NIST CSF 2.0: Implications for Your Third-Party Risk Management Program

Supply chain security incidents dominate the headlines, with a new breach announced every day—whether a software intrusion like SolarWinds or Okta or a supply chain attack like Toyota. More recently, Microsoft announced an intrusion related to a compromised key that granted illicit access to customer data.

With the continued pace of third-party attacks, security teams are left asking: What could possibly happen next?

NIST CSF and Third-Party Risk Management

For many organizations, the answer is: You need to get your third-party risk management (TPRM) house in order by leveraging best practices, guidance, and benchmarks. Often, that guidance comes from common cybersecurity frameworks such as the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF). Now that the NIST CSF version 2.0 has been finalized, significant changes will impact how you design and implement your TPRM program to address these risks.

In this post, I will examine the most impactful third-party risk management (TPRM) and C-SCRM changes to the NIST CSF, review its Core Functions, and recommend best practices for implementing it as part of your third-party risk management program.

3 Impactful TPRM Updates in NIST CSF Version 2.0

1. New Govern Function

The introduction of the Govern Function illustrates how critical cybersecurity governance is to managing and reducing cybersecurity risk in supply chains. Previous governance content found in the other Functions – Identify, Protect, Detect, Response, and Recover – has been moved into the Govern Function. With the proposed changes, cybersecurity governance includes:

• Determining priorities and risk tolerances of the organization, customers, and society
• Assessing cybersecurity risks and impacts (including for third parties)
• Establishing cybersecurity policies and procedures
• Understanding cybersecurity roles and responsibilities

According to NIST, these activities are critical to detecting, responding to, and recovering from cybersecurity-related events and incidents – as well as to overseeing teams who carry out cybersecurity activities for the organization.

As organizations increasingly depend on third parties for essential services and technologies, strong governance becomes critical for managing these risks in a structured and consistent manner. Including the Govern Function in NIST CSF 2.0 supports this need by aligning third-party risk management practices with broader corporate governance frameworks.

Key Third-Party Risk Management Features of the Govern Function:

A dedicated governance Function will help align and integrate third-party cybersecurity activities and processes across third-party risk management, enterprise risk management, and legal teams. Some aspects to note include:

Enhanced Accountability and Decision-Making:

CSF 2.0’s Govern Function highlights the importance of defining clear roles and responsibilities within cybersecurity programs, particularly for managing third-party risks. By establishing accountability, organizations can integrate third-party risk management into the overall governance framework, preventing it from becoming fragmented. It encourages assigning responsibility for vendor risk assessment, contract management, and ongoing compliance monitoring, reducing vulnerabilities. Additionally, the Govern Function promotes formal processes for evaluating third-party risks and making informed decisions about vendor selection and oversight, ensuring these choices align with the organization’s risk tolerance and cybersecurity goals.

Policy Development and Compliance:

The Govern Function encourages organizations to create policies covering all aspects of third-party risk management, from vendor selection to continuous monitoring and incident response. These policies ensure that vendors meet security requirements, such as adhering to specific standards, undergoing audits, or implementing security controls. Additionally, the Govern Function addresses compliance with both internal policies and external regulations, helping organizations align third-party risk management with industry standards like HIPAA or FFIEC to ensure compliance and avoid penalties.

Risk Oversight and Continuous Improvement:

NIST CSF 2.0 governance emphasizes the importance of continuous oversight and improvement in third-party risk management. This is also highlighted in the Improvement section of the Identify category. The Govern Function urges organizations to establish processes for regularly reviewing and updating their third-party risk management practices. This allows organizations to adapt strategies as the threat landscape and third-party relationships evolve.

Continuous improvement may include reassessing vendors’ security postures, conducting audits, and reviewing third-party incident reports. It also involves updating contracts and service-level agreements (SLAs) to address new cybersecurity risks or regulatory requirements. Embedding these activities into governance ensures continuous monitoring and mitigation of third-party risks.

2. Increased Roles for Legal and Compliance Teams

Consistent with the addition of the Govern Function, CSF 2.0 emphasizes the role of legal and compliance teams. For TPRM, these groups require accurate and timely reporting from suppliers, vendors, and other third-party organizations that may have access to sensitive data, systems, and applications.

3. Enhanced Guidance on Supply Chain Risks

The most impactful CSF 2.0 update for TPRM teams is the enhanced guidance on managing supply chain risks. CSF 2.0 includes additional cybersecurity supply chain risk management (C-SCRM) outcomes to help organizations address these distinct risks. According to the CSF, “The primary objective of C-SCRM is to extend appropriate first-party cybersecurity risk management considerations to third parties, supply chains, and products and services an organization acquires, based on supplier criticality and risk assessment.”

The supply chain risk management category has been expanded into the new Govern Function. It includes new provisions incorporating cybersecurity into contracts, contract termination, and continuous evaluation of third-party risks across the organization’s environment.

Next Steps: Download the Complete NIST CSF 2.0 Checklist

Finalized in February of 2024, version 2.0 can help organizations better incorporate comprehensive TPRM and C-SCRM into their operations, from governance to risk management and cybersecurity. By formalizing governance structures around third-party relationships, ensuring accountability, developing robust policies, and promoting continuous oversight, CSF 2.0 provides a comprehensive framework for addressing the complex risks posed by third parties.

Watch my on-demand webinar with Prevalent to learn more about how NIST CSF 2.0 incorporates TPRM and cybersecurity supply chain risk management controls. I also invite you to download the comprehensive NIST CSF 2.0 checklist developed by Prevalent. It examines the Govern Function and its supply chain risk management controls in detail.

For more on the Prevalent TPRM solution for NIST CSF 2.0, schedule a demonstration with them today.

The NIST CSF Structure

The CSF is organized into six Core Functions: Govern, Identify, Protect, Detect, Respond and Recover. The Core Functions are outcome-oriented and not considered a checklist of actions by NIST. For an illustration of the Core Functions, see the graphic below.

The six Core Functions of the NIST Cybersecurity Framework. Courtesy: NIST.

1. Govern

A new Function introduced with version 2.0, Govern is foundational and designed to inform how an organization will achieve and prioritize the outcomes of the other five Functions in the context of its broader enterprise risk management strategy. It includes oversight of the cybersecurity strategy, roles, responsibilities, policies, processes, and procedures, and it centralizes cybersecurity supply chain risk management guidance.

2. Identify

The Identify Function is designed to establish an understanding of an organization’s assets (e.g., data, hardware, software, systems, facilities, services, and people) and the related cybersecurity risks.

3. Protect

The Protect Function offers specific guidance to secure assets to reduce the likelihood and impact of adverse cybersecurity events. Included here are topics such as awareness and training, data security, identity management, authentication and access control, platform security (i.e., securing the hardware, software, and services of physical and virtual platforms), and the resilience of technology infrastructure.

4. Detect

The Detect Function is meant to enable the discovery and analysis of anomalies, indicators of compromise, and other potentially adverse cybersecurity events.

5. Respond

The Respond Function includes guidelines for containing the impact of cybersecurity incidents, such as incident management, analysis, mitigation, reporting, and communication.

6. Recover

The Recover Function includes guidelines for restoring normal operations to reduce the impact of cybersecurity incidents.

Nearly every Function includes Categories and Subcategories that directly apply to third-party risk management and cybersecurity supply chain risk management. For example, the Identify Function focuses more on asset and risk identification, including third-party systems and services. Organizations are encouraged to perform due diligence on third parties to identify vulnerabilities and ensure compliance with cybersecurity standards. The Protect and Detect Functions provide guidelines on implementing security controls to mitigate third-party risks, such as monitoring access and ensuring vendor adherence to security policies.