Third-party vendors are a critical part of modern organizations. While they play a large role in improving productivity and efficiency, the businesses you choose to partner with could be the greatest risk to your data compliance.
Ensuring that your organization is secure against cyberattacks or prepared to handle data breaches is only part of the equation. Your supply chain’s security posture is an extension of your own. Any vendors that process or collect your organization’s data or your customer’s data must meet the same compliance standards.
Assessing what measures a data collection provider takes to secure their internal systems and technology can help you disqualify less secure software vendors from your procurement process and protect your environment from unnecessary risk. .
What is Data Compliance?
Data compliance refers to the governance policies of an organization to ensure compliance with regulations, laws, and standards for safeguarding sensitive data. While different data compliance laws have separate requirements, the means to becoming compliant usually involve tools and practices for threat detection, multi-factor authentication, access restrictions and data collection consent.
Each law clearly defines what data needs to be secured and how, who has access to the data, and the specific processes for ensuring data security, privacy, and compliance. Data compliance laws that could impact you include General Data Protection Regulation (GDPR) which applies to the EU and all customers based out of the EU, California Consumer Privacy Act (CCPA), the Personal Information Protection and Electronic Documents Act (PIPEDA) a Canadian law that applies to Candian citizen data, US-based Health Insurance Portability and Accountability Act (HIPAA), and Children’s Online Privacy Protection Act (COPPA) which protects children under the age of 13 from data collection.
To avoid a compliance breach, the software suppliers you work with must process your customer and organization data at the same level of care as your own organization.
Is Your Data Collection Provider Prepared?
When performing due diligence for any third-party provider, it is important to thoroughly evaluate any potential vulnerabilities that could put your organization’s data at risk. Ask questions to find out if the vendor has the necessary measures in place to safeguard your data.
While many organizations opt for conducting a formal supply-chain vulnerability management assessment and questionnaire, the following questions can quickly identify red flags in a vendor’s data collection and management processes.
Infrastructure Security:
- How is your data center physically secured against unauthorized access?
- What measures do you have in place to prevent and detect physical security breaches?
Data Encryption:
- How is data encrypted during transmission over networks?
- Is data encrypted at rest, and what encryption standards are employed?
- Do you use secure protocols such as HTTPS for data transmission?
Access Controls:
- How is access to sensitive data controlled and restricted within your organization?
- Do you employ multi-factor authentication for accessing critical systems?
- How are access permissions managed for employees and third-party contractors?
Data Storage and Retention:
- What measures do you have in place to ensure the secure storage of data?
- How long do you retain customer data, and what is the process for data disposal?
Incident Response and Monitoring:
- What procedures do you have in place for monitoring and detecting security incidents?
- How quickly do you respond to security incidents, and what is your incident response plan?
Employee Training and Awareness:
- How do you ensure that your employees are trained on security best practices?
- What measures are in place to promote security awareness among your staff?
Vendor Management:
- How do you assess and manage the security practices of your own third-party vendors?
- Can you provide documentation on the security practices of any subcontractors you may use?
Compliance and Certification:
- Have you undergone any security audits or obtained certifications (e.g., SOC 2, ISO 27001)? How do you ensure compliance with relevant data protection regulations?
Data Breach History:
- Have you experienced any security breaches in the past, and if so, how were they addressed?
- What measures have been implemented to prevent similar incidents in the future?
Data Access Monitoring:
- How do you monitor and audit access to sensitive data?
- Can you provide logs or reports demonstrating who accessed specific data and when?
Software Security:
- How do you ensure the security of the software and applications used for data collection?
- Do you conduct regular security assessments and penetration testing on your software?
Physical Security for Devices:
- If your data collection involves physical devices (e.g., IoT devices), how are these secured against tampering or unauthorized access?
What to Look For
These questions are just a starting point but can help you rule out vendors who don’t have the documentation to support their claims of being a secure provider.
Read through the company’s privacy policy and ensure it adequately addresses how the company processes personal information. Verify that privacy assurances are matched by control standards in security statements or compliance reports, such as SOC-2 or ISO 27001.
A company that holds itself to strict standards in its daily practices has documentation in place that outlines those standards. When reviewing the data collection provider’s privacy, security and compliance policies, look for language that speaks to the business’s proactiveness in identifying and responding to threats, with scans and monitoring, and any SLAs for issues that impact customer data.
The objective of a well-designed security strategy is to promote positive habits and a culture of security awareness that empowers employees to flag and escalate concerns to the security team.
Ensure Better Data Compliance
Don’t let a weak link in your supply chain be the reason for a data breach. Selecting any third-party vendor requires careful and critical vetting by you and your team. Download our Data Collection Security Checklist for a curated list of questions to ask a potential vendor, before you entrust them with your organization’s sensitive data.
