In 2022, the risk management landscape underwent multiple tumultuous changes, including new regulations and emergent technologies to strengthen further the relationships between IT and non-IT evaluations of third-party vendors and suppliers. While cyberattacks on enterprises of all sizes have increased, so has geopolitical risk, prompting new government sanctions and stringent rules to protect human rights violations.
Other issues businesses face include protracted supply chain outages, personnel shortages, and the work-from-home argument. As if that weren’t enough, vendor financial health and company continuity remain significant third-party risk management concerns. Nonetheless, seasoned third-party risk management specialists understand that the only constant is that risk is ever-present and developing, and spending time analyzing the preceding year’s risk environment and events is a worthwhile investment.
Businesses need to analyze and monitor their third-party suppliers and vendors. Numerous logical and physical threats can disrupt a third-party vendor or service. As a result, organizations should widen the scope of their evaluations to include more risk areas in their research.
With the amplification of integrated vendor risk management for enterprises of all sizes in mind, let’s review the top 4 vendor risk management predictions and trends to watch out for in 2023. In this blog, we will discuss the key takeaways from third-party risk management in 2022 and what steps to take to mitigate this going forward.
Key Takeaways from 2022
Here are the four most essential takeaways of third-party vendor risk management:
1. Cybersecurity is a major concern.
2022 has demonstrated that no organization is immune to cyberattacks, many of which are the fault of other parties. Unfortunately, it is no longer a question of if but of when your organization will be hacked. As sobering as this should be, many organizations must ensure that their third-party vendors have complete cybersecurity protections and controls.
2. Supply chains need to be made more resilient.
Traditionally, third-party risk management (TRPM) programs focus on information security threats and data protection rather than supply chain resilience. The COVID-19 pandemic exposed flaws in the supply chain and in the TPRM processes of many enterprises and frameworks, leading to a rising recognition that operational resilience must be built into an organization’s DNA.
Organizations are shifting away from traditional risk management techniques that result in everything becoming amber. They acknowledge that third-party services will fail, but they want enough supply chain resilience to keep services available to clients. Treating operational resilience, and hence TPRM, as a checkbox exercise and responding to new requirements is insufficient. Organizations must monitor and manage third parties in a comprehensive and cross-functional manner.
Developing an exit strategy for your most significant and material third parties is part of this. Bringing the proper individuals to the table, including your supplier, is critical in planning for and managing both stressful and scheduled exits and developing a strong and resilient supply chain.
3. Regulatory compliance is essential.
Regarding third-party risk management (TPRM) regulations, 2022 only registered a few changes. Nonetheless, there were some new introductions, such as the SEC’s Amended Safeguards Rule, which for the first time requires covered financial institutions (such as auto dealerships, mortgage brokers, collection agencies, and tax preparation firms) to develop, implement, and maintain compliant, comprehensive information security programs.
Even if there are no significant changes to TPRM regulations, organizations still have a lot of work to do. A third-party risk management system should always prioritize regulatory compliance, which implies that everything from your policy to vendor risk assessments, due diligence, and monitoring should reflect and comply with regulatory standards.
4. Increasing demand for talent.
As the demands and expectations placed on third-party risk management (TPRM) programs rise, teams must build subject matter knowledge in critical areas of vulnerability, such as data breaches, the possibility of operational failures, financial insecurity, reputational effect, and cybercrime. This may necessitate hiring a dozen professionals, followed by a management team to own and oversee the process, as well as a team to drive execution. Companies must work smarter, and there is a growing recognition that if TPRM is not a fundamental skill of your firm, establishing the expertise in-house has little value. The competition for talent is fierce.
Now, let’s see what risk management recommendations organizations should keep in mind in order to stay ahead of the curve and develop adequate vendor risk management measures!
4 Vendor Risk Management Predictions and Trends for 2023
1. Vendor Breaches Will Continue to Rise
There has been a 300% increase in supply chain attacks in the last year alone, and there are no indications to show that data breaches by third-party vendors will slow down in 2023.
Research shows that the frequency and complexity of these attacks have also significantly increased.
