Innovative enterprise businesses are continuously assessing how new digital technologies can help them transform their organization and drive new growth. This practice is called enterprise digital transformation, and it is becoming essential in today’s digital-first era to stay ahead of the competition.
Enterprise digital transformation is an exciting endeavor that can make operations smoother, more effectively deliver value to target audiences and enhance the customer experience. But it also comes with its own set of adverse effects that many don’t consider until damage is done.
The more technologies that have access to your customer information and sensitive data means more potential risks and challenges—such as unauthorized access to confidential information or data breaches. This can be concerning, but it also doesn’t need to be a roadblock to your company’s overall goals. If you want to keep enterprise digital transformation going at full speed, you can still ensure data privacy and security by taking the right precautions.
Data privacy and security risks that can result from enterprise digital transformation
Fresh, innovative technologies enable better business practices but can also create new blind spots in your organization’s data privacy practices. When you implement new technology from a third-party vendor, what happens when your company’s sensitive data is passed through that technology?
Since these applications, software or systems typically reside outside of your own company’s infrastructure, you can’t be certain that sensitive data is going to be handled the same way your team safeguards it. And you can’t enforce compliance with third parties like you can with your own employees.
The data being passed outside your infrastructure faces a higher risk. It’s important to maintain a full picture of the potential risks that can come from partnering with these third-party vendors when on a quest for enterprise digital transformation. If you are without a sensitive data discovery tool that can scan endpoints outside of your network, keeping this picture becomes difficult. You don’t want something that was meant to be a positive change ending up as a total headache.
Risk #1: Reputational damage after a breach
Your organization’s relationship with your customers and prospective clients is paramount. Communicating the measures your organization is taking to keep customer data secure goes a long way in building trust. Cyber attacks and data breaches can chip away at that established trust. Depending on the severity of the breach and how your organization responds to it, these occurrences can seriously damage your company’s reputation—not only with customers and potential customers, but also with business partners who may not feel comfortable being known by association.
Risk #2: Financial losses
Data privacy is becoming a more prominent issue in the United States with GDPR, GLBA, HIPAA, CCPA, and soon CPRA, laws. Each data privacy law has its own outlined set of fines for non-compliance. For example, violations of CCPA that are deemed unintentional can cost $2,500 per violation. The financial penalty increases to $7,500 per violation if found to be intentional. These financial penalties can add up quickly.
In addition to financial penalties, there are additional costs in repairing the breach, potential loss of revenue from losing customers and difficulty acquiring new customers. A data breach can easily add up to thousands, hundreds of thousands or even millions of dollars in financial losses.
Risk #3: Legal ramifications
In the case of large data breaches that involve sensitive personal data, it’s not uncommon to see class-action lawsuits follow. In addition to a settlement or payout, there are also legal fees that your organization will need to account for. In some cases, organizations may even be restricted from performing certain business operations until legal investigations are complete. That pause can result in financial losses and can create other long-term issues within an organization.
How enterprise businesses can develop strategies for safely achieving digital transformation
The potential risks of a data breach are significant, and when dealing with a third-party vendor, it can seem like an unmanageable situation. While you can never entirely eliminate risk (especially from a third-party you have limited control over), you can take steps to limit that risk to a point where the growth value greatly outweighs the risk.
1. Assess potential risk during the vendor evaluation process
It sounds simple enough, but many organizations fail to consider data privacy and security during the vendor selection process. Take inventory of the types of sensitive information that the third-party vendor collects, processes and has access to. What is the level of confidentiality of this data? How is it stored and processed? Which compliance laws are relevant to this type of data collected? These are just some of the criteria you should be assessing before onboarding a new vendor.
You can also look to independent security rating evaluators to get an unbiased take on how they rate the vendor’s security practices. Security ratings can provide a data-driven, quantifiable number that can aid in the decision-making process.
2. Measure fourth-party risk
Which third-parties does your new third-party vendor rely on? These organizations are known as “fourth-party vendors,” and it’s important for you to know if any of your organization’s information is making its way to them. To keep tabs on where your data is traveling, you can require vendors to provide notification when data is being shared with a fourth-party, or even a fifth-party. This should be stated in a signed contract and can help your organization track where your sensitive data goes, who has access to data, and give your team better peace of mind.
3. Incorporate risk management into vendor contracts
While incorporating cyber risk into your vendor contracts won’t prevent a data breach from happening, it can help hold your vendors accountable. This can be language that states vendors must maintain a certain security rating or risk having their contract terminated. This could also include language that stipulates they must communicate security issues that arise within a certain time frame.
Again, while these measures won’t necessarily prevent a breach from occurring, they do spell out a level of responsibility for your vendor. This can also help weed out vendors who do not take data privacy and security seriously.
4. Keep an updated inventory of active vendors
Enterprise businesses typically engage with many third-party vendors. A byproduct of that is that they also likely engage with many fourth- and fifth-party vendors. It’s essential to keep a record of which vendors you engage with and who currently has access to your company’s data.
It’s simple in theory but can be tricky within large enterprise organizations. This is where data privacy tools that can locate sensitive data across multiple endpoints, including the cloud, can help with inventorying. Having an up-to-date record makes it easier for an organization’s security team to check in with their vendors, make appropriate changes to the organization’s data privacy policies as needed, and communicate important security news and updates with the team.
5. Develop and maintain a privacy- and security-forward team culture
Your employees are using the third-party technologies you implement, so everyone within the organization must understand data privacy and security best practices. Leadership should be talking with their teams about potential third-party security risks, and any steps that can be taken to prevent such risks from occurring. A good security plan starts from the inside out, so make sure to talk about best practices with your staff to create and continue building a security-forward culture.
6. Continuously check-in with third-party vendors
Once you have a system for inventorying which vendors are currently in use, this step becomes easier. The best solution is to continually monitor the data they have access to, which is done best through an accurate data privacy management tool.
At the very least, your organization should create scheduled assessments or audits to keep tabs on your vendors. The issue with relying on scheduled assessments, rather than continuous monitoring in real-time, is that your organization is not as proactive in preventing or responding to risk.
7. Invest in privacy tools that take a unified approach across all systems
Investing in a data privacy tool can help make it easier to accomplish enterprise digital transformation with minimized risk. There’s a lot that can be done to minimize risk manually, but by investing in a data privacy software that checks off multiple boxes of your third-party technology implementation strategy, you can reduce many tedious hours of work. You’ll also likely see greater accuracy and benefits such as real-time monitoring.
Embrace enterprise digital transformation while safeguarding sensitive data
There are many factors to consider when it comes to enterprise digital transformation. Data privacy and security are big ones and luckily, with the right precautions and strategy, your organization can accomplish transformation with better peace of mind.
Spirion’s Data Privacy Manager (DPM) makes rolling out a safe, smart strategy for enterprise digital transformation easy—and more effective. Built with a highly-scalable architecture, DPM can monitor and locate sensitive information across multiple endpoints, from the cloud to on-premise systems. Continuous, real-time monitoring is a huge advantage when it comes to staying on top of your third-party vendors, and it enables your organization to hit enterprise digital transformation growth goals on time.
To see how DPM works, you can schedule a free demo here.