Even the best cyber defences can be blindsided by factors outside direct control. While businesses continue to invest heavily in protecting their own infrastructure, the greater threat may sit outside their control – in the hands of third parties.
Analysis shows a staggering 98 percent of Europe’s top 100 firms suffered third-party breaches in the last year alone. As suppliers, platforms and partners become more deeply embedded in operations, the case for treating third-party risk as a strategic priority – not a checkbox – has never been clearer.
The Real Reason Third-Party Risk Gets Ignored
Despite its critical importance, third-party risk remains one of the most underestimated areas in cyber security. Too many organisations still operate under the belief that if their internal systems are strong, they’re safe. So, budgets and bandwidth get spent hardening their own defences -endpoint protection, network segmentation, employee training – while overlooking the fact that today’s digital perimeter now extends far beyond their own infrastructure. This oversight can be costly.
These breaches often stem from inadequate vetting, poor visibility into vendor security practices, and a lack of continuous monitoring. The assumption that external partners maintain the same level of cyber security maturity is a dangerous one – and attackers know it.
The Business Impact of Supply Chain Breaches – And Why It Matters
Third-party breaches can have devastating consequences, ranging from operational disruption to reputational damage and regulatory penalties. One of the most notable examples is the Target data breach, where attackers gained access to customer data through a compromised HVAC vendor. The incident cost the company over $200 million and led to a significant loss of consumer trust.
More recently, at least one of the highly impactful retail breaches had originated from a third-party provider. These incidents underscore a troubling trend: attackers are increasingly targeting the supply chain as a means to bypass hardened defences and gain access to sensitive data. These aren’t just PR headaches – they can cause irreversible damage to an organisation.
In the financial sector, the stakes are even higher. With financial entities increasingly reliant upon external technology and data service providers, Digital Operational Resilience Act (DORA) mandates a robust framework to ensure these partnerships do not become weak links in the cyber resilience chain. Under DORA, financial institutions must carry out comprehensive due diligence before entering into agreements with third-party service providers. This includes assessing the provider’s operational resilience, cyber security protocols, and incident response capabilities. Once onboarded, these relationships are governed by stringent contractual obligations that clearly define responsibilities, reporting lines, access rights, and termination clauses – all with a focus on maintaining business continuity and data protection.
The Playbook for Third-Party Risk Management That Holds Up Under Pressure
Managing third-party risk is no longer about ticking a box. To effectively manage third-party risk, organisations must adopt a proactive, intelligence-led approach that spans the entire third-party lifecycle. Best practices across the third-party lifecycle should include:
- Due diligence and onboarding: Before entering into any agreement, organisations should conduct a comprehensive assessment of the third party’s cyber security posture. This includes evaluating their incident response capabilities, data protection measures, and compliance with relevant regulations.
- Contractual safeguards: Ensure contracts clearly define roles, responsibilities, access rights, and termination clauses. Include provisions for regular audits, breach notification timelines, and data handling protocols.
- Continuous monitoring: Third-party risk doesn’t end at onboarding. Implement tools and processes to continuously monitor vendor performance, detect anomalies, and respond to emerging threats in real time.
- Risk tiering and prioritisation: Not all third parties pose the same level of risk. Categorise vendors based on the sensitivity of the data they handle and the criticality of the services they provide. Focus resources on high-risk relationships.
- Incident response integration: Ensure third parties are integrated into your incident response plans. In the event of a breach, coordinated action is essential to contain damage and maintain business continuity.
The goal is to build a living, breathing third-party risk management (TPRM) program that adapts to threats, enforces accountability, and supports the business as it scales.
Stronger Cyber Resilience Starts With Shared Responsibility
TPRM has stepped out of the back office and into the boardroom. It is no longer just about defence; it is about building trust in an interconnected digital ecosystem. As cyber attackers continue to exploit weak links in the supply chain, reactive, compliance-first approaches fall short. What’s needed is a shift to proactive, intelligence-led risk strategies.
Done right, TPRM becomes a catalyst for business continuity, regulatory alignment, and brand protection. It also breaks down silos – bringing security, legal, procurement, and operations into closer alignment so that cybersecurity supports innovation, rather than stalling it.
But building a resilient supply chain is not just a technical challenge; it is a cultural one. It means setting clear expectations with partners, investing in shared defences, and understanding that digital trust is not a given. It’s something that must be earned and continually verified.
