Two business co-owners review information on a laptop in their store as part of the business they run.
While third-party business applications can be convenient, you are releasing sensitive data, which could jeopardize your company in the event of a breach. — Getty Images/Lock Stock

When you enter any customer info into a customer relationship management (CRM) platform or use an accounting app, you are releasing sensitive data to a third-party application. Therefore, it’s important for small business owners to understand the significance of sharing data with third-party apps and how to best protect business and customer data.

What are third-party applications?

A third-party app is an app that was not created by the same party that created the platform or device it is used on. For example, the Google Maps app is a third-party app when it’s installed on an iPhone. You have likely noticed that whenever you begin to download an app, you are prompted to approve its access and capabilities. Any app you agree to use has some degree of access to your data.

What happens to that data?

Generally, the data is sold to companies that want to better sell you products, but it can also be used for more harmful purposes when it falls into the wrong hands.

[Read: 8 Best Practices for Keeping Customer Data Secure]

The advantages and risks of third-party data sharing

Third-party apps can be game changing for small businesses when it comes to productivity. Communication and project management apps can streamline workflow and ensure your team functions effectively and efficiently.

Many third-party apps are also used to enhance your business’s image or improve the customer experience. Customer management systems can help you maintain relationships with your customers, plant the seeds for new sales, and present a clean, professional representation of your business. In addition, you may use a payment app to allow customers to shop quickly and securely while avoiding the headache of entering all of their personal details and payment information at every check-out.

While there are clear benefits to using third-party apps for your small business, there are also several risks to consider. The most obvious risk is the inherent danger that personal data and other sensitive information will be compromised.

Because hackers and online criminals know that third-party apps handle such valuable information, they often target these apps. Currently, around 61% of cyberattacks successfully use third parties to access companies.

If your company is compromised in a data breach, you may face financial losses in the form of losing customers and having to make payments not covered by insurance. Beyond that, your reputation as a company can be jeopardized, and it may be harder for you to secure clients and build trust in the future.

[Read: Protecting Your Business Data in a Hybrid World]

Err on the side of caution, and implement a security incident response solution before the need for one actually arises.

How to mitigate third-party security risks

If you are using third-party apps for your business, follow these tips to mitigate any associated security risks:

  • Assess any third-party vendors before working with them. Before you give permissions to any app, do your own evaluation and ask key questions. What is this company’s history of data breaches? What services do they actually provide you with, and how badly do you need to use this third-party vendor? Only proceed with the vendor if the value of their services to your company outweighs the risk of a data breach.
  • Limit access to organizational data. To minimize your risk in using third-party apps, your company can utilize the principle of least privilege. With this mindset, your employees will only have access to the information and logins that are absolutely necessary to complete their tasks.
  • Monitor any third-party vendors in your network. Your company can use an ongoing activity monitoring system to keep a record of who accesses what information and when, allowing you to easily track any breaches. This step is especially important since over half of respondents in a recent survey said they rely on third-party vendors to alert them to any data breaches.
  • Educate your team on third-party risk. Everyone in your company should be aware of third-party risk and what they can do to minimize it. Institute regular data safety programming for your team. You may also want to encourage frequent password changes and institute a multifactor authentication login system.
  • Have a plan for any third-party security incidents. Err on the side of caution, and implement a security incident response solution before the need for one actually arises. Outline who in your organization should be made aware of a data breach, and have them properly trained in data security and response.

[Read: 4 Simple and Easy-to-Deploy Ways to Protect Your Company Data]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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