Now that you have a proper tier structure set up for your vendors, we will discuss how to map controls to each of those tiers to create a control matrix that you can work from. This control matrix will serve as the basis for the vendor supply chain security effort – essentially providing a skeleton of the due diligence that you will perform for each vendor. Once this matrix is complete, you can use it to clearly and easily demonstrate the work that your organization does on supply chain security to any auditor or regulator who may ask to review it. In our experience, walking them through the matrix, along with providing them a documented process that you follow to enforce the matrix will suffice to meet most regulatory requirements – assuming of course, that you actually perform the work detailed in the matrix.
So – at a high level, how do we assign the controls? I usually start at the bottom of the stack of tiers and define the minimum controls first. Thus (referring back to the tier structure defined last time around):
- Low Risk Vendors– What are the minimum steps we should perform for each vendor in this tier?
- Controls Required: Scoping peer review to ensure that the criteria for this tier are met; contract and, when applicable, SLA review by the security team against established guidance & regulatory requirements, approval of financial due diligence team to avert fraud, etc.
- Comments: Since there are only isolated potentials for digital risk in this tier, we don’t need to perform cyber-security reviews and the like, or accumulate data we don’t need (which wastes time & resources, etc.). If, for example, this is a commodity or non-impactful application provider, we might review their contract for language around malware free deliverables, code security, patch/fix turnaround times, etc., as appropriate for each vendor and the service or good they provide.
- Controls Required: Scoping peer review to ensure that the criteria for this tier are met; contract and, when applicable, SLA review by the security team against established guidance & regulatory requirements, approval of financial due diligence team to avert fraud, etc.
- Routine Risk Vendors – At this level, I try and think of the controls that I would want for just about any vendor that can impact us or our operations, but that aren’t capable of doing much beyond reputational or regulatory damage.
- Controls Required: All of the controls of the lower level apply and are required. Any control reviews that are required for regulatory compliance over PII that we share (SAS70, PCI-DSS compliance statements, etc.). Plus, at this stage, I would really like some form of cyber-security assessment, which in this case is MSI’s passive assessment tool (that can be run without the vendor’s knowledge or permission) run against them on a yearly basis with NO HIGH RISK issues identified. If a HIGH RISK issue is found, then they would be flagged and would need to have a formal technical review of their security controls performed or even our traditional risk assessment process. Any deviance from the accepted controls would require a signed risk acceptance variance from a management team or steering committee, as an example.
- Comments: Here, we are defining the basics. What do we need for most vendors that could hurt us? We try to keep the process as simple as possible, so that we can focus on the vendors that have higher risk of actually hurting us and our business. The use of passive assessments here is a powerful new approach to reduce the number of full fledged risk assessments that we need to perform, and the overhead created by dealing with the paperwork and interactions to complete the traditional risk assessment process.
- Controls Required: All of the controls of the lower level apply and are required. Any control reviews that are required for regulatory compliance over PII that we share (SAS70, PCI-DSS compliance statements, etc.). Plus, at this stage, I would really like some form of cyber-security assessment, which in this case is MSI’s passive assessment tool (that can be run without the vendor’s knowledge or permission) run against them on a yearly basis with NO HIGH RISK issues identified. If a HIGH RISK issue is found, then they would be flagged and would need to have a formal technical review of their security controls performed or even our traditional risk assessment process. Any deviance from the accepted controls would require a signed risk acceptance variance from a management team or steering committee, as an example.
- High Risk Vendors – Here we build on the controls below for normal vendors to try and achieve a balance between work load and information security needs. We define a level that exceeds best practices and serves to give us more confidence in the vendors that could hurt us at a significant level.
- Controls Required: All of the controls of the lower levels apply and are now definitely required(no variances accepted at this level for the basic controls defined for lower risk levels). In addition, we need to provide ongoing assessment of the vendor’s security controls, so a passive run is now required without any HIGH RISK findings on a quarterly basis. This is to help us combat control drift and control entropy in the vendor’s security posture. If at any time, a HIGH RISK issue is identified, then a FULL and COMPREHENSIVE risk assessment is required as soon as possible. This risk assessment should include the review of the vendor’s third party risk assessments, vulnerability assessments & penetration tests (these should be provided to us by the vendor, within 3 business days of the request). Failure to pass this risk assessment, respond properly or any significant issues identified that are not mitigated in a timely manner should result in financial and legal consequences for the vendor and their contract with our organization.
