What is Third-Party Risk Management (TPRM) in SaaS?  

Third-Party Risk Management in SaaS is the process of identifying, assessing, and managing the risks associated with external business partners and vendors who provide services to the organization, including cloud service providers and SaaS applications.  

Extending risk management beyond internal users to the entire ecosystem impacts an organization’s cyber threat protection.  

TPRM manages risks from business relationships integrated into an organization’s IT environment and infrastructure, especially as digital ecosystems grow more complex 

If a vendor is compromised, it can take down the entire organization. 

The main parts of the Third-Party Risk Management program in SaaS include: 

• vendor management 
• identification 
• risk evaluation 
• monitoring 
• termination.  

These functions require an effective management database and security/compliance assessments.  

A centralized database and security/compliance posture assessments can contribute to risk management.  

Remediation management and a risk assessment framework, incorporating security certifications and controls, can contribute to program stability. 

Key security risks in SaaS TPRM include: 

• misconfigured settings 
• excessive user permissions 
• weak authentication controls 
• unmonitored integrations 
• regulatory exposure.  

These vulnerabilities can lead to unauthorized data access and account compromise.  Addressing these risks also minimizes operational disruptions.   

In SaaS environments, third parties access data in two ways:  

• Platform integrations 
• API connections 

The data accessed includes:  

• Personal details (social security numbers, name, phone number, email addresses) 
• Financial information (bank account details)  
• Proprietary company records 

The security policies that dictate third-party data access include: 

• information security policies 
• data governance structures 
• access management systems 

These policies are designed to: 

• control data exposure and ensure responsible use of company assets when third-party SaaS applications are involved. 
• protect against data breaches and compliance violations related to third-party SaaS usage.   

In SaaS, the responsibility of compliance lies with the company providing the software as a service.  This company should be well-rounded with: 

• SOC 2: audits the effectiveness of internal controls 
• ISO 27001 
• GDPR 
• PCI-DSS: essential for processing credit card information 
• HIPAA: necessary when handling health information.  

These certifications test for security practices and compliance with specific laws and regulations, which are crucial to protecting sensitive information. 

The impacts of a third-party SaaS security breach can be: 

• extensive 
• affecting finances 
• legal standing 
• reputation 
• productivity.  

These breaches involve sensitive customer information, leading to non-compliance with SaaS industry regulations and compounding the damage with more expensive legal issues.  

As far as the dependence of SaaS applications is concerned, it is important to perform strict due diligence in order to avoid external risks.  

To effectively budget SaaS third-party risk management, consider following these steps:  

1. Start with understanding your SaaS organization’s needs and plan accordingly.  
2. Consider selecting both cost-effective and scalable TPRM solutions that also align with your business’s objectives.  
3. Ensure financial flexibility by employing real-time data to generate forecasts.