Security's Input on Outsourcing: Security Directors Can Help Their Companies Assess the Reliability of Third Parties before They Hire Them to Handle Vital Services

By Umanskiy, Ilya A. | Security Management, October 2006 | Go to article overview

Security's Input on Outsourcing: Security Directors Can Help Their Companies Assess the Reliability of Third Parties before They Hire Them to Handle Vital Services


Umanskiy, Ilya A., Security Management


WHEN YOUR COMPANY starts to consider the outsourcing option for a particular function, does the security department get involved in helping management make the right decision? For many security professionals, the answer is that they have no role in the process of selecting External Service Providers (ESPs) unless it involves the outsourcing of a security function. Yet, once you begin exploring the risks that outsourcing could bring to your organization, you will learn that security has an essential role to play even where the outsourced function is not a security service.

Today, the majority of security professionals get involved in due diligence for outsourcing only when invited by managers from other departments such as human resources, IT, and risk management. Through such invitations, security professionals get to work at the same time with their counterparts from the corporate privacy office, information security office, legal department, and other corporate groups.

Each participant in the due diligence process is required to complete a comprehensive review of the potential ESP by applying his or her expertise in a specific field. It is at such critical junctures when the opportunity to establish the framework for all future due diligence projects arises. And if a security professional becomes involved in the process, his or her contribution can help the organization minimize risk and ensure that future outsourcing strategies rely on baseline security standards.

Currently, due diligence for outsourcing is being handled primarily by business and corporate groups. But these groups have limited expertise in evaluating security risks, and cannot, therefore, reliably determine whether an ESP can, for example, be entrusted to protect a company's customer data as required by new federal regulations.

[ILLUSTRATION OMITTED]

Adequate due diligence for outsourcing cannot be completed without a comprehensive security assessment of the ESP, from its physical site layout and background screening practices to its emergency management processes and security awareness programs (new-hire and ongoing). It takes a security professional to perform such an assessment.

For example, in one organization clients from around the world contacted a company through its call center. The security manager was asked to review a potential service provider for "over the phone" and document-translation services. During the review, security identified that this service provider would handle sensitive customer information.

The service provider had operations in several countries with limited capabilities to conduct background investigations, and it used staff that worked out of their homes. The company did not have adequate information-protection training programs.

After considering such facts, the security manager was concerned. A company that cannot guarantee the integrity of its international staff due to lack of background screening and that does not have a documented information protection training program poses a significant risk from both internal and regulatory compliance perspectives.

The security manager knew that if this company were hired and later compromised the information of the organization's clients, both the ESP and company could be liable for violating federal rules about protecting personal data.

Teamwork

While the security department has a valuable contribution to make, it is only one member of the due diligence team. The team should be headed by a project manager who will coordinate the due diligence activities of everyone on the team. This manager will also be responsible for overseeing everything from project initiation to execution of the contract. Other team members may include the following:

Privacy officer. This person will assess the ESP from the regulatory compliance perspective. The corporate privacy expert will be an invaluable resource throughout the entire project and will explain to all internal participants the corporate approach to various privacy-related issues. …

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