- Comments: Again, we are trying to reduce the incidence of full risk assessments, so that we can focus our attention and limited resources on the vendors that can hurt us significantly and are in the worst security postures. Further, we create an incentive at this level for them to comply and respond rapidly.
- Controls Required: All of the controls of the lower levels apply and are now definitely required(no variances accepted at this level for the basic controls defined for lower risk levels). In addition, we need to provide ongoing assessment of the vendor’s security controls, so a passive run is now required without any HIGH RISK findings on a quarterly basis. This is to help us combat control drift and control entropy in the vendor’s security posture. If at any time, a HIGH RISK issue is identified, then a FULL and COMPREHENSIVE risk assessment is required as soon as possible. This risk assessment should include the review of the vendor’s third party risk assessments, vulnerability assessments & penetration tests (these should be provided to us by the vendor, within 3 business days of the request). Failure to pass this risk assessment, respond properly or any significant issues identified that are not mitigated in a timely manner should result in financial and legal consequences for the vendor and their contract with our organization.
- Critical Risk Vendors – These are the vendors that can REALLY hurt us, so we spend a majority of our attention and resources here.
- Controls Required: All of the controls of the lower levels apply and are now definitely required(no variances accepted at this level for the basic controls defined for lower risk levels). Additionally, passive assessments are now monthly in frequency (or maybe even weekly, depending on your paranoia/risk tolerance). Ongoing monitoring of target threat intelligence data is also required – so we are having MSI monitor social media/public web/deep web/dark web for any events or indicators of compromise that might emerge and be related to our vendors in this tier. At this level, we are performing the full comprehensive risk assessment process on a yearly basis, in addition to the passive work of MSI. While this is tedious, we want to ensure that we have provided the utmost effort on these vendors that can truly hurt us at the most damaging of levels. We can now do this easily without taxing our resources, thanks to the tiering architecture and the use of the focus points provided by MSI through our passive assessment and other services. Any identified MEDIUM or HIGH RISK issue flagged by MSI results in the immediate triggering of an update to the risk assessment process, notification of the vendor for the required response of their security team leadership, and the potential requirement for a formal incident response process for the vendor – which we manage by requiring the delivery of an incident response report and/or attestation by a third party security firm that the situation was mitigated and that our IIP was protected. Failure to pass this risk assessment, respond properly or any significant issues identified that are not mitigated in a timely manner should result in SIGNIFICANT financial and legal consequences for the vendor and their contract with our organization.
- Comments: Here we leverage ongoing monitoring and take the lead on watching for potential compromises for ourselves and our vendors. Given the large percentage of breaches reported by third parties, we no longer believe that the detection and response capabilities of any partner organization are strong enough, alone, to protect our IIP. Thus the increased due diligence and oversight for the vendors that can hurt us the worst.
- Controls Required: All of the controls of the lower levels apply and are now definitely required(no variances accepted at this level for the basic controls defined for lower risk levels). Additionally, passive assessments are now monthly in frequency (or maybe even weekly, depending on your paranoia/risk tolerance). Ongoing monitoring of target threat intelligence data is also required – so we are having MSI monitor social media/public web/deep web/dark web for any events or indicators of compromise that might emerge and be related to our vendors in this tier. At this level, we are performing the full comprehensive risk assessment process on a yearly basis, in addition to the passive work of MSI. While this is tedious, we want to ensure that we have provided the utmost effort on these vendors that can truly hurt us at the most damaging of levels. We can now do this easily without taxing our resources, thanks to the tiering architecture and the use of the focus points provided by MSI through our passive assessment and other services. Any identified MEDIUM or HIGH RISK issue flagged by MSI results in the immediate triggering of an update to the risk assessment process, notification of the vendor for the required response of their security team leadership, and the potential requirement for a formal incident response process for the vendor – which we manage by requiring the delivery of an incident response report and/or attestation by a third party security firm that the situation was mitigated and that our IIP was protected. Failure to pass this risk assessment, respond properly or any significant issues identified that are not mitigated in a timely manner should result in SIGNIFICANT financial and legal consequences for the vendor and their contract with our organization.
As you can see, building from the ground up makes leveraging the tiering process easy and logical. In the next post we will show you an example controls matrix we use to demonstrate and discuss our vendor supply chain security process. Over the years, we have found the matrix to be a powerful, auditor/regulator friendly tool to show clearly and concisely the due diligence process for vendor supply chain security. We hope you find it useful as well. Stay tuned!