June 19, 2018
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Since 2005, over 10 billion consumer records have been compromised showing how data breaches are a growing problem. For large enterprises, a data breach can result in a lost revenue of £1.3m.
One of the most frequent causes of data breaches are third-parties that organizations engage with to perform key functions within their business. It’s a clear weaknesses within the business infrastructure, and the services they provide can often leave your business vulnerable.
Previously, hearing of a data breach would have been shocking, but in today’s modern world, they’re common in our headlines. The not-for-profit organization, Privacy Rights Clearinghouse, reports on data breaches impacting consumers. In 2005, when it started maintaining its chronology of information, there was 136 breaches, affecting 55,101,241 records. Last year this exploded to 7,934 breaches that have been made public, affecting 10,082,217,317 records. The importance of executing an effective Third-party risk program is critical for businesses.
Apart from the negative press attention, data breaches can have a huge impact on your organization:
• 40% of organizations experiencing a breach lose customers.
• 23% lose business opportunities.
• 29% lose revenue.
According to PwC, more than a quarter of businesses don’t know how many data breaches they’ve experienced, and a third have no idea how they happened. It’s understandable but also very worrying when you consider how heavily we rely on engaging with third-parties to perform key functions within our businesses; as research now suggests that third-parties represent 60% of revenue.
The problem lies in vulnerabilities within a third-party’s infrastructure and the services they provide. The risks presented to both the end customer and the organization only mount with each additional third party involved. The chains involved industries can stretch beyond the first, second, and third (customer, the organization, immediate suppliers) into fourth and fifth (suppliers of the suppliers of suppliers). It’s no surprise that this mind-bending complexity becomes easy for risks to permeate. In addition, with consumers’ trust eroding more with every data breach, it’s causing governments to tighten their regulatory control by making organizations more accountable, ensuring you have a well thought out third-party risk program in place is imperative.