Mitigating Third-Party Risks: The Urgent Need for Comprehensive Non-Employee Identity Management in India

By Abhishek Gupta

In today’s globalized business landscape, organizations are increasingly dependent on third-party vendors and contractors to streamline operations. While these partnerships offer business advantages, they also introduce significant security risks, particularly in the realm of identity management. These external stakeholders often require access to the organization’s network and resources to operate effectively, presenting a potential security vulnerability. Poorly managed non-employee identities can lead to data breaches, financial losses, and reputational damage. To mitigate these risks and protect sensitive information, organizations must prioritize comprehensive non-employee identity management as a critical component of their cybersecurity strategy.

Employee V/s Non-employee Identity Management

While employee identity management is typically well-defined with the HR department having direct control, managing access for non-employee users, such as part-time workers and vendors, presents significant challenges. Responsibilities are often scattered across different business units, leading to inconsistent practices and oversight. Additionally, the rise of remote work, cloud computing, and outsourcing has expanded the attack surface for organizations. Third-party vendors, with varying security standards, can serve as entry points for malicious actors. According to a recent IBM Report, the global average cost of a data breach just this year, has been $4.88 million. This fragmented approach to non-employee identity management increases the risk of data breaches, unauthorized access, excessive privileges, insider threats, and ultimately also resulting in severe reputational damage.

To assess the effectiveness of their non-employee identity management programs, organizations should consider the following key questions:

• How many vendors and third-party parnters do you have? Due to the lack of a centralized system, many organizations struggle to accurately determine the number of external entities accessing their systems. Owing to the dynamic nature of these relationships, organizations need continuous monitoring and management.
• How many non-employee users do you have? Industries like healthcare and manufacturing often have a larger non-employee workforce. Understanding the number of non-employee users with access to the organization’s information and systems is crucial, especially given the fluidity of employment business requirements.
• How much does it cost? When evaluating new contracts, organizations should factor in the cost associated with securing and managing non-employee identities throughout the onboarding processes and access management. Existing tools and processes may require additional time and cost for validation active engagement status, access changes, and compliance with auditing requirements. By improving efficiency and visibility, organizations can mitigate both security and financial risks by aligning security controls with individual user risk profiles.

A Comprehensive Identity Security Approach

Organizations must recognize that non-employees pose high security risk and require rigorous second and third-party risk management. Accurate and reliable verification of non-employee identities, including background checks, proof of employment, and other relevant documentation, is essential. Granting appropriate access privileges based on roles and responsibilities is critical, involving strong authentication methods like multi-factor authentication (MFA) and the principle of least privilege.

Managing the entire lifecycle of non-employee identities, from onboarding to offboarding, is vital. This includes timely provisioning and de-provisioning of access, as well as regular reviews and updates. Continuously assessing risks associated with non-employee identities and implementing appropriate mitigation measures is crucial. This may involve conducting security audits, vulnerability assessments, and incident response planning. Ensuring compliance with relevant regulations and industry standards, such as GDPR and ISO 27001, is essential for organizations to protect sensitive information and maintain a strong security posture.

The Indian government has placed significant emphasis on preventing data breaches. The recently enacted Digital Personal Data Protection (DPDP) Act, mandates that employers act as data fiduciaries, responsible for safeguarding the privacy and rights of their employees’ and customers’ data. This includes implementing robust technical and organizational measures to prevent unauthorized access, disclosure, alteration, or destruction of data. Non-compliance can result in hefty penalties of up to INR 250 crores. Organizations must ensure that their third-party vendors also adhere to the DPDP’s requirements. To comply with the DPDPA and mitigate third-party risks, organizations should consider the following best practices:

• Conduct thorough due diligence on third-party vendors to assess their security practices and compliance with the DPDPA.
• Require third-party vendors to sign data processing agreements that outline their obligations to protect personal data and comply with the DPDPA.
• Implement robust access controls to restrict access to personal data to authorized personnel only.
• Regularly review and update security policies and procedures to ensure they align with the DPDPA’s requirements.
• Provide employees and non-employees with training on data privacy and security to raise awareness of the importance of protecting personal data.

A comprehensive non-employee identity management solution can enhance operational efficiency, reduce costs, and mitigate risks. By replacing homegrown, ad-hoc solutions with a purpose-built, authoritative source of identity and data access, organizations can address existing limitations. Such a solution can provide user-configurable portals for efficient data collection from both internal and external sources. Advanced AI functionalities can ensure secure access by granting privileges to the right identities at the right time. A true non-employee identity management solution enables regular monitoring and review of access privileges, eliminating over-provisioning and untimely de-provisioning. By enhancing control over non-employee identities, organizations can make informed access-based decisions to reduce the risk of third-party breaches.

(The author is Abhishek Gupta, Managing Director, India, SailPoint, and the views expressed in this article are his own)