Data Sharing and Third Parties
In this topic we’ll provide information about Data Classification and Data Cataloging, and cover the following topics:
- What is a Third-Party Data Sharing Vendor?
- What Is an Example of a Third Party?
- What Is Third-Party Data Sharing?
- What Is a Data Sharing Agreement?
- What Is Third-Party Risk?
- How to Mitigate Third-Party Risk and Why It is Important
As more organizations seek to transform data into value, companies that directly exchange data with select partners are gaining traction. Third-party data can add significant value to such arrangements.
In the financial services industry, for example, providers have traditionally relied on third-party data to send pre-approved offers to consumers. Today, savvy marketers are relying on non-bureau-based second-party data to deliver insights. A credit card issuer who wants to increase sign-ups for its co-branded card with retail partners can purchase transaction data in order to identify the retailer’s frequent shoppers and combine this data with its first-party consumer data to identify which consumers lack a co-branded card. It can then share this data with the retail partner under the terms of their agreement and, together, deliver more relevant co-marketing to these loyal customers
It’s not uncommon for an enterprise to share data with 100 third parties across different functional areas from marketing to customer service to supply chain.
What is a Third-Party Data Sharing Vendor?
A third-party data sharing vendor is a business entity that does not have direct relationships with your customers (first-party) but has an agreement with your company (second party) to provide new data or analyze existing internal data. Oftentimes, third-party data is from a variety of web platforms that is collected, cleaned, and consolidated by a third-party data provider for the purpose of enriching existing data sets collected by your company.
What Is an Example of a Third Party?
Some examples of third-party data sharing vendors include:
- Distribution channels Partners and resellers
- Network Security tools
- Monitoring solutions
- Customer Relationships Management (CRM) tools
- Digital marketing systems
- Employee and customer screening and reputation services
- Media agencies
What Is Third-Party Data Sharing?
Third-party data is any user information collected by an entity that does not have a direct relationship with that user. Often, third-party data is collected from a variety of websites and platforms and then aggregated by a third-party data provider such as a DMP.
What Is a Data Sharing Agreement?
A data-sharing agreement is a legal document laying out the contractual terms and conditions agreed upon by participating parties. It typically includes a specific description of the data being shared, license grants, limited use restrictions, required data protection safeguards, and privacy and identification-related guidelines.
What Is Third-Party Risk?
Third-party risk involves the following factors:
- Data breach – if a data breach occurs at one of your third-party partners, the data you have shared may be compromised or exposed.
- Rapid response – in most cases a data breach will be followed by a rapid response process driven by the organization’s data privacy team. When multiple parties are involved, this process becomes more complicated.
- Non-mature data governance practices – you have little control over the practices and maturity levels of your third-party partners, which may result in lower standards of data protection programs.
- Loss of control – data is a transient object, it’s being moved and aggregated by different backup systems or data pipelines and may end up in the hands of subsequent parties who have no legal obligations to you (fourth or fifth parties).
- Traceability – tracing data back to its origin is complex, time-consuming, and may rely on variables outside your control (e.g. tools, logs, and retention periods). This process is hard to accomplish within your enterprise environment and almost impossible when multiple parties are involved
How to Mitigate Third-Party Risk and Why It is Important:
- Focus on sensitive and personal information – separate between third parties with who you share sensitive data with and those who you do not.
- Make de-identification the default – shared data is always de-identified. Anything else should be the exception (and not the other way around).
- Know your third-party data flow and keep an inventory – continually track which third parties use your data.
- Know which business process depends on third-party partners – doing so enables conducting impact analysis and removal of third parties without disrupting normal business operations.
- Frequently review your policy – make sure to remove obsolete third-party partners and avoid data proliferation.
- Implement a fourth-party notification process – make sure to treat fourth-party partners like any other third party partners to avoid losing control.
- Actively manage risk – make sure your board-of-directors and executive team understand the need for data sharing and the associated risks. This precaution will help you maintain the required resources to keep data safe.
What Is Third-Party Risk Management?
TPRM (Third-Party Risk Management) is a form of risk management that concentrates on analyzing and controlling risks related to the use of third parties. This could include access to third party’ data, intellectual property, operations, customer information, and other relevant information.
The goal of the Third-Party Risk Management program is to eliminate the following risks:
Strategic Risk: Risks arising from adverse business decisions and failure to meet business objectives due to third-party vendors.
Financial Risk: Risk arises from a third party’s detrimental impact on the business’s financial success.
Operational Risk: A risk that a third party will disrupt internal processes, people, and systems essential for day-to-day operations.
Reputational Risk: Risk arises from negative public opinion formed due to dissatisfied customer service, inappropriate recommendations, security breaches, and other flaws by third parties.
Compliance Risk: A risk that a third party will impact business compliance with laws, rules, or regulations negatively.
Cybersecurity Risk: A risk arises from cyberattacks, data breaches, and other security breaches by third-party vendors. Using data discovery tools, sensitive data can be searched and detected for better protection.
How To Select A Third-Party Risk Management Solution?
The choice of a TPRM risk management solution should depend on your organization’s regulatory requirements, business processes, compliance requirements, an acceptable level of risk, and how you use your third parties. Make sure that it also facilitates your overall organization’s risk management strategy.
How Can Secuvy AI Help?
Secuvy AI continuously accesses an organization and captures critical information related to third parties’ use in the risk dashboard. The integrated AI workflows and robotic automation features measure risk and improve overall visibility into third-party vendors’ performance.
By providing Compliance Estimations, Cyber Rating, and other vital information, Secuvy AI gives a complete picture of third-party risk and ensures that results will stay in compliance with rules and regulations.