What is Third Party Data Breach?

Third party data breach occur when cybercriminals compromise the computer systems of your vendors or business partners and access your sensitive information. It is necessary to note that any vendor in your business network can be vulnerable to such attacks, and studies suggest that approximately 60% of all data breaches are caused by third-party vendors.

Experiencing a security breach can have serious financial consequences for your business, irrespective of the cause. An industry report says the average recovery and remediation cost is more than $7 million. This risk is especially significant for credit card companies, email service providers, and those offering cloud services.

Third-party suppliers, partners, and vendors are crucial to businesses but also vulnerable to cybercriminals. A breach can have severe consequences for everyone involved, not just the industry affected.

Examples of data Breaches Caused by Third-Party Vendors

Cyber attacks like phishing and ransomware have increased during the COVID pandemic as many employees work from home using virtual private network (VPN) connections with varying levels of security. These attacks can result in data breaches, a common occurrence in cybercrime.

To have a better understanding of what types of data can leak, let’s appeal to the examples of third party data breach. Here are some:

• One of the world’s largest electronics companies, General Electric (GE), recently announced that the sensitive information of current and former employees may have been exposed in a data breach at Canon, a third-party company.
• T-Mobile lost control over the personal information of approximately 1 million customers after experiencing a hack on their email provider.
• Health Share of Oregon, an organization that manages healthcare services for Medicaid clients in Oregon, experienced a security breach when an unencrypted laptop was stolen. This resulted in the exposure of personal information belonging to more than 650,000 clients.
• Improperly secured websites and login information storage can lead to security breaches. Recently, a bug on a website called Social Captain allowed unauthorized access to thousands of Instagram usernames and passwords.

These few examples I found are already enough to understand which data categories are endangered. Pretty much everything you share with your contractors – trade secrets, payment information, amounts of supplies and dates of delivery, info about other contractors – all these things may become a subject of the leak. The exact type of information exposed generally depends on the way the third party data breach happened.

Various ways data breaches by third-parties

Organizations must assess and manage the risks associated with third-party relationships and implement appropriate security measures to effectively prevent and respond to these types of breaches:

Supply Chain Attacks

In this attack, hackers exploit a trusted third-party vendor or supplier to gain unauthorized access to an organization’s systems or data. They use weaknesses in the third-party’s infrastructure or software to infiltrate the organization’s network and steal sensitive information.

Cloud Service Provider Breaches

Many organizations trust cloud service providers to store and manage their data. However, if a data breach happens, it could put the data of multiple clients at risk. This kind of breach can happen because of provider infrastructure weaknesses, poorly set up access controls or insider threats.

Outsourcing Partner Breaches

Outsourcing involves hiring a third-party service provider to perform tasks that the company’s employees traditionally did. These tasks can range from back-office support to manufacturing. However, companies need to be careful when outsourcing certain functions or services to external partners because that is a chance of a data breach if the partner’s security measures are inadequate. This can happen if the partner mishandles data, experiences a cyberattack, or has internal security weaknesses.

Payment Processor Breaches

When you purchase with a credit card, a payment processor helps facilitate the transaction between the seller and the bank. They ensure that the seller receives their payment and that everything is processed securely. However, if a payment processor’s security is compromised, it could result in the theft of crucial financial information like personal details or credit card numbers.

Insider Threats

An insider threat occurs when individuals who have permission to access an organization’s network, applications, or databases take harmful actions. These individuals can include former or current employees and third-party entities like partners, contractors, or temporary workers. They may also have gained access through compromised service accounts. In some cases, insiders within third-party organizations may intentionally access or disclose sensitive data without authorization, either for personal gain, malicious intent, or due to coercion.

Preventing Third Party Data Breach

It can be challenging for businesses to hold third-party vendors responsible, mainly if there is no established third-party security policy or program. Ideally, all third-party vendors should adhere to the same strict standards and data security measures that your company has internally.

1. Audit Third-Party Vendors for Compliance

Before bringing on any third-party vendors, discussing risk management requirements with them upfront is important. Some vendors may be close to being audited by partners, so it’s crucial to ensure they are willing to answer questionnaires as part of your due diligence process. If a vendor resists this, they may resist an audit.

