Understanding Third-Party Risk Management
Published: March 18, 2025
In today's interconnected business environment, third-party relationships are essential but introduce significant security risks. Companies frequently rely on external vendors, partners, and contractors to deliver critical services, but these third parties often require access to sensitive internal systems and data. Mismanaging this access can lead to data breaches, compliance failures, and operational disruptions.
Third-party risk management (TPRM) focuses on identifying, assessing, and mitigating the risks that arise from giving external entities access to internal networks and data. Two key technologies that play a vital role in securing third-party access are Software Defined Perimeter (SDP) and Software Defined Wide Area Network (SD-WAN). Understanding how these solutions work, their differences, and how to implement them effectively is crucial for maintaining a secure and resilient IT environment.
Why Third-Party Risk Management Matters
Third parties often require broad access to internal systems for maintenance, support, and operations. This access creates significant security gaps increasing the attack surface as each additional connection to your network creates a new potential entry point for attackers. If third-party credentials are compromised, attackers can escalate their access and move laterally within the network, increasing the risk of deeper infiltration. Inadequate access control can expose sensitive company and customer data, leading to costly data breaches and loss of trust.
Mismanaged third-party access can result in violations of critical regulations such as GDPR, HIPAA, and PCI-DSS, which may lead to legal penalties and reputational damage. An effective third-party risk management strategy helps reduce these risks by implementing strict access controls, monitoring behavior, and using technologies like SDP and SD-WAN to segment and secure network traffic.
Handling Third-Party Access
Effective third-party risk management requires a multi-layered approach to handling access, this is defined in 3 steps:
1. Establish a Zero Trust Model:
The first step is to establish a Zero Trust Model, which follows the principle of "never trust, always verify." This means that all third-party users and devices must authenticate before gaining access to internal systems. Implementing multi-factor authentication (MFA) adds an extra layer of security, ensuring that even if credentials are compromised, unauthorized access is still blocked. Applying least-privilege access ensures that third parties are only granted the minimum permissions necessary to perform their tasks, reducing the potential for misuse or exploitation.
2. Monitor and Audit Access:
The next critical step is to monitor and audit access continuously. Real-time monitoring of third-party connections allows organizations to detect and respond to suspicious activity before it leads to a breach. Automated logging and alerting systems can help identify patterns of abnormal behavior, enabling quick action to contain threats. Regular audits of access permissions are also essential to ensure that credentials are not over-extended or misused. Revoking unnecessary or outdated access further strengthens the security posture and minimizes potential attack vectors.
3. Contractual and Legal Controls:
Strong contractual and legal controls are necessary to hold third parties accountable for security compliance. Contracts should clearly outline security requirements, including how data is handled and accessed. Third parties should be required to adhere to the same internal security policies as employees and undergo periodic security assessments to verify compliance. By combining these legal safeguards with technical controls and continuous monitoring, businesses can effectively minimize the risks associated with third-party access while maintaining operational efficiency.
Understanding SDP and SD-WAN
Two key technologies that can enhance the security and performance of third-party access are Software Defined Perimeter (SDP) and Software Defined Wide Area Network (SD-WAN). While they serve different purposes, they complement each other in securing third-party access.
What is Software Defined Perimeter (SDP)?
SDP is a security framework that creates a dynamic, invisible network perimeter around applications and services. It operates on the principle of "authenticate before connect."
How SDP Works?
SDP requires users and devices to authenticate with a controller before they can access any resources. Once authenticated, a secure, encrypted connection is established between the user and the specific application they need, ensuring that data remains protected during transmission. Unauthorized users cannot even "see" the existence of protected resources, effectively reducing the attack surface and preventing unauthorized access.
Key Benefits of SDP:
✅ Reduces attack surface by hiding network resources from unauthorized users.
✅ Enforces granular access control and segmentation.
✅ Limits lateral movement within the network.
What is Software Defined Wide Area Network (SD-WAN)?
SD-WAN is a technology that allows organizations to manage and optimize network traffic between different locations (e.g., branch offices, data centers) using software-based policies.
How SD-WAN Works?
SD-WAN routes network traffic dynamically based on real-time performance and security conditions, ensuring that data flows efficiently and securely. It uses encryption and segmentation to protect traffic across both public and private networks, reducing the risk of interception and unauthorized access. SD-WAN prioritizes business-critical applications, improving overall performance and reliability by allocating network resources where they are needed most.
Key Benefits of SDWAN:
✅ Improves network performance and reliability.
✅ Reduces costs by allowing the use of low-cost internet connections.
✅ Enhances security with integrated threat detection and encryption.
SDP vs SDWAN
| Feature | SDP | SD-WAN |
|---|---|---|
| Primary Purpose | Secure access to applications and services | Optimize and secure network traffic between sites |
| Security Model | Zero Trust – Authenticate before access | Dynamic routing with traffic encryption |
| Access Scope | Individual users and devices | Entire network and branch locations |
| Visibility | Resources are hidden until authenticated | Network traffic is visible for routing decisions |
| Common Use Case | Third-party access control and remote user security | Branch office connectivity and network optimization |
Zero Trust Foundation - SDP and SDWAN
The combination of SDP and SD-WAN forms the foundation of a Zero Trust model, which operates on the principle of "never trust, always verify." SDP reinforces Zero Trust at the user and application level by requiring authentication before granting access and limiting access to specific applications based on user roles, ensuring that even if attackers infiltrate the network, they cannot access sensitive resources without proper credentials. SD-WAN supports Zero Trust at the network level by encrypting traffic, segmenting network paths, and dynamically routing data based on performance and security policies, which helps limit lateral movement within the network. Continuous monitoring and dynamic enforcement of access and network policies further strengthen Zero Trust by allowing real-time detection of anomalies, automatic policy adjustments, and quick revocation of access when necessary.
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