More businesses than ever rely on vendors, suppliers, service providers, and platforms to optimise functionality and streamline both the employee and customer experience.
While this range of external connections and support networks offers an array of benefits, they can also be a serious hindrance to your security: a possible entryway that business leaders can fail to fully acknowledge as part of their immediate threat environment.
Every external connection increases the attack surface, meaning that the more service providers you use, the more vulnerable you are to a cyberattack.
With this in mind, third-party risk management should be treated as a core cybersecurity discipline, not a nice-to-have or afterthought.
Penetration testing helps CISOs verify vendor claims and uncover weaknesses before attackers do, putting your business in an advantageous position against potential third-party risks.
This blog will provide a comprehensive overview of how cybersecurity relates to third-party risk management, its importance, and steps you can take as a CISO to secure your vendors.
What is third-party risk management?
Cybersecurity third-party risk management (TPRM) is the process by which an organisation identifies, assesses, and mitigates the security risks introduced by external entities that have access to its systems, data, or infrastructure.
These third parties span a wide range of relationships: software vendors, cloud providers, managed service providers, consultants, logistics partners, and supply chain companies all fall within scope.
The risk extends well beyond data access: a third-party incident could result in non-conformance findings during an iso audit, potentially jeopardising certification under frameworks such as DORA or ISO 27001, damaging an organisation’s reputation and undermining the availability of critical services.
The 2021 Kaseya ransomware attack, which impacted hundreds of managed service providers and subsequently thousands of downstream businesses, vividly illustrates how vulnerabilities in third-party relationships can lead to extensive and severe consequences.
Why third-party cyber risk management is more important than ever
Third-party risk management is more urgent now than ever before. Organisations depend on complex supplier ecosystems comprising several third-party vendors, each with varying security strategies and implementations.
A single weak supplier provides an entry point into a larger security environment, introducing cybersecurity risks throughout the entire supply chain.
Alongside this, many businesses recognise that regulatory pressure around vendor risk and oversight has increased recently as part of trying to enforce more effective third-party risk management programmes.
Breaches often originate through external access, integrations, or exposed credentials, with a startling 41.4% of ransomware attacks involving third-party access.
Common third-party risks CISOs need to watch
Mastering third-party risk management is essential in securing your vendor ecosystem and protecting sensitive data. To achieve this, it’s important as a CISO to have a firm understanding of common third-party risks that could sabotage vendor relationships. Here are some key third party risks to be aware of:
Excessive access and poor segmentation
- Vendors are often granted more access than they need, sometimes into sensitive internal systems.
- If compromised, that over-permissioned access can be used to move laterally.
Weak vendor authentication
- Shared accounts, weak passwords, missing MFA, and poor session controls can all increase exposure, leading to security and compliance issues.
- This is especially risky for support providers and managed service access.
Insecure integrations and APIs
- Third-party tools often connect through APIs, webhooks, file transfers, or embedded services.
- If these are poorly secured, they can leak data or create entry points for attackers.
Inadequate patching and vulnerability management
- Some suppliers run outdated systems or fail to patch quickly.
- That can leave known flaws open in software, services, or hosted infrastructure.
Poor visibility into subcontractors
- Risk can extend beyond the primary vendor to their own suppliers and third-party engagements.
- This creates an extended supply chain challenge that’s often overlooked when trying to manage vendor risk level.
Data handling and compliance gaps
- Vendors may store, process, or transmit sensitive data in ways that don’t align with your internal standards or regulatory obligations. Understanding your vendor’s security posture is essential in protecting your own assets and meeting industry standards.
- This matters especially in heavily regulated industries such as fintech and healthcare.
Below, we’ll cover the key benefits of how penetration testing specifically manages third party risks, and important questions CISOs should be asking their supply chain regarding security.
Benefits of penetration testing for third-party risk management
Questionnaire-based assurance has its place: it provides a structured, scalable way to gather information across a broad vendor portfolio. The problem here is that it relies on self-reporting.