Maintaining up-to-date data protection measures is key to building a solid relationship with third-party vendors. Conducting an audit is the best solution to ensure your vendor is following security compliance frameworks and has performed well in previous audits. During the audit, look for any indicators of compromise and assess how well the vendor manages cybersecurity risks.

2. Require Proof of the Third-Party Vendor’s Cybersecurity Program

It’s not enough for the vendor to have an information security program when preventing third-party breaches. They must also demonstrate a commitment to risk management and allocate resources to their vulnerability management program. To ensure this, ask for the vendor’s most recent internal risk assessments, penetration testing results, and compliance frameworks. The vendor must have a strong risk management program, a strategy for mitigating supply chain risks, and a plan for addressing potential data breaches.

3. Adopt a Least-Privileged Model for Data Access

It’s common for third-party data breaches to happen when the provider is given more access than they need to do their job. To improve your network security, enforcing strict access standards for third-party service providers is important. This means giving them the lowest level of access necessary. It’s also crucial to be cautious with sensitive data like Social Security numbers and personal information. By following these least-privileged access standards, you can effectively manage vendor risk and minimize any potential damage from a breach.

4. Adopt the Zero-Trust Network and Data Model

It’s crucial to map, authenticate, and encrypt your network flows to enhance your security ratings. Even if cybercriminals infiltrate a part of your computer system, implementing a zero-trust model prevents them from moving laterally. You can’t trust any entity inside or outside your established network perimeter. To strengthen this framework, it’s essential to enforce multi-factor authentication or biometric identification for all users as part of your cybersecurity protocol.

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Insider Threat Definition

An insider threat refers to harmful actions taken by individuals authorized to access an organization’s network, applications, or databases. The people with access to the organization’s physical or digital assets include current and former employees and third-party entities such as partners, contractors, or temporary workers. They may also have compromised service accounts. Although the term typically denotes illicit or malicious activity, it can also encompass unintentional harm caused by users to the business.

Insider threats differ from external threats because they can work without being noticed. They can blend in with the organization’s daily activities, and their actions may go unnoticed for a long time. In addition, they can carry out their activities without triggering the usual security measures, making it difficult to identify and mitigate insider threats. To address this challenge, organizations need to have a good understanding of human behavior, proactive monitoring systems, and a culture of security awareness.

How dangerous is that?

Financial motives usually drive data breaches and compromises. Still, they can also occur due to espionage, retaliation, grudges towards employees, carelessness in maintaining security or accessing unlocked or stolen devices. Insider threats are prevalent in specific industries, including healthcare, finance, and government institutions, but any company can be vulnerable to information security risks.

According to a recent Ponemon study, “Cost of Insider Threats: Global Report”, insider threats are becoming a growing problem:

• Over 60% of organizations experience 30 or more insider-related incidents yearly.
• Negligence was responsible for 62% of incidents caused by insiders.
• Out of all insider-related incidents, 23% were caused by criminal insiders.
• User credential theft was responsible for 14% of insider-related incidents.
• Over two years, there was a 47% increase in incidents involving insiders.
• On average, companies spend $755,760 for every incident related to insiders.

Detecting Insider Threats is challenging because the perpetrator has authorized access to the company’s systems and data. Employees must access email, cloud applications, and network resources to perform their duties effectively. Depending on their job functions, some staff members may also need access to sensitive information, such as financials, patents, and customer details.

Since insiders have legitimate credentials and access to the company’s systems and data, they are often considered normal behavior by many security products, and no alerts are triggered. The difficulty of detecting the insider threat increases as the attacks become more complex. For instance, threat actors may use lateral movement to conceal their tracks and gain access to high-value targets. Alternatively, an insider might exploit a system flaw to gain elevated privileges.

Types of Insider Threat

Malicious Insider

A malicious insider is a contractor or employee who intentionally steals information or disrupts operations. This type of person may be looking for opportunities to sell information or advance their career or be a disgruntled employee seeking to harm the company, punish or embarrass them. For example, some Apple engineers were recently charged with data theft after stealing driverless car secrets and sharing them with a China-based company.

