IT Vendor Assessments

How safe is your data after it leaves your control?

Howard Haile Bill McSpadden

Topics Covered

• Why conduct a vendor audit?• Organizing the internal processes• Identifying who needs to be

involved• Get information about your

vendors• Survey and assess the vendors• Monitor and remediate

Potential Problem Areas

• Industries– banking – healthcare

• Business Processes– Employee processes (Payroll, 401k)– Customer Service

• IT processes– Cloud computing– Backup/recovery – Help Desk

Why Audit Your Vendor?• You can’t control information once

it leaves your control• You are putting a great deal of

control in the hands of your vendors

• Your vendor may pass your data to other people – who you don’t know and who have no obligation to you

• A hack on your vendor may leave your organization as exposed as if you had been hacked.

Why Not a SAS70?

• SAS70 does not specify a pre-determined set of control objectives or control activities that service organizations must achieve. 

• SAS70 is used for financial reporting compliance – not other compliance requirements (HIPAA, GLB, etc.).

• May not cover some important areas like Disaster Recovery, etc.

• May not be available (too small, out of US)

Other 3rd Party Reviews?

•You may be able to use results of other 3rd party reviews to reduce the burden of 1st party inspection.

•However, your organization should perform it’s own risk assessment!

•Shared Assessments – new organization which supports a standardized set of assessment criteria

Other Types of Reviews

• ISO 17799 (info security)• ISO 9000 series (quality)• Trust Services (security oriented

including availability)

Get Everyone On Board

Develop standards and procedures

surrounding data

Make sure it covers

Vendor management (purchasing, etc.)

IT

Field offices

Employee Awareness

Purchasing

•Get 'right to audit' in contract•Spell out obligations

• Proactive (not just penalties for failure)• Prescribe necessary precautions

•Make the obligations part of the solicitation and scoring

• Include ‘claw-back’ provisions in the contract for expenses incurred as a result a breach.

IT

• Information classification needs to be emphasized

• Heightened awareness required, particularly involving data repositories

• Strong change request process is very useful• Need heightened awareness involving

encryption• Direct access to your network heightens the

risk as it potentially exposes ALL of your data!!!

Field Offices

• What is their ability to contract independently

• How de-centralized is IT?

Employee Awareness

• Employees need to be aware of data sensitivity

• Reminder that email attachments (spreadsheets, cut/paste lists, etc.) are covered

• Provide a point of contact for questions

• Periodic reminders

Data classification

• Sensitive data needs to be identified

• Remember combinations of data• Don't send unnecessary data, e.g.

account numbers

Discussion Questions

1. Should you hold your vendors to the same information security specs as your own?

2. Do you hold your vendors to the same information security specs as your own?

3. What would it take to satisfy you of the vendors’ security over information?

4. What is your organization doing to satisfy themselves with regard to vendor security?

Assessment Process

1. Rank the risk2. Identify the vendors (all or some?)3. Survey vendors4. Score the survey5. Identify weaknesses6. Decide on remediation process

Pre-Survey Steps

Does the vendor know what is expected – in detail?

Do you have a good contact at the vendor, if permitted?

What sort of tracking system do you need?

Who is responsible for devising, administering and scoring the survey?

Survey Process

• Develop the survey• Devise a scoring system (Keep it

simple!)• Design the questions to be ‘gradable’• Have all vendors complete a standard

questionnaire. • Review and score questionnaire – use

same criteria.• Use 'skepticism' when grading• Evaluate by predetermined score

Survey Considerations

• Once high risks vendors are completed are you comfortable with results? If not, keep going until you begin to feel comfortable

• Evaluate risks against questionnaire score

• High risk data/processes necessitate high vendor score

• Determine if additional info, including site visit, is needed

On-site inspections? High risk vendors may require on-

site inspection• High risk implies sensitive data

and/or questionable safeguards• Set up a schedule based on risk

assessment. The higher the risk, the greater the frequency.

• Might be a good opportunity for employing consultants whose presence overlaps your vendors

Vendor - Background Info• Nature of service provided• Frequency that information is

supplied to vendor• List of date elements provided

(selection criteria is not essential)• How data is transported (transport

method and encryption technique)

Vendor - Background (cont’d)

• Will any of the data reside outside of the US?

• Are any of the services provided further outsourced? (If so, more detailed information on nature, location, etc. is required)

Vendor Oversight

• Regulatory or other Governance the vendor must follow (HIPAA, PCI, banking, SOX, SAS70, etc.)

• Is your data/processes covered by those compliance processes? If so, can those regulatory bodies affect your organization?

• Employee policies (confidentiality agreements, background checks, termination process within systems, etc.)

Vendor – Process Inventory• Provide a specific list of servers,

databases, and networks where data will reside or be processed

• Provide information on each (location, operating systems, age, etc.)

Vendor - Security Questions• Describe security policies• Provide data classification grid• How does your vendors’

classification match your data classification scheme

• Technical/logical system controls

Vendor – Physical Risks

• Physical security of facilities (accessibility by public)

• Data Center• Off-site data storage – is your data

going to yet another vendor?• Call center services (if in scope) • Identity theft monitoring process

Vendor Business Continuity• Business Continuity plans (may not be in

scope depending upon nature of the services provided)

• What is the recovery timeframe for your data and equipment?

• Does response time match your need?• Does the response time match your contract?• Has your data and equipment recovery been

specifically tested?

Handling 3rd Parties

• What processes are further sub-contracted to a 3rd party? NOTE: same assessment process needs to be followed for the 3rd party

• What are your rights with regards to 3rd party inspections or ability to have primary vendor inspect?

Vendor Documentation

• Any documentation from third party reviews (PCI, SAS-70, BITS)

• Organization chart (especially showing security responsibility and hierarchy)

• Outline or listing of security policies and procedures in place (an index or table of contents, etc.)

• Process documentation or results of any security risk assessment processes

Vendor Doc (cont’d)

• Employee background check template to verify scope

• Floor plan diagram showing security devices (i.e. cameras, badge readers, etc)

• Access control list for the data center (if applicable)

• Account password settings (screen shot of settings for systems

Vendor Doc (cont’d)

• Audit/logging policies for systems processing/protecting

• Data retention and secure purging related policies and procedures.

• eDiscovery program• Incident response plan – is your

organization notified promptly?• A sample of the change control process

sign off form or document recording approval for system/software changes

• Org chart

Managing Deficiencies

• Prioritize the deficiencies• Ensure that purchasing and

business unit is aware of vendor deficiencies – and potential impact

• Work with vendor and purchasing to develop a reasonable timeline to fix

• If necessary, begin enforcing contractual penalties

One More Thought (or so)If you are provide outsourced

services:• What are you doing to provide this

info?• Are you meeting your obligations?• What is the processes for keeping

your clients informed?• What do you outsource that might

create a problem?

Call to Action

• Assess the process for managing information flow to outside parties

• Identify the risks for data residing outside your direct control

• Evaluate external organizations’ ability to secure your data

More Information

Shared Assessmentshttp://sharedassessments.org/

• Agreed Upon Procedures• Standard Info Gathering

Questionnaire• Low/high risk questionnaire• Business Continuity questionnaire• Privacy Continuity questionnaire

Questions & Contact Info• Bill McSpadden

(BMcSpadden@Chanllc.com)

• Howard Haile (HHaile@Chanllc.com)