Why You Need to Assess Your Third and Fourth-Party Vendors

Published on

April 21, 2025

Article Courtesy of StoredTech's Network of Experts

Sonu Vinod Mehta | Governance, Risk & Compliance Expert

Sonu has 8+ years of experience as an information security professional with a proven track record in governance, risk & compliance and IT audits.

"Do what you do best and outsource the rest." - Peter Drucker

How well do you really know your vendors, and do you know your vendors - vendors?

In today’s hyper-connected business world, organizations are partnering with third-party vendors more than ever to boost efficiency and tap into niche expertise. But with every new partnership comes a new layer of risk—not just from the vendors you directly work with, but also from the ones they rely on: fourth-party vendors. These hidden players in your supply chain can silently expose your organization to serious cybersecurity threats which you would not be aware of. And as recent high-profile breaches have shown, overlooking them could cost you far more than just data. It’s time to rethink how we assess vendor risk—because security doesn’t end at your front door.

The Expanding Risk Landscape

A survey conducted in January 2025 revealed that 91% of Chief Information Security Officers (CISOs) reported an uptick in third-party cybersecurity incidents over the past year. Alarmingly, only 3% of organizations have full visibility into their supply chains, including fourth and nth-party relationships. This lack of oversight can leave businesses vulnerable to breaches originating beyond their immediate partners.

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Real-World Consequences of Vendor Breaches

The consequences of inadequate vendor assessments are evident in recent high-profile breaches. These incidents highlight the tangible risks posed by third and fourth-party vendors and the potential for substantial financial, legal, and reputational damage.

Healthcare Data Compromise:

In February 2025, Genea, a major IVF provider, experienced a significant data breach. An unauthorized third party accessed management systems.

Sensitive information exposed including names and contact details
Healthcare records exposed including medical histories and insurance information

Financial Sector Exposure:

In April 2025, a ransomware attack on Toppan Next Tech (TNT), a third-party data vendor, potentially compromised customer information from Singapore’s DBS Group and the Bank of China’s Singapore branch.

Data from around 3,000 BoC customers were at risk
Approximately 8,200 client statements from DBS
Sensitive information including names, addresses, and account details

What Are Third-Party Vendors?

Third-party vendors are external partners who provide services like IT support, cloud hosting, payroll etc. They often access sensitive systems or data of all their customers, making them a potential victim to cybersecurity risks. If their defenses are weak, their customers could be exposed to breaches—highlighting the need for ongoing risk assessment and careful vendor selection.

Understanding Fourth-Party Risks

Given the complexities of modern supply chains, assessing the cybersecurity posture of both third and fourth-party vendors is imperative. Key steps include:

Before engaging with vendors, evaluate their cybersecurity policies, incident response plans, and compliance with relevant regulations.

Regularly monitor vendor activities and their subcontractors to detect and address vulnerabilities promptly.

Define security expectations and responsibilities in vendor agreements, including provisions for assessing and managing fourth-party risks.

Utilize tools like artificial intelligence to enhance the efficiency and scalability of vendor assessments.

Notably, 27% of CISOs currently use AI for this purpose, with 69% planning adoption in 2025.

What Should Vendors Do to Pass a Vendor Risk Assessment?

Vendors should hold recognized security certifications such as: ISO/IEC 27001, SOC 2 Type II, NIST Cybersecurity Framework compliance, and PCI DSS (for those handling payment data), HIPPA (for those handling medical data
Follow best practices
Train staff
Implement access controls
Conduct backups
Change Management
Encryption
MFA
Business continuity & incident response plans

StoredTech's Commitment to Secure Vendor Management

At StoredTech, we recognize the critical importance of robust vendor risk management. Our comprehensive cybersecurity services are designed to:

Identify and Assess Vendor Risks: We help organizations evaluate the security postures of their third and fourth-party vendors with business impact analysis, ensuring alignment with industry best practices.
Implement Continuous Monitoring Solutions: Our tools and skills provide real-time insights into vendor activities, enabling proactive threat detection and mitigation.
Develop Customized Risk Management Strategies: Understanding that each organization has unique needs, we tailor our approaches to effectively address specific vendor-related risks.

By partnering with StoredTech, businesses can enhance their resilience against supply chain threats and safeguard their critical assets.

The increasing need for vendors and their expertise has led to increase in the frequency of vendor-related cyber incidents, and this serves as a stark reminder of the importance of assessing third and fourth-party vendors. Implementing comprehensive risk management strategies not only protects sensitive data but also ensures operational continuity and compliance with regulatory standards. As the cybersecurity landscape evolves, proactive vendor assessments will remain a cornerstone of robust security postures.