panorays streamlines risk assessment processes for third parties, ensures that your questionnaires are comprehensive and clear, and calculates dynamic Risk DNA scores that give you a real-time picture of third-party risk posture. 

Ready to restore cybersecurity for SMBs? Contact Panorays to learn more.

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