The Rise of Non-Employee Risk Management: Protecting Against Third-Party Threats

The Growing Threat of Third-Party Data Breaches and the Importance of Non-Employee Risk Management

Introduction

In recent years, the frequency and cost of data breaches have been skyrocketing, with third-party involvement being a significant exacerbating factor. According to recent research, 54% of businesses suffered a third-party data breach in the previous 12 months alone. The average cost of a data breach in the United States has risen to $4.45 million, an increase of more than 15% over the past three years.

While the blame for a third-party breach may be placed on the external party, the responsibility lies with the organizations themselves to thoroughly vet their partners and vendors and implement effective non-employee risk management practices. This article examines the challenges posed by non-employee identities and provides best practices for mitigating third-party threats.

The Rise of Non-Employee Identities

The number of non-employee identities being used within organizations has seen a significant increase in recent years. The gig economy and the rise of contract, freelance, and temporary workers have contributed to this trend. According to McKinsey, 36% of the US workforce is now comprised of non-employee workers, up from 27% in 2016. Additionally, organizations engage with partner organizations, supply chain vendors, consultants, and other outside entities, all of which require varying degrees of access to the organization’s digital environments.

Managing these non-employee identities has become a complex task for IT and security departments. The average company now uses 130 different software-as-a-service (SaaS) applications, adding even more complexity to the provisioning and management of these identities.

The Non-Employee Identity Life Cycle

One of the biggest challenges with securing and managing non-employee identities is the onboarding process. IT and security departments often lack specific information about the job functions of non-employee workers, making it difficult to provision the appropriate access levels. To avoid obstructing business operations, organizations often err on the side of granting more permissions than necessary. This, however, increases the risk of potential breaches as compromised identities with extensive permissions can cause significant damage.

The transient nature of non-employee workers further complicates managing their identities. Orphaned accounts, where no one informs IT or security that a contractor has left, can remain active indefinitely, leaving the organization vulnerable. Legacy permissions and duplicate accounts also present risks, underscoring the importance of regularly reassessing the permissions needed by non-employee workers and eliminating unnecessary entitlements.

Best Practices for Non-Employee Risk Management

To effectively manage non-employee risk, organizations need a comprehensive solution capable of visualizing all non-employee identities from a single dashboard. Such a solution should clearly illustrate the permissions and entitlements associated with each identity, allowing for proper provisioning and decommissioning.

Automated features significantly streamline the onboarding and offboarding process, ensuring that new accounts are provisioned correctly and older accounts are deactivated. Predefined roles for specific positions can also expedite onboarding while maintaining security. It is crucial to assign an internal “sponsor” to each non-employee worker who understands their job requirements and is responsible for notifying IT about any changes in their status. The departure or change of a sponsor should also be monitored to maintain accountability and security.

Regular revalidation of non-employee identities is essential. Organizations should perform periodic checks to verify whether non-employees are still associated with the organization, potentially using monthly notifications to confirm their status. The solution should actively monitor whether permissions are actively used and promptly notify IT and security teams if an identity appears dormant or overprovisioned.

Verifying that identities only have the necessary entitlements and eliminating orphaned accounts are critical elements of non-employee risk management. The increasing utilization of contract workers, third-party vendors, and SaaS applications makes adopting a modern approach to non-employee risk management increasingly essential for business security.

Conclusion

The rise of third-party data breaches highlights the importance of effective non-employee risk management practices. Organizations must recognize the significant threat posed by third parties and implement solutions that streamline the provisioning and management of non-employee identities. By visualizing and monitoring these identities, organizations can mitigate the risks associated with external entities and reduce the likelihood and impact of data breaches.

As the volume and severity of third-party breaches continue to grow, non-employee risk management will become increasingly critical for modern businesses. The average cost of a data breach is rising, and organizations cannot afford to neglect the security of their digital environments. Implementing best practices for non-employee risk management is no longer optional—it is essential for safeguarding data, maintaining trust, and ensuring business continuity in the digital age.