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Security Risks of Third-Party Vendor Relationships

Most organizations are heavily reliant on third-party vendors for a large component of their business.

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According to Deloitte, a typical Fortune 500 company may use more than 100,000 external third-parties—including vendors, suppliers, service providers, and outsourcers—to meet its business objectives and stay competitive.

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With these added relationships, however, come higher exposures to security risks including data breaches and cyberattacks.

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Riskonnect offers insight into some of the risks companies face when doing business with third-parties:

Looking Back at the Big Flood: Time to Examine Your ‘Human Supply Chain’

The devastation left behind after Hurricane Harvey is a reminder that people are a critical link in the effort to build community storm resilience. We often remind our customers that to prepare for a disaster, they need to consider their supply chain risk—will they be able to access goods and services in the aftermath of a storm.

One area that is often overlooked is what is often called the human supply chain, which consists of your employees, customers and others members of your community.

Beyond ensuring that your employees are safe, business owners may need to consider other concerns: Do you have a plan that will allow your employees to continue working during the recovery? Can they work remotely? Are your employees trained in disaster preparedness? If your business relies on local customers, are they able to access your goods and services? What about rescue personnel and other business owners that provide goods and services to support the community?
Think of the human supply chain as a network of individuals who help your business to survive and continue to thrive after a disaster, like Hurricane Harvey, which dumped trillions of gallons of water on Texas a year ago.

Ensuring that this living, breathing supply chain remains connected is one of the recommendations culled from 13 in-depth studies that Zurich has produced on the impacts of natural disasters around the world. The latest report, “Houston and Hurricane Harvey: a call to action,” was released at the start of the 2018 hurricane season.

Zurich has developed a methodology called the Post Event Review Capability (PERC), which is an approach to understanding why a hazard becomes a disaster, and then from that, identifying entry points for building resilience.

report released earlier this month highlights some of the lessons learned from these PERC studies and encourages businesses and communities to focus on resilience to prepare for future storms.

The report identifies some common truths about major storms:

  • Every dollar spent on disaster preparedness saves four dollars in future losses;
  • Early warnings paired with contingency and emergency planning can save lives and protect businesses; and
  • Risk managers and communities must “build back better” to strengthen resilience after a disaster strikes.

The report also emphasizes the human element in storm preparation and recovery. For example, one of the central lessons that emerged from the PERC studies is that successful response operations are mostly reliant on institutions. Providing equipment, access to food and showers, assisting with cleanup and offering paid time off for employees can go a long way towards supporting a community and creating a culture of assistance.

Business leaders should provide employee readiness training, the report concludes. Some companies already do this, making preparedness a part of business as usual. One such company regularly schedules “disaster recovery days.” The company will randomly announce, “It’s flooding today, work from home,” to practice employee readiness for the real thing.

This recognition that humans play a critical role in the recovery process is partly why Zurich continues to support SBP, an organization that seeks to shorten the time between disaster and recovery.

Zurich has worked with SBP since 2009, helping the nonprofit bring hundreds of families back home after Hurricane Katrina. SBP has remained in Southeast Texas since Harvey to help aid in the recovery efforts there.

Recognizing the need for home and business owners to identify and mitigate their risks prior to disasters, Zurich in 2014 committed a $3 million grant to SBP through its Z-Zurich Foundation. The grant helped fund SBP’s Disaster Resilience & Recovery Lab, an initiative through which SBP trains home and business owners in 30 communities at risk for disasters across the United States over the course of three years.

In the future, hurricanes will continue to wreak havoc, destroying homes and lives, damaging critical infrastructure and shuttering businesses, but it’s important to remember that humans are the key to resilience. Keeping people safe, engaged and part of the recovery process can help ensure that communities remain resilient in the face of major storms.

Q&A: School Shooter Preparedness

Schools across the country are back in session. And in the wake of high-profile school shootings earlier this year, safety is a top priority for students, parents, educators and communities. Steven Smith, founder and president of Guardian Defense, specializes in active shooter preparedness and works with education industry leaders to keep their facilities safe.

We reached out to Smith to discuss how preparedness strategies have changed, the types of plans schools implement and for ways to better incorporate them into their culture.

Risk Management Monitor: How have recent school shootings impacted the way you train clients?

Steve Smith: Every mass shooting at a school impacts our training because we learn a little bit more from these horrific events on how to prepare, train and react. Parkland was different for our company because it hit home as this event occurred in our nearby community. Parkland impacted us, our staff, our community and our friends personally. Along with my SWAT Team, I responded to the incident and arrived on scene approximately 30 minutes after the incident. Some of our staff had friends working in the school and knew of other co-workers who had their children attending the school during that time.

RMM: Have they changed active shooter preparedness plans among schools?

SS: By the time law enforcement arrive on scene during a mass casualty incident, the damage has often already been done. The teachers and staff at the schools must receive training, understand the situation, make their own decisions and put action behind it. This will help mitigate mass casualties.

Active shooter preparedness plans change at times depending on the individual school, if they are private, or in a county with a large school district. The biggest hurdle I find in the change in policies is the lack of knowledge and experience. Generally speaking, the “active shooter” concern has not been in school or corporate safety plans for very long. Most administrators tasked with providing training and updating safety plans for this type of threat were never in a formal “lockdown” drill when they were students, themselves. Recognizing this, they rely on the experts for guidance and training to provide them with realistic policies, training and a drill plan for their staff.

