The average IT organization has an average of 25 third parties and a fourth or fifth-party relationship with over 200 parties. With 98% of organizations having integrated a third party into their IT infrastructure that has suffered a data breach, it’s no surprise that third-party data breaches are on the rise. Organizations need to step up their security, and one of the best practices for ensuring strong cybersecurity is data breach prevention.

What is Data Breach Prevention?

Data breach prevention is the set of policies and procedures a third-party organization implements to protect sensitive, private, confidential and protected data from getting into the hands of malicious threat actors. It is proactive as opposed to defensive. For example, it focuses on aspects of cybersecurity such as third-party risk management, data encryption, risk assessment and endpoint and network security. When a data breach occurs, an effective incident response is crucial to mitigate the damage and ensure business continuity.

How Data Breaches Occur

There are a few causes of data breaches, including:

  • Misconfigurations. Cloud misconfigurations alone account for up to 11% of attacks, according to IBM. The T-Mobile third-party breach in 2023 that exposed over 30 million users was caused by a misconfiguration of an AWS S3 bucket accidentally made public. It was in good company: Twilio, McCraw-Hill and even U.S. cybersecurity contractors suffered third-party data breaches also from similar AWS S3 misconfiguration.
  • Weak passwords. Brute force attacks can easily guess many types of passwords. Once they have one password, they often gain access to an array of networks and systems, as users tend to use one password for many different devices and systems.
  • Insider threats. Disgruntled or negligent employees with privileged access to networks and systems who obtain unauthorized access to sensitive data and information. This happened to Microsoft in 2022 when negligent employees leaked login credentials to the company’s infrastructure on GitHub.
  • Unpatched applications. Cybercriminals bank on exploiting vulnerabilities in old software, hardware or systems in companies with a poor patch management system as a successful attack vector for attacks. More than 5% of data breaches are a result of known exploited vulnerabilities (KEVs).
  • Phishing and social engineering attacks. Emails with malicious links or fake websites lure individuals into giving personal information, such as username and passwords and even payment data.
  • Exploitation of vendor system vulnerabilities. While cybercriminals are well-aware that larger organizations have strong cybersecurity practices in place, they suspect that their third parties do not, and attempt to launch attacks through them. This is how many supply chain attacks originate. For example, cybercriminals may try to detect vulnerabilities that haven’t been recently updated, cloud misconfigurations, or known exploited vulnerabilities in third-party software.

7 Steps to Third-Party Data Breach Prevention

With even the largest brands such as T-Mobile falling prey to multiple data breaches in the same year, organizations are faced with finding comprehensive solutions to defend against them. Although many data prevention strategies exist that organizations can implement without needing significant resources, advanced third-party risk management solutions can help streamline the process.

Here are seven essential steps that your organization should consider:

1. Performing Assessment Security Rating

Before you decide to work with a third party, it’s important to perform a comprehensive evaluation to assess its cyber risk. This can best be achieved through an external attack surface assessment combined with automated security questionnaires to check the third party’s internal security policies. You should also consider the inherent risk of the third party; for example, a vendor that integrates with your payment solution is typically more risky than a project management tool. With all of these considerations, you’ll be able to get a complete view of supplier cyber risk. However, thorough assessments like these can take time, so it’s important that the process is automated so that it can be easily scaled.

2. Fostering Employee Awareness

Some of the most notorious third-party data breaches took place due to human error such as weak passwords, misconfigurations, and clicking on malicious links. Phishing and stolen credentials, for example, specifically target employees to volunteer sensitive data to gain access to systems and networks of an organization. One of the most effective deterrents to these attacks is through security awareness training. For example, companies can run phishing simulation tests to see how their employees respond. They can also teach safe internet habits, proper use of social media, incident reporting and data privacy practices. Insisting that your third party implements such training of its employees is a necessary step for data breach prevention.

3. Facilitating Collaboration with Suppliers

Third-party security management typically involves communicating with numerous teams. There’s the procurement team that is looking to hire the third party, the infosec team that must assess the third party, the executive board, compliance and security, and the legal team. And then of course there’s the third party itself, which may or may not have its own security team.

