Organizations today are growing more dependent on third parties such as vendors, contractors and third-party service providers for their daily business functions. Whether it be IT support, logistics management, or data processing, many tasks are commonly outsourced. This can be done for a range of reasons, including cost savings, to save on resources, or to simply allow the company to focus on activities more crucial to their core goals. Despite how large of a role third parties may play in an organization, they are frequently treated as an afterthought in terms of security. This leaves organizations vulnerable to cybersecurity risks.
Third-party access often operates outside of the typical security oversight, missing the security controls and due diligence that internal organization accounts are subject to. This gap makes third-party identities a much easier attack point for cybercriminals looking to gain unauthorized access into corporate systems. These attackers often take advantage of weak account credentials, improper access configurations, and poor identity monitoring to do so.
A single compromised external account could have significant ramifications. With just one account, for example, an organization could suffer from data breaches, ransomware incidents, and substantial financial losses. On top of this, if sensitive data becomes exposed due to negligence, regulatory penalties may be faced as this could be a compliance violation. It’s clear that there are large risks with even larger consequences associated with the management of third party and non-employee identities. Despite this, many organizations still have a security blind spot and remain unaware of it.
This blog will explore in further detail what third-party identities are, using real-life examples to showcase how easily overlooked non-employee accounts can result in security incidents. Most importantly, the blog will outline the key actionable strategies that companies can undertake to start ensuring that third-party credentials aren’t an unaddressed vulnerability.
Third-party identities cover a wide range of individuals. They typically refer to any user that isn’t working directly within the organization. They include:
• Vendors
• Contractors
• Temporary/seasonal workers
• Freelancers
• Suppliers
• Outsourced employees
• Consultants
• Cloud service providers
Learn more about non-employee and third-party identities.
What makes these users different from your average employee is the nature of their employment and responsibilities. As their involvement is usually project/role-based, and this changes over time, their access privileges may need to change more frequently than that of an internal employee. Third-party engagements can also be short or appear suddenly as an organization need for it arises. Because of this, it becomes harder to have constant and consistent oversight over these accounts.
Another aspect is the individual standard of operations that third parties and subcontractors work under. The way that each vendor company operates isn’t always fully visible to the contracting company. As vendors delegate tasks across their organization, the risk of unauthorized or unmanaged access also grows. All in all, ensuring accountability amongst third parties can be difficult.
Organizations typically lack direct control over third-party cybersecurity practices, such as password management and policies, the use of multi-factor authentication (MFA), and general security standards. This limited oversight leaves room for security gaps that cyber attackers regularly exploit. For example, many non-employees reuse passwords across multiple accounts or share credentials with multiple people. On top of this, they may also use personal devices that aren’t encrypted/not fully protected by security protocols. Such practices greatly increase the risks associated with third-parties.
Given these factors, cybercriminals view third-party access vulnerabilities as relatively easier entry points. Addressing these risks is essential. However, doing so requires organizations to shift their security mindset and strategy beyond just focusing on internal accounts. Controls and practices designed with third-party identities in mind need to be implemented.
Despite how much emphasis and care organizations place on internal user security, many don’t give the same attention to third-party identities, overlooking them. For example, internal employees are usually mandated to complete regular security training, while external contractors work without this standard being applied to them. Third-party contractors often do not receive proper security awareness training, let alone have them be required. As they are often excluded from audits and privilege reviews as well, the likelihood of undetected account misuse can be significant.
The mismanagement of third-party identities often come from the incorrect assumption that organizations have regarding their risk level. They frequently believe that external partners have limited permissions, and that in turn, the impact that these accounts would have on the overall security landscape is minor.
The reality is that vendors and contractors often end up with administrative or privileged account access as that is what’s most convenient. Full-time employees wouldn’t be bothered with incessant access requests, and third parties can perform their roles without restrictions. It sounds great in theory, but this level of access places sensitive enterprise data and systems directly into third-party control. And if these accounts become compromised, attackers have immediate access to it all.
