Privacy Risks and Its Effect on Companies
In this digital age, data plays a huge role in our everyday lives. Everywhere we go, our data is being collected with and without our knowledge. This is why companies who handle sensitive data need to secure their IP to safeguard the data that they are handling because privacy risks have become a big concern.
A company’s most prized asset is it’s IP. It should be designed to help businesses maximize their revenue opportunities to drive business value. When a company’s IP is not well protected and falls victim to hackers, it can lead to legal, financial, reputational, and operational loss.
When a company hires a third party, it opens itself to a whole lot of privacy risks through their vendor network. A company needs to make sure that all entities that have business relationships with their organization are responsible in implementing security measures to protect personal information that they are processing. This includes contractors, partners, joint ventures, service providers, intermediaries, agents, suppliers, and consultants.
Privacy Risks and Vendor Networks
Did you know that data breach is one of the biggest privacy risks when it comes to your vendor networks? Since you have no full control of your vendor networks, the possibility of a data breach becomes bigger.
In fact, there are four kinds of data breaches normally caused by third parties. External attack normally comprises 40%, internal incidents 24%, third party attacks or incidents makeup for 21%, and lost or stolen assets for the remaining 15%. Trusting a business whose practices and processes you can’t control can really expose your data to a lot of risks. To add insult to injury, a data breach caused by a 3rd party increases the cost by more than $370,000.
When data breach happens, there are four kinds of exposure that happens. The first is legal exposure which includes lawsuits, adverse judgements, unenforceable contracts, administrative penalties, and criminal penalties. The second is financial exposure which are regulatory sanctions and penalties as well as negative impact on stock prices.
Other exposures resulting from data breach are reputational exposure which leads to loss of confidence in the integrity and reputation of the institution. Lastly, you have operational exposure which covers possible business failure, errors in systems and processes, danger to the public or financial system, withdrawn or restricted regulatory licenses, and the cost to rehabilitate.
All of these can be detrimental to a company’s overall reputation and business management.
Different Methods to keep up with New Technology
There are different methods that can be used to keep up with new technology. As hackers are evolving and updating the ways they access private information, companies who hire third parties can also apply different methods to counter these data breaches.
Since only 37% of companies believe that their primary third party vendor would notify them if there is a data breach involving sensitive and confidential information, the need to have periodic re-evaluation is needed.
Periodic re-evaluation should cover risks evaluation and transition management. It should also monitor data transfer, retention, as well as destruction of files if and when needed.
There should also be continuity of business plans made by management that details action plans to be taken in the event of certain scenarios and situations. This will help people and third parties to know what steps to take when something happens.
When all of this is in place, the need for due diligence is a must. This means that determining legal and regulatory compliance should be enforced. Someone also needs to conduct controls assessment regularly and an evaluation of the third party risk management programs and processes are put in place to determine findings.
Some of the other methods will be doing an inventory of all third parties with whom you share information so that you can easily identify third parties who have access to confidential information and those who share data with subcontractors.
You can also establish a third party notification when data is shared with nth parties. It should be included that third parties need to provide information about possible third-party relationships with whom they will be sharing sensitive information.
How Connor Can Help with Privacy Risks
Companies that hire a third party to handle data privacy need someone to audit these third parties. They need the auditor to check that suppliers remain compliant. Connor can be that auditor.