How to manage third-party cyber-risk across your organization

Businesses increasingly rely on external suppliers and partner organizations to operate. With cyber threats increasing, here’s how your organization can prepare and stay resilient.

3 minute read

Key takeaways

  • Whether or not a data breach originates internally or from a third party, companies need to build and test a response plan.
  • A fundamental task of third-party management is data protection: What data is most critical to your organization, and who has access to it?
  • Effective oversight of third parties depends on strong policies that emphasize collaboration and cybersecurity as a shared goal.

Expanding supply chains and complex digital workflows are connecting most organizations to a dynamic ecosystem of partner organizations, contractors and vendors who share sensitive data and maintain access to business systems. In addition to improving cybersecurity posture and employee awareness, the businesses must also grapple with the cyber-risk posed by third parties — and the often-unseen networks of suppliers and partners third parties depend on to operate.

 

Cyber incidents involving third parties continued to rise through 2025, reflecting the growing complexity of global digital supply chains. Recent analysis shows that supply‑chain and third‑party incidents play an outsized role in data compromises, with single vendor breaches capable of cascading across hundreds of organizations and affecting tens of millions of individuals.1Additionally, industry reporting consistently shows that a substantial share of global breach activity can be traced back to external partners rather than internal systems.2Broader threat‑landscape reporting also highlights that supply‑chain compromise remains one of the fastest‑growing attack vectors worldwide, with weaknesses in third‑party environments often magnifying the overall impact of an incident.3

 

Data breaches represent only one part of the security risk. Third parties that share or use a company’s systems can introduce vulnerabilities through oversight or poor security practices. Mishandling of sensitive data can also significantly increase the risk of violating regulatory guidelines in many industries.

 

Managing third-party cyber-risk requires an in-depth exploration of how your company connects to other entities, what digital services it relies on and how entwined they are with critical business operations.

 

Here are seven steps for building or reinforcing a third-party risk management plan: 

Create incident response plans. Your company should work with suppliers and partners that have the greatest access to your systems and data to document steps to take during and after a cyber incident, including identifying stakeholders, communications and reporting protocols.

 

Identify, track and govern your most valuable data. Your company should create systems and policies that help identify who is using critical data, such as intellectual property and customer information. The company should also set controls that protect data in transit, in use and in storage.

 

Measure third-party risks. Your company should undertake a full risk assessment associated with third parties and identify those that could present the most serious threat to your company’s data or reputation in the event of a cyber incident.

 

Evaluate third-party security standards. Conduct assessments of your most important partners and service providers and the security controls they provide for your company’s assets. These evaluations should also consider any data privacy regulations or other compliance considerations.

 

Bind security protocols to contracts. Be proactive in building security requirements into supplier contracts and service level agreements. These requirements should include protocols for reporting potential security incidents, as well as the remedial steps third parties must take if a cyber threat occurs.

 

Maintain oversight of third-party security. Cybersecurity requires continuous monitoring and updates to tool sets and protocols as needed. Build performance reviews and key performance indicators into your company’s most important third-party contracts. Stress collaboration during the review process to frame cybersecurity as a shared objective.

 

Refer to industry best practices and intelligence when reassessing third-party risk. The threat landscape is constantly evolving. Risk profiles of key third parties should be regularly evaluated and adjusted based on new data about existing or emerging threats. Your company should reevaluate third-party risk assessments whenever it changes its own security protocols or learns about new cyberthreats. 

1 Identity Theft Resource Center. 2025 Annual Data Breach Report.

2 Verizon. 2025 Data Breach Investigations Report (DBIR).

3 ENISA. Threat Landscape Report 2025

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