In today’s digital world, cyber threats are evolving rapidly, and even companies with strong internal security systems are at risk. The biggest danger now often comes from outside your organization — from the third-party vendors you rely on every day.
The Growing Danger of Third-Party Cyber Risk
Businesses in every industry now depend heavily on external software vendors and cloud services. These tools make operations smoother but also create new vulnerabilities. If one vendor is attacked or their system goes down, your business could suffer serious disruption.
In fact, recent data from Resilience, a cyber risk firm, showed that in 2024, 23% of all material cyber insurance claims came from third-party risks — a huge jump from 0% in 2023. This means these indirect risks are now causing real financial loss.
Real Incidents with Major Business Impact
Several major attacks in 2024 highlight this rising threat:
- Change Healthcare: A ransomware attack shut down medical payment systems, affecting hospitals and clinics nationwide.
- CDK Global: Software used by auto dealerships was hit by ransomware, causing a $1.02 billion loss after a two-week outage.
- PowerSchool: A massive data breach exposed private data of students and teachers due to one weak account without two-factor authentication.
These cases show how a single security gap in a widely used vendor can affect thousands of organizations downstream. Hackers are now targeting these critical service providers to create widespread chaos.
Rise of “Big-Game Hunting” by Cyber Criminals
Cybercriminals are becoming more strategic. Instead of attacking small businesses, they now focus on large organizations with complex supply chains. These “big-game hunters” know that hitting a major company will affect many others — increasing their chance of demanding larger ransoms.
In 2024 alone, ransomware caused 61% of all claim losses. And as ransom demands rise, so does the potential damage to supply chains. Industries like healthcare, transportation, and manufacturing are especially vulnerable due to their interconnected vendor networks.
Is Your Business Ready?
Now more than ever, it’s critical to evaluate how well your third-party vendors are protecting your data. Here are 3 essential questions to ask:
- Are your vendors meeting your security standards?
You share their risk the moment you sign a contract. Use tools like automated vendor risk reports to spot weak links. - Do you understand the financial impact of third-party incidents?
Know how a vendor issue can hit your operations and bottom line. - Are decision-makers informed about these risks?
Explain the risks in financial terms so leaders can take action and allocate budget.
Final Thoughts
Ignoring third-party cyber risks is no longer an option. In today’s hyper-connected business environment, one weak link can trigger a chain reaction of loss and disruption. Businesses must invest in third-party risk assessment, build strong cyber resilience, and make sure that everyone — from IT to leadership — understands the potential impact.
