Managing Human Risks for External Providers
In today’s business landscape, companies increasingly rely on external providers for various services, from IT support to facility management. However, failing to conduct thorough background checks on these third parties can expose a company to significant insider threats. These threats can jeopardize sensitive data, harm reputations, and even lead to financial losses.
The importance of including external providers in your human risk policy lies in their level of access to your systems and data. Unlike internal employees, who are usually subject to rigorous vetting processes, third parties might bypass these checks, creating vulnerabilities in your security framework. Ensuring these external partners undergo similar screening helps mitigate risks associated with unauthorized data access and potential breaches.
Financial Industry - Insider Trading
A prominent investment firm outsourced its data analytics to a third-party financial consultancy. An analyst employed by the consultancy gained access to confidential investment strategies. Without a comprehensive background check revealing previous misconduct, the analyst exploited this information, engaging in insider trading. This led not only to regulatory fines but also severely damaged the firm's credibility and client trust.
IT Sector - Data Breach
A large IT company hired an external consultancy to assist in software development. An engineer from the consultancy, who hadn't undergone a rigorous background check, used their access to implant malicious code into the software products. This led to a major data breach, exposing sensitive client information and resulting in substantial reputational and financial repercussions for the IT company.
Luxury Manufacturing Brand - Intellectual Property Theft
A luxury watchmaker collaborated with a third-party design firm to innovate new product lines. A designer from the external firm, who had not been properly vetted, secretly duplicated proprietary designs and sold them to a competitor. This intellectual property theft undermined the brand's competitive edge and led to costly legal disputes, impacting the brand's market position and profitability.
Conclusion :
These examples underscore the critical need for implementing background checks on external providers across various industries. It helps protect sensitive data, maintain corporate integrity, and prevent unauthorized and harmful actions that could result in significant operational, financial, and reputational damage. Incorporating third-party checks into your human risk policy is a strategic move that can save your organization from potential disasters.
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