Third-party relationships are crucial to achieving outstanding customer service. It eases the burden that companies feel regarding managing customer data. Despite this, third-party relationships can be risky, especially when it comes to data sharing.
You might ask, “how then is security guaranteed?” This blog post will shed light on that question by defining third-party data sharing, various third-party risks, and how to mitigate them.
Third-party data sharing is the transfer of data from an original receiver to another entity. This other entity often does not have a direct relationship with customers who own the data collected. This process starts with two entities agreeing to share customer data.
Examples of third-party sharing vendors are network security tools, CRM(Customer Relationship Management) tools, partner companies, recruitment companies, etc.
As we established earlier, sharing data with third parties attracts some risks. We shall discuss them one after the other.
In cases where you as the second party requests customer (first-party)data through third parties, quality data is not assured.
For instance, if you hire talents through a recruitment company, they might not completely consider your preference. This situation would generate data for your company, but it won't align with your company’s standards. As a result, the data might end up being useless.
A slight security issue in the third-party company will also hit you. Adata breach occurs when cybercriminals violate a company's security system to steal and share sensitive data.
When third-party companies suffer data breaches, they do not feel the impact alone. Companies associated with them also experience the effects. Some of these effects include data loss, inability to make decisions based on data insights, reputation damage, and loss of customer trust.
In 2021, a third-party vendor experienced a data breach. This cyber incident affected its customer company, Volkswagen Group of America Inc. The vendor's breach erupted when it left unsecure data on the internet between August 2019 and May 2021.
This breach exposed customers' contact information, loan numbers, and social security numbers. The breach affected 97% of Audi's (a member company of Volkswagen) customers.
Third-party vendors interact with an ocean of data. This is often the case because they gather data from several companies. Take HubSpot CRM, for instance. If 200 companies with 1000 customer data each use their software, that'll be 200,000 pieces of data.
So, controlling or managing this data might be tough.Issues could arise from moving data, segmenting them, and maintaining privacy.
Third-Party Risk Management (TPRM) is the control and analysis of third-party-related risks generated from access to sensitive data. Having discussed risks related to third-party data sharing, we shall discuss the way out for your company.
As everyone in your team is not a cybersecurity expert, they might not understand the nitty-gritty of data sharing. Therefore, educate them on what data sharing is, why your company must share data with third parties, and the risks associated with the process.
Determine which third-party vendors you share sensitive information with and those you do not. This classification will help you decide where to watch for data security measures set to protect your customer data.
It will be wrong to enter an agreement with a third party and not monitor how things go. Always monitor when data is received, who receives it and what is received. For example, data could be emails during subscription to your newsletter or payment card details before purchasing.
Make sure to review your third-party policies regularly. Watch out for change or recommend one when necessary. Likewise, remove old third-party partners from your system. Ensure that they delete your data after unsubscribing from their services.
Your vendor's vendor is the fourth party. Even though you might not forma relationship with them, you should know them. Know that your third-party vendor relationship with its vendor will positively or negatively affect you.
Therefore, conduct vendor due diligence on the fourth party before forming an agreement with the third party. For example, find out the fourth party's cybersecurity management plan and incident response plan.
Data can be so complex that businesses will require third-party services for data sharing. However, there are risks associated with this process. The good news is that you can mitigate these risks. To receive advice and help with risks related to third-party technologies, reach out to us today at Zendata.