With so many moving parts, it’s essential to have a process in place that allows all stakeholders to communicate quickly and effectively with each other. This is particularly important if any cyber gaps need to be addressed: The supplier must be able to understand what needs to be fixed and the security team must be able to confirm that remediation has been completed. Advanced third-party risk management solutions facilitate communication between the different parties for faster remediation.

4. Providing Documentation

Keeping records of any third-party management is important for several reasons: First, it can help you track supplier cyber posture over time. Second, documentation can help you stay on top of necessary cyber hygiene such as patch management and periodic tests. Third, documentation is particularly important when considering compliance, because it can serve as an audit trail indicating that a robust third-party security risk management process is in place. 

Documentation will help you avoid a data breach by ensuring that necessary cyber maintenance has been completed, and will serve as proof that your organization did everything necessary to avert it.

5. Monitoring Third-Party Risk

The cyber world is incredibly dynamic, and cyber threats keep evolving. In addition, companies are always introducing new software and technologies that could be vulnerable to cyberattacks. This ever-changing landscape is why it’s not enough to perform periodic cyber risk assessments of your third parties. Instead, to avoid third-party data breaches, it’s essential to continuously monitor your suppliers for any new cyber issues and receive live alerts about any changes in cyber posture.

6. Having a Remediation Plan

When considering onboarding a new third-party and discovering it presents considerable risk, implementing a remediation plan for that vendor can strengthen your overall security plan and trust in your brand. In addition, they position your organization well for audits of your third-party programs, required by standards such as SOC-2. When remediation is implemented promptly, it can also reduce the impact of an attack once it occurs. Advanced third-party risk management solutions can identify which risks are critical and prioritize them accordingly.

7. Achieving Supply Chain Visibility

According to the 2024 CISO Survey for Third-Party Risk Priorities, 18% of CISO feel they need better resources in place to manage their third parties, and 15% are worried about vendors such as Shadow IT and other tools in their business environment to which they have zero or limited visibility. Advanced tools such as Panorays offer extended supply chain visibility to third, fourth and n-th parties, mapping out the relationships between your organization and its suppliers and continually monitoring them for cybersecurity threats.

How Panorays Helps You Manage Third-Party Risk

Third-party data breaches such as the one that Bank of America recently suffered can happen at any time, so organizations need to do everything in their ability to defend against these attacks. Most organizations, however, deliver third-party risk assessments that don’t take into account the criticality and business relationship of each supplier. The lack of prioritization of threats results in a risk score that fails to accurately reflect the risk each supplier presents to your organization.

In addition, many businesses aren’t aware of who their third parties are or how they would impact your business. Once they are identified, completing assessments is difficult, with long waiting times for vital information your business needs to assess or remediate against risk. Organizations need a frictionless process of implementing these third-party risk assessments that are customized and scalable so that vendors can be quickly onboarded.

Panorays offers a new approach to third-party management, delivering seamless external attack surface assessments combined with comprehensive cybersecurity questionnaires that are customized and relevant to each vendor. It minimizes dependence on third parties by powering these questionnaires with artificial intelligence (AI) to verify information using relevant vendor documents and fill in answers based on similar past questionnaires.

Its Supply Chain Discovery and Mapping automatically discovers unknown third parties and calculates their corresponding Risk DNA or the distinct risk profile associated with each business relationship a company maintains with its third parties. This contextual approach delivers accurate and evolving risk ratings of each supplier for continuous threat detection. Automated workflows based on third-party criticality can now be set up to reject or onboard suppliers, auto-generate remediation tasks, assign stakeholders to review questionnaire responses and generate questionnaire templates based on different regulations and compliance (e.g. SOC2, HIPAA, SIG or CAIQ).

This combined approach offers a customized, scalable third-party risk management program that delivers a cyber rating of suppliers that your organization can trust.

Want to learn more about how you can prevent third-party data breaches? Contact Panorays to schedule a demo today.