Performing annual Vendor Risk Assessments are a critical step that help Private Equity (PE) firms proactively manage the chances and impact of a cyber breach.
Though vendors play a crucial role in streamlining firms’ operations, cyber risks among third-party vendors present a real and present threat.
What you should know – Top third-party vendor risks for PE firms include:
- Unauthorized Access: Your PE firm is responsible for managing sensitive financial data, such as investment records and strategies. Do you know how your vendors control access to your data?
- Supply Chain Vulnerabilities: Third-party vendors for services like IT support can put your firm at risk of their hidden vulnerabilities. How confident are you of their cyber controls and vulnerability management? Do you have a process in place to ensure you are notified of a breach?
- Regulatory Risk: Engaging with third-party vendors introduces new compliance and regulatory risks. Non-compliance by a vendor can lead to major consequences and penalties for your firm.
Read: 2024 SEC Examination Priorities for Cybersecurity in Registered Alternative Investment Funds
What this means for you – Get key insights from a Vendor Risk Assessment (VRA).
Before partnering with any new vendor, prioritize a Vendor Risk Assessment first. A detailed and thorough assessment allows you to make an informed choice to onboard the vendor by reviewing topics such as:
- Critical controls missing in a vendor’s systems.
- Severity level of existing cybersecurity threats.
- Potential business impacts to your firm in the event of a breach.
Read: Cost of a data breach 2023: Financial industry impacts
Additionally, undertaking a VRA can provide you with the evidence of your commitment to cybersecurity to investors and board members. This will also help you to keep track of your critical vendors and can help improve your speed to action in the event of a breach at one of your third-party vendors.
Get smart – Know what to consider in a VRA.
By leveraging a best-practices VRA you can understand and manage common cyber risks across your portfolio of key vendors who touch and manage your sensitive data.
When choosing a vendor due diligence solution, seek out the following features:
- Direct examination third-party vendors by an independent expert like Drawbridge.
- Remediation strategies at each vendor.
- Real-time updates to your board, allocators, and regulators on outstanding risks.
Ask questions such as:
- What is the level of detail that this VRA will provide me? If it’s a large vendor, will I be responsible for analyzing SOC reports?
- How are assessments performed? Are they simply passive scans of a third party’s attack surface?
By adding a detailed Vendor Risk Assessment to your cybersecurity toolbelt, you can ensure efficiency in your private equity investments without sacrificing security.
Take action – Ask about the Drawbridge Vendor Risk Assessment
At Drawbridge, our VRA solution proactively addresses third-party risks in your cybersecurity ecosystem. We help your firm identify critical threats posed by vendors and mitigate these risks effectively.
Get in touch with our team today to get started.
