Third-Party Cyber Incidents: 5 Steps to Vet Your Vendors
Your vendors are an essential part of your business, but they can also introduce serious cybersecurity risks. A single weak link in your vendor network can expose sensitive data, disrupt operations, and damage your reputation. Cybercriminals often target third-party suppliers as an entry point into larger organizations, making it critical to vet every vendor before signing a contract.
TekConcierge’s Third-Party Cyber Incidents: 5 Steps to Vet Your Vendors eBook outlines the essential steps businesses should take to ensure their vendors meet security best practices.
How to Evaluate Vendor Security Before Signing a Contract
1. Ask the Right Security Questions
Before engaging with a vendor, it’s crucial to assess their security posture. Ask specific questions to gauge their readiness and commitment to protecting your data:
- What security protocols do you have in place? Look for encryption standards, access controls, and multi-factor authentication.
- What is your data breach recovery plan? A well-prepared vendor should have a documented and tested incident response strategy.
- How do you respond to security incidents? The vendor should provide a clear timeline for detection, reporting, and remediation.
If a vendor cannot answer these questions or hesitates to share details, that’s a major red flag. You need partners who take security as seriously as you do.
2. Review Security Audits & Certifications
Reputable vendors should provide proof of their security compliance through industry-standard certifications and audits. These demonstrate that they’ve undergone rigorous evaluations to meet cybersecurity best practices. Common certifications to look for include:
- SOC 2 (Service Organization Control 2) – Ensures data security, availability, and confidentiality.
- ISO 27001 – A global standard for managing information security.
- NIST Cybersecurity Framework – A framework outlining best security practices.
- PCI DSS (Payment Card Industry Data Security Standard) – Ensures secure handling of credit card transactions.
If a vendor lacks certifications, consider whether they are investing enough in cybersecurity or if they might be a weak link in your security chain.
3. Assess Financial Stability
A vendor’s financial health can directly impact their ability to maintain strong security protocols. Companies facing financial difficulties may cut corners, reduce IT investments, or fail to maintain compliance, leaving your business vulnerable. Key factors to evaluate include:
- Financial reports and stability – Check their track record for sustained growth and investment in security.
- Insurance coverage – Vendors should have cyber liability insurance to cover potential breaches.
- Long-term viability – If a vendor folds, you may face business disruptions and loss of critical services.
By selecting financially stable vendors, you ensure that security remains a priority—not an afterthought.
4. Evaluate Data Handling & Privacy Compliance
Your vendor will likely handle sensitive data—customer information, financial records, or intellectual property—so it’s vital to understand how they store, process, and protect that data.
- Encryption methods – Ensure all sensitive data is encrypted both in transit and at rest.
- Access controls – Vendors should use role-based access controls (RBAC) to limit access to only necessary personnel.
- Regulatory compliance – Ensure vendors follow regulations like:
- GDPR (General Data Protection Regulation) – Protects personal data for EU citizens.
- CCPA (California Consumer Privacy Act) – Ensures privacy rights for California residents.
- HIPAA (Health Insurance Portability and Accountability Act) – Protects healthcare-related data.
Failure to comply with these regulations could put your business at legal risk, even if the breach occurs on the vendor’s end.
5. Establish Incident Response Protocols
No security system is 100% foolproof, so it’s essential to know how a vendor will handle an incident if one occurs. Their incident response plan should outline:
- Timely notifications – How quickly will they inform you of a breach?
- Damage mitigation steps – What actions will they take to contain the attack?
- Future prevention measures – How will they ensure the same incident doesn’t happen again?
Additionally, your own incident response plan should account for third-party vendor breaches, ensuring you can act swiftly to protect your business.
Are Your Vendors Keeping Your Business Secure?
If you’re unsure whether your current vendors have the right security measures in place, TekConcierge can help. Our third-party risk assessment service evaluates vendor security, compliance, and reliability—so you can make informed decisions before signing any contract.
📩 Contact us today to schedule a risk assessment and strengthen your vendor security strategy.
