What Makes You Vulnerable to a Third Party Data Breach?

Third Party data Breach

Data breaches make up an increasingly frequent and expensive part of business life. In the most recent 2022 IBM and Ponemon report, 83% of companies they surveyed reported suffering a data breach, with a staggering average cost of $4.35 million. While the causes vary, a data breach related to a third party comprises 62% of all data breaches companies suffered in the past few years. 

Hackers tend to target these third party vendors as they provide a convenient backdoor. These contracted companies usually operate within an organization’s network, which inherently gives them more access than a completely foreign actor trying to break in. Effective siloing and proper use of zero trust security does provide an effective defense. However, that’s only if a company has implemented these protocols. 

Which is currently not the case. More and more companies are adopting zero trust initiatives, but a report from Optiv Security in 2022 found that only 21% of them have fully adopted the practice across their business. Companies are making progress, but it’s taking time. In a world where data breaches are occurring more and more frequently, time is not a luxury many companies have. 

Third Party Data Breach Vulnerabilities 

Broadly speaking, any company using third party software or vendors can be targeted. In today’s business world that category is extensive. However, there are some industries that are particularly vulnerable. 


Healthcare sits at the top of the list. Medical practices typically rely on third party vendors for all sorts of work. Whether it be managing their EHR system, payment systems, or even their entire IT configuration, it’s almost a guarantee that at least part of a medical institution’s network setup includes third party vendors. 

This wide variety of vendors, plus the management of sensitive patient information and payment records, make the healthcare industry a prime target for a third party data breach. The cost of a data breach in healthcare is more than double the overall average, coming in at $10.1 million. As healthcare continues to digitize, and hackers find it an increasingly lucrative target, the IT side will need to ensure that their network, and those of their third party vendors, are secure. 

Critical Infrastructure Companies 

Critical infrastructure companies present an attractive target to hackers as well. Many of them aren’t as reliant as healthcare providers on third party vendors, but many still use several. Critical infrastructure encompasses the sectors of financial services, industry, energy, transportation, communications, the public sector, and technology. Healthcare is also part of critical infrastructure, but the nature of the data they handle makes it uniquely vulnerable. 

That doesn’t mean these other critical infrastructure industries are safe. A quick google search for data breach brings up an innumerable amount of companies in these sectors who have been affected. For these companies,  the threat often comes from a lack of visibility into their third party’s environment and security. 

In addition to this lack of visibility, a Ponemon Institute report found that 60% of companies don’t monitor or evaluate the security or privacy practices of their vendors that are handling their sensitive or confidential information. The combination of these two means that for many companies in these sectors, it’s a disaster waiting to happen. 

General Third Party Data Breach Risks 

Companies outside these sectors are far from immune to the vulnerabilities outlined above. There’s a high likelihood that they are also allowing third party vendors to handle sensitive company data, run vital components of their business processes, and not screening their security and privacy practices properly. 

Small and medium sized companies may also be vulnerable due to a lack of knowledge of what software they have. 60% of companies don’t have a comprehensive inventory of their 3rd party vendors. Their security standards might also be lower than large companies, as their resource are more limited. While it might be convenient to shift responsibility, it can prove costly without proper oversight. 


While becoming 100% secure in a cloud and network environment is nigh impossible, taking measures to mitigate risk and shore up security around third party vendors can save businesses millions of dollars. 

Knowledge is power, and the first step to take, if it hasn’t been done already, is taking inventory. What third party vendors are your company using, and what do they do for your business? What data do they need to function properly – and what data do they currently have access to? If the answers to those two questions don’t line up, remedying that problem is a good first step. 

Following that, it’s a good idea to figure out the quality of a third party vendor’s security and privacy practices. This can be done with research into the organization, examining their security ratings, and instituting a third party risk management (TRPM) program to ensure the vendors continue to meet the security and privacy standards your company desires. 

Finally, it’s always good to ensure your own network is up to standards. If you’re interacting with third party vendors, zero trust architecture is the gold standard. Zero trust ensures that firewalls are set up between third party software and your own internal network. This practice makes sure third parties only have access to what they need. 

Record Nations Can Help     

Third party vendors are still crucial for many businesses. Record Nations can help you find a secure and effective solution for your records. documents, and more. Call us at (866) 385-3706 or fill out the form on the page, and we’ll connect you with a secure and trusted provider that fits your needs. 

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