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RMM: What are the potential risks or benefits of arming teachers?

SS: The perception of every teacher being armed in our schools is not yet a reality in this country. There are alternatives to arming teachers in classrooms. One that immediately comes to mind is training.

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A teacher with no previous training will have to incur at least two weeks of firearm training and even more tactical training on how to respond to these incidents. This will take time and money, which is usually hard to come by in any school or business.

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Other alternatives that meet safety needs have been discussed and approved in many districts. Schools have hired police officers in their cities to work off-duty employment. This would be my first recommendation because officers are trained and obligated to respond to this threat.

RMM: What are the factors risk professionals should consider when choosing a preparedness plan?

SS: All facets of security are important, such as structural hardening and security upgrades, but if we are building a foundation for active threat preparedness, our recommendation is to follow our model of Policy-Train-Drill.

In order to respond appropriately to a threat on site, every individual needs to understand how to make decisions for themselves and put action behind it. Time is not on our side when it comes to this type of crisis and people, in general, have stood by to wait for direction and instruction when there is an emergency. In these incidents, delayed responses can equate to mass casualties. Therefore, putting the response plans on paper, training all staff, and conducting drills are where we find the best starting point for active threat preparedness.

RMM: When hosting an event, what can risk managers do to avoid a shooting like the recent one in Jacksonville?

SS: If an incident gets to the point where an attacker is carrying out their plan, it does not mean the hosting site failed. In some instances, indications of a threat are not clear or available, making intervention efforts difficult. We can prepare beforehand for a possible threat.

  • My first recommendation would be to meet with the local police department and inform them of the event. Request to pay for a detail officer to be on site. The number of hired officers would depend on the projected number of attendees. The officer’s presence alone could deter an attack.
  • I would also request to have a meeting with the police supervisor that would be working the day of the event and share the floor plans and emergency procedures with all contact information, so law enforcement and fire would have everything they need in case of an emergency.
  • If there are no police available on that day, consider hiring armed security officers to be on site.
  • Inside the event site, install a security checkpoint with bag checks or security wands being utilized to ensure no weapons are being brought into the event. Depending on the event, prior notice can be communicated that a strict “no-bag policy” will be enforced.
  • Meet with staff beforehand and establish a “safety team” that will discuss vulnerabilities and how you will remedy them.

Regardless of the event, security must be the utmost priority and will at times feel inconvenient for the guests, but the old saying, “Safety first” is how we need to think and prepare in today’s world.

Structures in Wildland Urban Interface Present Added Fire Risks

The trend of building homes in isolated wooded areas has been increasing across the United States. This urbanization of woodlands has changed the way forests are managed. Small wildfires that were once allowed to burn out are now suppressed to protect homes and buildings. Added to this are drought conditions exacerbated by climate change. All of these factors have increased the likelihood of wildfires.

The United States Forest Service (USFS) notes that 32% of the housing units in the U.S. and one-tenth of all land with housing are situated in the Wildland-Urban Interface (WUI). The largest cost driver for both Federal and State wildfire suppression operations is the protection of public and private property in the WUI, according to the USFS.

The “Wildland-Urban Interface Federal Risk Mitigation Executive Order 13728,” released in 2016 by the Federal Emergency Management Agency (FEMA), reported that:

In 2015 alone, more than 10 million acres of wildlands burned, requiring the service of more than 27,000 firefighters and resulting in $2.1 billion spent by the USFS and the Department of the Interior (DOI) to suppress the fires—a record amount. Over the last decade, the fire season has become 2.5 months longer, and fires covering more than 10,000 acres increased, with the average area burned by wildland fires doubling in the last three decades to an estimated seven million acres per year.

This year, more records were broken. In California, the Mendocino Complex Fire became the largest wildfire ever recorded in the state, according to the California Department of Forestry and Fire Protection, or Cal Fire.

According to FEMA, 46 million homes in 70,000 communities are at risk of WUI fires, which have destroyed an average of 3,000 structures annually over the past decade. As more people move into the WUI, businesses follow, putting organizations and jobs at risk.

To protect structures from fire, especially those in the WUI, the Insurance Institute for Business & Home Safety (IBHS) recommends that protection should take into account for a building’s materials and design features—as well as the selection, location and maintenance of landscape plants, including grasses, shrubs, bushes and trees.

According to IBHS, a defensible space should be maintained around a building to reduce wildfire threat and help a building to survive without assistance from firefighters. A vegetation management plan (VMP) also needs to be put in place, particularly in WUI areas. A VMP provides important information about the land, such as:

  • Topography (slope and aspect)
  • Location of building(s) on the land
  • Proposed fuel treatment details (suggested actions such as thinning and prescribed burning to minimize wildfire risks)
  • Environmental concerns (such as threatened and endangered species, state-listed sensitive species and wetlands)

The VMP also provides detailed information on how the three defensible space zones will be developed and maintained. When developing a VMP, IBHS recommends consulting a landscape professional such as a forester, range manager, or natural resource specialist.

IBHS recommends creating three defined areas around a building called defensible space zones. Each zone has specific recommendations for the types of plants used, including how they should be grouped and maintained.