A vendor can answer every question correctly while still harbouring exploitable weaknesses in their environment.
Penetration testing addresses this gap by validating security controls through simulated attack techniques, moving beyond policy reviews to show whether a weakness can actually be exploited in a real-world scenario.
For CISOs managing third-party risk, the difference between questionnaire-based assurance and pentesting is key.
Penetration testing provides evidence-based answers to questions that questionnaires cannot reliably address: whether a vendor is exposed to external compromise; whether a misconfiguration could expose shared data; whether a supplier breach would create a route into your own environment.
Used together, the two approaches offer complementary oversight. Questionnaire-based assurance describes what controls should exist, and penetration testing confirms, through simulated attacks, whether they hold up in practice.
What should CISOs ask vendors?
For a comprehensive and transparent understanding of your third-party risk landscape, it’s important as a CISO to feel comfortable in posing questions to your associated vendors, to get a decent understanding of any potential vulnerabilities within your digital supply chain.
Establishing specific Service Level Agreements (SLAs) for how quickly third parties need to report security issues and how they should be handled can also be a hugely beneficial component of any risk reduction strategy.
Have you been independently penetration tested?
Understanding how recently your vendors have been pentested is essential in ensuring third-party business relationships are secure and to achieve a fair oversight of any vulnerabilities that could pose inherent risk.
Ask when the last test was performed, whether it was scoped realistically, and whether findings were remediated.
What systems and integrations were in scope?
Make sure the test covered relevant external interfaces, admin portals, APIs, cloud services, and remote access paths. This can also reveal how attuned your associated vendors are to cybersecurity.
Were critical findings retested?
A test is only useful if the fixes were verified. Ensure your vendor has appropriately handled any strategic risks.
How do you manage access for your own suppliers?
This helps uncover hidden associated risks further downstream in your supply chain. Potential risks, no matter where in the supply chain, will always increase your own business risk profile.
Can you share evidence, not just a summary?
CISOs should want enough detail to judge whether the testing was meaningful. An up-to-date inventory supports both you and your vendors in maintaining business continuity, ensuring regulatory requirements are met and documented, and that business-specific cyber risks are well understood.
How CISOs can build penetration testing into supply chain risk management
| Lifecycle Phase | Applies To | Testing Activities | Evidence to Require | Who Conducts | Outcome / Action |
|---|---|---|---|---|---|
| 1. Procurement & due diligence (before contract award) | High-risk vendors | Issue security testing requirements in RFP/RFQ; evaluate vendor’s testing maturity as a selection criterion; review existing pentest reports as part of bid assessment | Recent pentest report (≤12 months); remediation evidence for critical/high findings; CREST, CHECK, or equivalent accreditation; bug bounty programme details | Vendor (self-commissioned); independent assessor | Gaps in testing or unresolved criticals may disqualify bid; risk score informs contract security schedules |
| 2. Contract & onboarding (contracting through integration) | All vendors | Embed testing obligations in contract security schedules; define scope, frequency, and notification requirements; agree right-to-audit and third-party assessment clauses | Contractual commitment to annual (or more frequent) testing; obligation to share summary findings within agreed timescales; remediation SLAs by severity tier | Legal / procurement; security team | Testing rights enshrined before go-live; baseline security posture documented |
| 3. Pre-go-live testing (before production use) | High-risk vendors | Test vendor-facing systems and integration points; API and authentication layer testing; data flow and access control validation; configuration review of shared environments | Clean pentest report for in-scope systems; evidence of vuln remediation before launch; network architecture diagram reviewed by tester | Independent assessor; internal red team | No go-live with open critical or high findings; accepted residual risks formally signed off |
| 4. Ongoing assurance (regular cadence in-life) | Critical suppliers | Annual full-scope pentest minimum; quarterly vulnerability scans of vendor-facing surfaces; continuous monitoring of shared attack surface; review vendor’s own test outputs on agreed schedule | Annual third-party pentest report with executive summary; evidence of finding remediation within agreed SLAs; attestation letter from CISO; ISO 27001 / SOC 2 Type II (supplementary, not a substitute) | Vendor-commissioned assessor; buying org right-to-audit | Findings tracked in supplier risk register; persistent criticals trigger escalation to contract review |