To reduce the potential magnitude of these threats, organizations should adopt an outside-in security approach. This involves thoroughly screening external user identities, limiting their access privileges to what its truly necessary, and continuously monitoring their activities. Implementing privileged access management (PAM) solutions and regularly reviewing third-party credentials can also help reduce vulnerabilities coming from external users.
Retail giant Target had a security breach due to vulnerabilities in their third-party access controls. The breach occurred when credentials from Target’s contracted vendor, Fazio Mechanical Services, was compromised. Through the use of phishing tactics, attackers were able to gain a user’s login details, allowing them to access Target’s vendor management system and ultimately reaching sensitive payment processing servers.
Attackers used the stolen credentials to access Target's Ariba vendor portal. Once inside, they progressed deeper into Target’s internal network, eventually compromising their point-of-sale terminals and payment processing systems.
This breach exposed personal and financial details of over 70 million customers, causing substantial reputational and financial losses for Target. $18.5 million were incurred in legal settlements, but above all, customers lost their trust in the retailer. This impact was reflected in the notable decline in sales and lasting harm to Target’s brand image.
Target’s response involved an in-depth overhaul of their vendor cybersecurity procedures. This incident highlights the importance of regular vendor security assessments, password/account policies, as well as phishing awareness training.
More about the case study: Target
The first thing organizations should do when starting their journey with implementing third-party identity management is conducting thorough vendor risk assessments. These assessments review the security practices, access management procedures, and security awareness training external partners have.
It’s key for companies to have a comprehensive understanding of their vendors’ security posture, especially those that are involved in handling sensitive data or systems. Only once this is done should the necessary access be granted. Assessments should be redone periodically to address evolving threats and ensure the previous standards are still being met.
Applying the principle of least privilege greatly reduces third-party access vulnerabilities. This approach helps make sure non-employee identities have the least amount of permissions granted to them, only having access to what is needed to complete their tasks.
Rather than granting general access, privileges should be tailored closely to a user’s roles, tasks, and responsibilities. Regular audits and access reviews help further reduce instances of over-privileged accounts or forgotten credentials.
MFA is beneficial as it requires users to verify their identity through at least two authentication methods, greatly reducing the risks brought by compromised credentials. MFA should be mandatory for all third-party logins, especially those that can access critical systems, to add an extra layer against unauthorized access and credential theft.
Real-time monitoring of third-party activities gives companies expanded visibility into suspicious behaviors. Solutions capable of identifying abnormal login attempts, unusual activity patterns, or strange data access by external users should be implemented.
Continuous monitoring combined with regular security reporting allows organizations to promptly respond to threats. This helps reduce the potential damage from undetected third-party security incidents.
Although they aren’t direct employees, third-party users need to have adequate role-specific security training too. The training sessions should be comprehensive, covering a range of topics such as security best practices, phishing awareness, and the use policies applicable for external identities.
Explore our four-part series on reducing third-party risks to dive deeper into best practices for mitigating external security threats.
Over time, organizations have become more reliant on third-party vendors, contractors, and such to support critical business functions and improve operational efficiency. Despite this, the security implications associated with third-party identities and their access remain widely underestimated.
As seen in real-world breaches like Target, vendor cybersecurity failures can result in substantial financial and reputational damage. Organizations need to implement the appropriate security measures to manage third parties and their identities, including rigorous risk assessments, strict access controls, continuous monitoring, and mandatory security training.
At the end of the day, third-party identity management should be a key component of enterprise cybersecurity—not an afterthought. By proactively identifying and mitigating these external threats, organizations can reduce their overall security risks.
Managing third-party identities effectively is essential for reducing security risks, preventing unauthorized access, and ensuring compliance. Anomalix delivers identity and access management (IAM) solutions that help businesses mitigate third-party security risks through adaptive authentication, continuous monitoring, and intelligent access management. Read our whitepaper on why IAM solutions are a crucial investment to understand how they can strengthen your security posture.
Get in touch with us at info@anomalix.com to see how we can help you safeguard third-party identities and improve security across your organization.
