Out-Sourcing Can Compromise Cyber Security

Cyber Security Risks With Out-Sourcing IT 


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Out-sourcing security functions can help companies save costs, access specialised skills, and focus on their core business, however, it also comes with risks, such as loss of IT control, data breaches, compliance issues, and vendor lock-in. 

How can you mitigate these risks and ensure that your security architecture design is aligned with your business goals is the best practices? Here are some of the thoughts your business should consider.

In today’s global interconnected world, organisations, both in the private and public sectors, often rely on outside providers to fulfil their supply chain needs. Right now, 1% of corporate leaders are choosing to rely on third-party vendors to either completely handle or supplement their cybersecurity functions, according to the consulting firm Deloitte. This surge in outsourcing is a response to the cyber security industry’s equally rapid growth.  

In particular, the powerful cloud collaboration tools used to keep us connected in the 'work from anywhere' model present ongoing data security challenges. Critical organisational data is now being consistently shared across multiple platforms, often outside the stringent security boundaries of the corporate network. And opportunistic cyber-criminals are capitalising on this increased threat surface.

Furthermore, outsourcing your IT, with the right outsourced IT services company, can save time, improve  reliability, and increase productivity. In fact, out-sourcing has become an ubiquitous business process where organisations relinquish lower-value functions such as payroll or even parts of the value chain that are more central to their business processes. However, if you make the wrong hire, you face several risks of out-sourcing IT services.

  • With the main motive to out-sourcing being cost reduction and specialised expertise at lower-value or peripheral functions, there is an increased risk that an enterprise’s capabilities might be exceeded by one or more of its providers in a data and intelligence driven world.
  • It is increasingly hard for companies to distance themselves from the digitised supply chain ecosystem. What might have started as business effective and efficient arrangement could turn into an unhealthy dependency, threatening competitive advantages and strategic plans on the business level. This can be far more critical on the cyber security level to extend to personal data loss, financial loss, compromise of product integrity or safety, or even threat to life.

The National Institute of Standards (NIST) considers that cyber risks associated with the loss of visibility and control over the supply chain can be significant. This often ranges from the inability to define the primary source of a piece of hardware embedded in an organisation’s physical infrastructure, or the provenance and risks associated with a piece of software in the digital infrastructure, to the problem of contractors and consultants having access to its critical data and trade secrets. These risks associated with Cyber Supply Chain Risk Management (CSCRM) have evolved from simply targeting Information & Communication Technology (ICT) supply chains to cover digital products and services out-sourcing. 

With more businesses becoming digital and moving their businesses to the cloud environment, the effects of a cyber security event are magnified and threat actors are increasingly targeting secure organisations to penetrate their defences by exploiting insecuities in trusted  third-party suppliers.

Four broad categories for IT Outsourcing (ITO) can be identified

Onshore in-Sourcing:   Where all services are kept in-house with more control and visibility into the processes and security.

Onshore Outsourcing:   Where both clients and providers are domestic. This strategy is the most used in outsourcing strategies.

Offshore In-Sourcing:   Carried by large inter-continental companies that set part of their supply chain and operations abroad in less developed countries, such as India, to capitalise on lower labour costs or proximity to materials and markets. 

Offshore Out-sourcing:   Combines a foreign location with an external supplier.

Clearly, there are significant reductions in costs when out-sourcing is adopted, however, the cyber risks need to be considered to determinermne f they can be mitigated and at what cost.

These concerns are similar to the standard concerns in a project: physical risk, insiders’ threats, development and implementation risks resulting in flaws. Admittedly, these concerns are not unique to out-sourcing, but the assumption is they can be more visible and accessible internally and potentially addressed adequately and timely.

Consequently, understanding and assessing vendors competencies and security processes helps ranking vendors and ultimately recording them in a repository such as an ISO to ensure there is a common basis or accrediting trusted vendors worldwide.

The cyber security risks in the ITO context exacerbated by the following factors:

Inability to quantify providers’ cyber risk exposure:  Due to lack of knowledge of vulnerabilities, potential damage, and frequency. Since risks arise from the providers’ partners supply chain, it is more diverse and evolving making it less predictable,

Lability asymmetry:   ITO providers seek to disclaim liability to avoid paying damages exceeding the revenue generated. Clients are concerned that ITO providers do not have enough incentives to protect clients’ data and systems vehemently,

Opaque supply chains:   ITO supply chains involve increasingly complex systems and operations where lack of visibility limits the potential to control cyber security risks,

Growing regulatory demand:  Across the US, UK, EU and other markets  it is almost impossible for ITO providers to be compliant with all regulatory requirements as data and services flow between regulatory perimeters, and

Strategic imperative:  Most organisations, including government agencies, do not consider cyber security as an operational concern, but rather a strategic imperative due to the data handled and the potential of being targeted by threat actors risking national security and public trust.

Trustworthiness of the contractor.   More specifically the suppliers’ risks identified relate to inaccessibility of suppliers, theft of credentials, breach through the vendor network, and finally modification of the code via malware injection.