| 5. Material change events (triggered testing) | Medium–high risk vendors | Retest after significant infrastructure or platform changes; test new integrations or data-sharing arrangements; scope review after vendor M&A or outsourcing | Change impact assessment with security sign-off; pentest scoped to changed components; updated architecture diagram post-change | Independent assessor; internal security team | Change not activated in production until test complete; resets the annual testing clock for affected components |
| 6. Post-incident retesting (after breach or near-miss) | All vendors | Targeted retest of compromised or at-risk systems; validate remediation of root-cause vulnerabilities; wider scope test if breach vector is unclear; threat-led / purple team exercise for critical suppliers | Post-incident pentest report within agreed timeframe; root-cause analysis mapped to test findings; remediation plan with owner and target dates; independent assessor attestation of fix effectiveness | Independent assessor; forensic / IR specialist | Continued use conditional on satisfactory retest outcome; persistent failure triggers contract review or exit |
| 7. Offboarding & exit (contract end or transition) | All vendors | Confirm data deletion / return and verify access revocation; scan for residual vendor credentials or backdoors; test replacement system before cutover | Data destruction certificate; confirmation all vendor accounts deprovisioned; access log review for the final 90 days | Internal security team; independent assessor (high-risk) | Confirmation of no residual access or data exposure; findings retained for future due diligence reference |
Which vendors should be pentested first?
As a rule of thumb, pentesting should be conducted based on risk prioritisation. Third and fourth parties (vendors of your vendors) that hold the greatest risk of disrupting business operations, endangering customer data, and breaching third-party compliance must be treated as an absolute priority.
Here’s how to determine which vendors to pentest first:
- Vendors that handle intellectual property and sensitive or regulated data
- Suppliers with remote access to your environment
- SaaS platforms that integrate deeply with internal systems
- Managed service providers
- Suppliers that support critical operations or business continuity
- Vendors with a poor security track record or limited transparency, operational risks, or previous data breaches.
By taking into account each bullet point above, CISOs reduce client risk and enforce more robust data protection throughout the entire supply chain, simultaneously bringing to light any ‘weakest links’ in your supply chain that could be endangering your business.
Limitations of third-party penetration testing
Pentesting is a critical control, but it is not a silver bullet when it comes to vendor risk management.
A vendor may still have risk outside the test window, and scope matters.
That said, testing gives far more practical assurance than policy alone and should be combined with continuous monitoring, contractual controls, and access governance to more effectively mitigate risks than remaining in the dark about the cybersecurity posture of your vendors.
When to engage a penetration testing partner
Timing is crucial for effectively engaging a penetration testing partner. Because cyber threats are constant and unyielding, security testing must be conducted promptly to ensure risk mitigation is effective.
Engage a penetration testing partner:
- Before onboarding a high-risk supplier
- Before renewing a strategic vendor contract
- After a major platform or integration change
- After a third-party incident
- When preparing for a regulatory audit or customer assurance review
Engaging a pentesting partner at these points helps ensure your incident response planning is well-directed and conscious of the risk level faced by your organisation and associated vendors.
How OnSecurity can help with pentesting for third-party risk management
Third-party risk management is most impactful when it’s evidence-based. Penetration testing helps CISOs move beyond checklist-based assurance and fortify their risk management strategy by providing a clear view of real-world exposure.
OnSecurity’s specialised platform-based penetration testing provides critical insights into your supply chain security posture through third-party cyber risk evaluation. Go beyond a checklist risk assessment and learn how hackers could be exploiting your third-party vendors through simulated, real-world attacks.
Get an instant, free quote today to learn how OnSecurity can support your organisation in securing vendor relationships and defending against cyber threats.
