Third-Party Risk in the Cloud

The term third-party risk applies to all risks introduced by external parties into an ecosystem, supply chain or infrastructure. Common third parties include vendors, partners, suppliers, service providers or contractors with access to internal data, such as intellectual property, systems, processes, internal communications and customer information.

Third-party relationships can significantly increase the vulnerabilities an organization is exposed to. The organization might have solid security and remediation measures in place. However, if the third party does not uphold similar standards, they can still expose the organization to risks.

Hyperconnectivity via third-party can help organizations grow, but it also increases risk exposure and the probability of significant losses. Failure to manage third-party risks can result in regulatory penalties, financial loss, reputational damage and litigation. The first step in mitigating this risk is getting visibility into all entities with access to the organization’s data.

Third-Party Security Risks in the Cloud

Digital transformation is a major trend today, with many organizations expanding their cloud presence and relying more on cloud services. While cloud computing enables extensive optimization and cost savings of computing environments, it also introduces complexity, making cloud security harder. For example, a technology vendor may have third-party vendors downstream, each providing different functions to support the technology.

The security paradigm is changing as the modern computing environment moves away from the isolated enterprise network. When an organization moves to the cloud and relies increasingly on third parties, it introduces the security risks associated with these newly added third parties. A provider with security issues could allow attackers to penetrate the corporate network.

Here are some security challenges associated with third-party service providers in the cloud.

Larger Attack Surface

Whenever organizations share data with third parties, their attack surface expands, putting their customers and data at risk. A larger attack surface is harder to manage and increases the likelihood of missing a critical security gap. Many organizations ignore third parties to avoid the time-consuming, labor-intensive process of evaluating third-party risk.

Limited Visibility

Many organizations lack sufficient visibility into third-party environments, making it harder to mitigate security risks. It is not always apparent if a vendor or partner has a severe vulnerability. Organizations can improve visibility into third-party security risks by using scalable solutions and standardized risk assessments covering the entire supplier ecosystem.

With high visibility and robust data and analytics, organizations can see what security controls each third party uses to prevent breaches. Monitoring third-party risk also allows customers to notify the vendor when they identify a security gap, helping the vendor improve its defenses.

Software Dependencies

A software dependency is a component that provides the necessary functionality for the primary component to work. The more dependencies in an application, the more third-party tools or applications it requires to function, increasing the risk of disruption and expanding the attack surface.

Package managers (i.e., Maven, npm), Git repositories (i.e., GitHub), and container image registries (i.e., Docker Hub) can introduce dependencies to code. Identifying all dependencies is essential to enable a smooth migration to the cloud. For instance, critical dependencies in the local data center may affect the security and performance of a cloud-hosted application.

Managing Third-Party Risks in the Cloud

Third-party Risk Assessment

Before starting a relationship with a third party, it is critical to prepare a complete risk profile. Organizations use these profiles to understand the strategic risks associated with the third party and learn what data or business processes might be at risk.

Assessing third-party risk often involves using vendor risk questionnaires to learn about the vendor’s security practices, policies, and past failures. A risk assessment must consider the data the organization plans to entrust to the vendor and all relevant data security and privacy compliance obligations. It is also important to learn whether the vendor outsources work to subcontractors, introducing risks through their own third parties.

Application Dependency Mapping

Application dependency mapping helps organizations to accurately scope a modernization effort and manage a cloud migration project effectively. It provides organizations with continuous visibility into how components connect and the impact of these connections before executing cloud migration plans.

Understanding code dependencies enables organizations to work more confidently, knowing all changes are correct and safe. Once organizations fully migrate to the cloud, application dependency insights enable them to monitor the applications’ structure continuously and troubleshoot changes.

Plan for Third-Party Incident Response

Ideally, organizations should have an incident response process that can help them respond to third-party incidents. It requires analyzing the scope of cybersecurity threats to choose those most relevant risks to the organization and creating formalized procedures to mitigate them.

Organizations can ensure timely cybersecurity incidents detection by using a dedicated solution to set up alerts and notifications for suspicious actions and events related to third parties. Organizations should designate responsible personnel to get notified when third-party security incidents occur, including their names and contact details in the organization’s cybersecurity policy.

Continuous User Activity Monitoring

Many IT regulations, standards, and laws require organizations to monitor user activity continuously. Monitoring third-party activity within the network enables organizations to see what they do with critical assets and when the activity occurs.

Monitoring solutions can help monitor and record user sessions in a format suitable for additional auditing of these activities. Organizations can use reports based on the results of monitoring processes to pass external audits, evaluate overall security during internal audits, and investigate cybersecurity incidents.


In this article, I explained the basics of third-party security and showed how organizations operating in the cloud can plan to reduce their third-party risk:

Third-party risk assessment—Conducting a comprehensive risk assessment of all third parties related to cloud workloads and infrastructure.
Application dependency mapping—Automatically identifying dependencies running in cloud resources and their security issues.
Continuous user activity monitoring—Monitoring the activity of third-party users, detecting and responding to anomalous activity.
Plan for third-party incident response—The organization must have a formal plan in place that can provide a rapid and effective response to third-party security incidents.

I hope this will be useful as you improve the third-party security posture of your cloud environments.

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Gilad David Maayan

Gilad David Maayan is a technology writer who has worked with over 150 technology companies including SAP, Oracle, Zend, CheckPoint and Ixia, producing technical and thought leadership content that elucidates technical solutions for developers and IT leadership.

gilad-david-maayan has 36 posts and counting.See all posts by gilad-david-maayan

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