The alternative is to out-source each function to a different Managed Security Service Provider (MSSP) which eliminates the benefits complementarity of these functions.

What Are Managed IT Services?

These are a form of technology support where an outside organisation provides proactive monitoring and maintenance of your technology infrastructure. In addition, they can assist you with upgrading your current technology so that it works to improve the running of your business.

A Managed service provider allows businesses to save time, money, and energy by outsourcing the technical management tasks they may not have the resources to take care of in-house.

How Managed IT Service Pricing Works

Pricing for managed IT services can vary depending on the type of service, the number of users and devices, and how many hours per month you need support. As with most services, if you’re catering for a large volume of employees, this is likely to cost significantly more than it would for a smaller business. Typically, businesses will be required to pay for these services in a monthly fee to the managed service provider.

What is involved in Managed IT Services?

Here’s a breakdown of what you can expect when investing in Managed IT Services:

Proactive Monitoring:   Monitoring consists of responding to potential threats, system updates, and any performance issues. Additionally, proactive monitoring from your managed IT service provider ensures that problems are prevented before they occur, reducing overall downtime as issues are fixed through expert remote support services.

Network Security:   Your network will always be safe from malicious attacks, viruses, and other cybercrime attempts. A managed services provider will implement various cyber security measures to ensure that your software is protected and doesn’t result in a costly data leak.

Data Protection:   Regular backups are carried out, as well as secure data for being stored for potential disaster recovery. As a business owner, you can take comfort in knowing that your employee and customer data is safe.

Technical Support:   This is when you need help troubleshooting issues or setting up new hardware or software for your business. A services company will often have expert remote or onsite support in case of any issues.

Software Management:   A managed services provider will install and update necessary software on all computers and devices connected to the network. They might also assist with mobile device management.

Reporting:   This includes regular reports on network performance, security, and other data points. Not only will this help the IT company monitor for any issues, but it will give you peace of mind knowing that your IT network is looked after.

How Do I Know If My Business Needs Managed IT Services?

If you’re running a business, the chances are you have an IT system in place. With the growing complexity of technology and the increasing need for reliable infrastructure, it’s essential to ensure that your IT systems are properly managed and maintained to stay competitive. That’s where Managed IT Services can help.

If you’re finding that your IT systems are outdated or inefficient, then investing in managed IT Services could be the answer. You’ll have access to qualified professionals and their expertise to ensure your business runs efficiently and securely. Additionally, you may not have an internal IT team or the resources to manage your IT systems adequately. In this case, Managed IT Services can provide the necessary assistance to keep things running smoothly and up to date.

Finally, if you’re looking for ways to reduce costs associated with managing your IT system, then Managed IT services can provide cost savings by leveraging economies of scale. By combining your IT requirements with those of other companies, you can benefit from the resulting lower costs.

What Are the Benefits Of Managed IT Services?

The main benefits of managed IT services are cost savings, improved productivity, and increased security. You can save time, money, and energy by outsourcing the technical management of your business’s IT infrastructure to an outside organisation that specialises in this area.

Additionally, these services can help reduce downtime by proactively monitoring potential issues before they become significant problems. They can also help improve productivity by streamlining processes and ensuring your technology is up-to-date and running optimally.   

Conclusions

In summary, out-sourcing strategies are a major source of cyber risks unless they are also monitored securily.The decision to out-source cyber security or keep it in house is multi-faceted and depends on the unique environment of each individual organisation.

There are many factors to assess, like cost and resourcing, but at the end of the day it boils down to one core consideration: risk ownership and management. As a business, you’re putting trust in a third-party when out-sourcing cyber security, and that level of trust needs to outweigh the risk of losing control of your highly sensitive data.   

When companies outsource IT or other functions, they change their risk profile to assume the providers’ risks incorporated in the extended supply chain along with the uncertainties and opacities that constitute an intrinsic part of it. Organisations and their executives are turning toward third-party vendors to provide strategic insight and access to advance capabilities.

  • What this iteration of the global out-sourcing report has uncovered is that third-party vendor use alone is not enough.
  • Third-party vendors must be managed in coordination with internal talent in a way that fosters transparency and trust worthiness to truly unlock value as one team in a holistic ecosystem of services, both internal and external.

Research points that a client-provider trust relationship can improve the management of cyber security risks in the supply chain and mitigate the risks in the out-sourcing decision-making process. 

Ultimately, the focus when out-sourcing should be on building integrated programs that are focused on reducing the likelihood and impact of risks that you have identified to your data and your people. Elements of this resilience can certainly be out-sourced, but fundamentally, the risk is yours to own and manage.

Image: 3D_generator

References: 

Academia:     GP Computers:    

Deloitte:     Network Coverage:    

Time Doctor:     Researchgate:    

Cyber Security Intelligence 

Relevant:     Deloitte:    

InfoSecurity:    LinkedIn:    

BIO-Key:     Researchgate

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