Negligent Insider

Insider threat can come from employees or individuals who compromise security due to negligence, carelessness, or lack of awareness. These accidental insiders may unknowingly cause data breaches, open phishing links, or fall victim to social engineering attacks. It is crucial to acknowledge these risks and take measures to avoid them.

Disgruntled Employees

Be aware that employees with negative feelings towards their organization or who have faced personal or professional issues can be a potential danger. Such individuals may cause problems, steal data, or try to harm the organization’s reputation as an act of revenge.

Compromised Insider

It’s common for employees to fall victim to malware infections on their computers. Often through phishing scams or downloading malware through links. These infected devices can become a hub for cybercriminals, giving them access to scan files, compromise other systems, and more. A perfect example of this is a 2020 Twitter breach. Attackers used a phone spear phishing attack to access employee credentials and their internal network. With this information, they targeted employees with access to account support tools. Leading to the successful hacking of high-profile accounts and spreading a cryptocurrency scam that earned over $120,000.

How to mitigate insider threats?

Organizations have various technical and non-technical measures they can implement to detect and prevent each type of insider threat. Each type of threat shows different symptoms, but security teams can proactively address them by understanding the attackers’ motivations. Successful organizations take a comprehensive approach to mitigating the insider threat.

So how to prepare against insider threats?

To prevent insider threats, organizations can take several measures. Here are the primary areas to concentrate on, which are four in number:

1. User behavioral analytics

User Behavior Analytics (UBA), also called User and Entity Behavior Analytics (UEBA), involves tracking, collecting, and analyzing user and machine data to identify organizational threats. UEBA uses different analytical techniques to distinguish between normal and abnormal behaviors. This is typically achieved by gathering data to establish what normal user behavior looks like and then flagging any behavior that deviates from the norm. UEBA can effectively detect unusual online behaviors, such as credential abuse, unique access patterns, and large data uploads, which are often signs of insider threats. Additionally, UEBA can detect these unusual behaviors among compromised insiders well before criminals can access critical systems.

2. Train your employees

Moreover, organizations must provide comprehensive training to their employees, enabling them to recognize and address potentially risky behavior exhibited by their colleagues. Encouraging employees to report such concerns promptly to the Human Resources (HR) department or the Information Technology (IT) security team is essential in proactively mitigating the risks posed by disgruntled individuals who may pose malicious insider threats. Facilitating anonymous tips further enhances the confidentiality and security of such reporting mechanisms.

3. Coordinate IT security and HR

Numerous accounts highlight instances where IT security teams were caught off guard by layoffs, underscoring the need for effective collaboration between the Chief Information Security Officer (CISO) and the HR leadership. These key stakeholders can proactively prepare the IT security infrastructure by fostering a close working relationship. One effective measure involves creating a watchlist of affected employees and implementing behavioral monitoring systems to detect potential threats before they materialize.

Moreover, HR can play a vital role by sharing pertinent information with the IT security team, such as when certain employees were overlooked for promotions or salary increases. Another valuable strategy involves leveraging input from HR to fine-tune data loss prevention (DLP) tools, enabling the early detection of indicators associated with self-harm and disgruntlement within the organization. By incorporating active thought and collaboration from HR, organizations can establish a robust early warning system to prevent potential security breaches and foster a safer work environment.

4. Frequent password change

Frequent password changes can be one method to mitigate insider threats, but there are better solutions than this one. Insider threats refer to the risks posed by individuals within an organization who have authorized access to sensitive information or systems and misuse that access for malicious purposes. While password changes can help somewhat, a comprehensive approach is necessary to address insider threats effectively.

5. Access Control

To enhance security and mitigate potential risks, it is imperative to establish robust access control measures. These measures should be designed to grant employees access only to the resources and information essential for their designated job roles. Adhering to the principle of least privilege ensures that individuals have the minimum necessary permissions, minimizing the likelihood of misuse or unauthorized access.

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