Most organisations rely on third-party technology vendors - cloud platforms, payroll systems, CRMs, project management tools, and more. These services help businesses operate efficiently, scale effectively, and stay connected.
However, this reliance introduces risk.
A data breach, extended downtime, or compliance failure by a vendor can quickly become your problem. When something goes wrong, it’s your customers, your team, and your reputation that could suffer the consequences.
So, how can you manage these risks without overcomplicating things?
What Is Third-Party Technology Risk - and Why It Matters
When your organisation relies on external vendors for IT services, software, or infrastructure, you’re opening the door to potential vulnerabilities. These partnerships are crucial for operational efficiency, but they also bring risks. While many of these risks may be beyond your or the vendor’s direct control, the key is in managing potential scenarios to minimise their impact on your business.
Given the critical role these technologies play, a cyber-attack, service disruption, or failure to meet compliance can lead to serious consequences for your business.
Third-party risks can lead to:
- Data breaches and privacy violations
- Operational disruptions from system failures or outages
- Non-compliance with regulations
- Reputational damage, particularly if your customers are affected
These risks aren’t theoretical. For example, if your third-party email platform is breached, customer names, emails, and even personal preferences could be exposed. Or imagine your payroll system goes down right before EOFY - employees go unpaid, your finance team scrambles, and you risk compliance issues with the Australian Tax Office (ATO) or the Inland Revenue Department (IRD).
These sorts of incidents are becoming more common - and regulators are taking note. Every tool and platform your teams use is a potential weak spot if it’s not properly secured or managed.
How can you mitigate these risks?
Managing third-party risk doesn’t need to be complicated. The key is to put in place a clear, simple framework that keeps your business protected without unnecessary red tape.
At Seisma Group, we support organisations in navigating third-party technology risk; whether it’s identifying key vulnerabilities, conducting risk assessments, refining vendor processes, or developing disaster recovery plans. Our goal is to help you build strategies that are both practical and tailored to your operational needs.
In the meantime, here are a few steps you can take to start reducing your businesses exposure:
1. Stay Across Your Critical Vendors
Start by identifying the third-party vendors that are essential to your day-to-day operations -those handling sensitive data, supporting key business functions, or keeping teams connected.
Once you’ve got that list, make regular check-ins part of the process. Review your major vendors at least once or twice a year, keeping an eye out for changes in ownership, security practices, or compliance. It’s less about micromanaging and more about staying informed and ahead of potential issues.
2. Ask the Right Questions Up Front
Before locking in a new vendor, take a moment to check they’ve got the basics sorted. It doesn’t need to be an exhaustive review, just a few key questions to understand where you stand:
- What kind of data will they access?
- How do they store and protect it?
- Have they had any major outages or breaches?
It’s less about ticking legal boxes and more about making sure they treat your data and systems with the same care you would. A short conversation early on can save a lot of scrambling later.
3. Make Contingency Planning Part of the Culture
If a key platform went offline tomorrow, what’s your plan B? Whether it’s a temporary workaround or a backup tool, having a rough plan keeps your team steady when the unexpected hits.
It doesn’t need to be fancy, just practical.
4. Bring Everyone into the Fold
Third-party tools often come in through different departments - marketing, HR, finance, you name it. Make it easy for teams to do a quick check-in before signing up to something new.
A casual pre-purchase chat can save a lot of clean-up later on.
Managing your third-party risk
Relying on third-party tech is a normal part of running a modern business, but it shouldn’t feel like a roll of the dice. With some upfront planning and ongoing oversight, you can take full advantage of these tools while keeping your risk in check.
If you haven’t reviewed your third-party risk exposure in a while, now’s a good time to take stock. The sooner you build a simple, sustainable approach, the less likely you’ll be caught off guard.