It is likely that more large-scale vendor attacks will occur, as will more cases in which sophisticated threat actors target supply chains rather than enterprises themselves. Companies will need to vet everyone they do business with in the future rigorously. And, as we witness more real-world examples of breaches affecting valuations and business relationships, we will see the rise of an environment in which cybersecurity is non-negotiable in all corporate dealings.
2. Vendor Risks and Internal Risks Will Combine as One
The bottom line is that vendor and internal risks must be managed together. It was already impossible to distinguish between an organization’s internal and external ecosystems in 2019, and they’ve vanished since then.
Your internal systems, vendors, and supply chain are all functionally comparable in today’s world. As a result, vendor risk management trends should be a fundamental component of your internal risk and compliance program. You should also carefully consider implementing a comprehensive third-party risk management strategy that integrates your TPRM tools with the platform you use to control internal risk.
If all risk data and threat information are housed in a single spot, you will have a far better knowledge of where your organization and its vendors stand at any given time. In contrast to a third-party risk management questionnaire, it will provide you with better visibility into vendor risk management trends, but they will still be considerable.
3. Privacy Laws Will Be Indispensable
Governments and regulatory organizations are well aware of the unstable, risky climate in which modern businesses must operate. However, the legislative movement could be faster, which will need to change in 2023. This year, the law will finally begin to catch up with technological and vendor risk management trends.
An actual tsunami of legislative and regulatory reforms can be expected. Criminals are increasingly concentrating their efforts on the nation’s infrastructure, and privacy and security have become contentious political problems. As a result, many regions will almost certainly experience a period of overcorrection and overregulation.
Finally, Gartner believes that by next year, 75% of the world’s population will be subject to at least one set of privacy rules. As a result, you must immediately begin laying the groundwork for adjusting to that new environment, starting with a framework for vendor risk management trends.
4. Zero-Day Assaults to Potentially Increase Manifold
As criminals devise new tactics, zero-day assaults are expected to skyrocket. Supply chain assaults and zero-day vulnerabilities were the two most popular ransomware attack methods in 2021, hence hints of this were already visible.
Businesses must rethink their business practices in order to respond to vendor risk management trends, incorporating security and resilience into all aspects of their operations. However, most decision-makers are aware of this.
We predict a greater emphasis on safe software development and lifecycle management in conjunction with the implementation of zero trust. Developers will naturally consider risk at the start of every new project. Furthermore, as businesses seek to reduce sprawl and complexity across their ecosystem, this will aid in adopting an API-first strategy with a security-by-design focus.
Risk Management with Akitra!
Some vendor risk management trends of 2023 can seem alarming. Most professionals, on the other hand, believe that we will inevitably see more robust, more sophisticated vendor risk management trends and more automation, integration, and cutting-edge tools and platforms to assist us.
Before the end of the year, we can expect to see improved legislation, improved development methodologies, and business leadership treating vendor risk management trends with the care and respect they deserve. As you work on your information security program at your organization, you must remember that good security takes considerable time and effort. Like life, security is a journey, not a destination.
This is why we at Akitra can help you to take care of risk assessment and management using the Akitra solution. Akitra offers an industry-leading, AI-powered Compliance Automation platform for SaaS companies. Using automated evidence collection and continuous monitoring, together with a full suite of customizable policies and controls as a compliance foundation, our service helps customers become certified for NIST CSF along with other frameworks like SOC 1, SOC 2, ISO 27001, ISO 27701, ISO 27017, ISO 27018, HIPAA, GDPR, PCI DSS, FedRAMP, NIST 800-53, NIST 800-171, CMMC, and other specific frameworks such as CIS AWS Foundations Benchmark, etc. Our compliance and security experts will also provide the customized guidance you need to navigate the end-to-end compliance process confidently.
The benefits of our solution include enormous savings in time, human resources, and cost savings—including discounted audit fees with our audit firm partners. Customers achieve compliance certification fast and cost-effectively, stay continuously compliant as they grow, and can become certified under additional frameworks using a single compliance automation platform.
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