As more businesses depend on third party vendors and service providers, the risk of data breaches from these partners is growing quickly. A recent 2024 Third Party Risk Management study revealed that 61% of companies have experienced third-party data breaches over the past year—a 49% increase from 2023 and three times higher than in 2021. It’s a clear wake-up call that stronger Third-Party Risk Management (TPRM) solutions are needed to protect supply chains, cloud systems and sensitive data. 

The increase in third-party breaches comes down to a few factors. Companies now rely heavily on external vendors to manage sensitive data, perform critical functions, and maintain IT infrastructures. However, many vendors do not follow strict security protocols, leaving data more vulnerable to cyberattacks. As these attacks become more sophisticated, businesses must adopt advanced enterprise risk management practices to protect themselves from potential threats. 

Third-Party Data Breaches in 2024 

Here’s a look at nine recent data breaches in 2024, along with key lessons businesses can take from each incident. 

1. Truist Bank Data Breach (October 2024) 

• What Happened? A third-party debt collection service provider for Truist Inc., Financial Business and Consumer Solutions, Inc. (FBCS), experienced a breach that exposed Truist Bank’s sensitive data. 
• Data Compromised: Sensitive Truist Bank information, including client data, was exposed to unauthorized access. 
• Tip: This highlights the importance of vetting third party vendors for strong security practices, as the risks posed by third-party service providers can have significant consequences for your business. To minimize these risks, continuous monitoring of third party data and risk handling is essential. Using a third-party risk management software like Alliance TPRM can help automate and streamline the process, providing real-time, continuous monitoring of your vendors’ security practices. 

2. Toyota Data Breach (September 2024)  

• What Happened? In a major Toyota breach, a cybercriminal group known as ZeroSevenGroup hacked into an undisclosed third party supplier of Toyota’s U.S. branch, leaking 240GB of sensitive data on a hacking forum. 
• Data Compromised: This Toyota security incident exposed customer and employee data, contracts, financial information, and network credentials. 
• Tip: Securing both internal networks and third-party systems is essential. Strong encryption and access controls should be in place to limit the risk of exposure. 

3. Infosys McCamish, Bank of America Data Breach (September 2024) 

• What Happened? Infosys McCamish, a subsidiary handling insurance and financial services for major clients like Bank of America and Fidelity, was hit by the Lockbit ransomware, leading to the exposure of sensitive customer data. 
• Data Compromised: Financial and personal data of Bank of America and Fidelity customers. 
• Tip: Organizations need robust incident response plans and regular vulnerability assessments, particularly when handling high volumes of financial data. Ransomware defenses must include advanced threat detection systems. 

4. Fortinet Data Breach (August 2024) 

• What Happened? Unauthorized access to a third party cloud-based file drive used by Fortinet exposed customer data. 
• Data Compromised: The Fortinet breach exposed limited data related to a small number of their customers 
• Tip: Businesses must ensure their third-party cloud storage solutions implement stringent security measures, including multi-factor authentication (MFA) and regular audits. 

5. CMS/WPS Insurance Breach (July 2024) 

• What Happened? The Centers for Medicare & Medicaid Services (CMS) notified nearly a million Medicare beneficiaries of a breach at a CMS contractor that handles Medicare claims, Wisconsin Physicians Service Insurance Corporation (WPS). The breach occurred due to a vulnerability in MOVEit software, a third-party application used by WPS for transferring files for Medicare. 
• Data Compromised: Protected health information (PHI) and personally identifiable information (PII) of Medicare beneficiaries (name, social security number, taxpayer identification number, date of birth, Medicare beneficiary identifier, health insurance claim number, etc.) 
• Tip: Regular patching and software updates are critical to prevent known vulnerabilities from being exploited. Vendor security testing is essential to reduce exposure to such risks. 

6. Ticketmaster Breach (July 2024) 

• What Happened? Ticketmaster suffered a data breach after an unauthorized third party obtained access to customer payment and account information from a cloud database hosted by a third-party data services provider. 
• Data Compromised: Ticketmaster payment info and personal data, including credit card details and account information of customers, were exposed. 
• Tip: Implementing strict access control measures and conducting regular cloud audits can help mitigate the risk of unauthorized access. 

7. Shopify Data Breach (July 2024) 

• What Happened? Shopify experienced a breach due to a third-party app’s vulnerability, exposing customer information. 
• Data Compromised: Customer data like Shopify IDs, full names, email addresses, mobile phone numbers, order counts, total money spent, SMS and email subscriptions. 
• Tip: Ensure that third-party applications integrated into platforms like Shopify follow strict security protocols. Continuous monitoring and vulnerability scanning of third-party apps is critical to reduce the risks of unauthorized data access. 

8. American Express Data Breach (June 2024) 

• What Happened? A third-party merchant processor exposed American Express credit card data due to a security lapse. 
• Data Compromised: The Amex data breach exposed customer credit card data, putting individuals at risk for fraud. 
• Tip: Payment processors must strictly adhere to PCI DSS (Payment Card Industry Data Security Standard). Card companies should implement robust monitoring to detect fraud early. 

9. Cisco Duo Security Breach (May 2024) 

• What Happened? A telecom provider experienced a phishing attack and exposed Cisco Duo MFA codes. 
• Data Compromised: Cisco Duo MFA authentication codes and logs were accessed by attackers. 
• Tip: Even multi-factor authentication (MFA) solutions are vulnerable to phishing attacks, necessitating additional layers of defense such as phishing-resistant MFA solutions and better user education. 

How Alliance Can Help Prevent Third-Party Data Breaches 

To mitigate the growing risk of third-party breaches, companies must adopt a robust Third-Party Risk Management (TPRM) solution. Alliance TPRM is a risk management software specifically for third party vendors and suppliers. It offers businesses an easier and more efficient way to manage vendors, ensuring compliance with information security and regulatory standards. 

With Alliance, you can streamline the whole cycle of the supply chain risk management process: 

1. Vendor Risk Assessment: Automatically assess potential vendors with detailed risk assessments to ensure they meet stringent security and compliance standards before engagement. 
2. Continuous Monitoring: Alliance provides real-time monitoring of third-party activities, enabling quick detection of any potential risks or compliance issues. 
3. Risk Identification: Use AI to identify and address vulnerabilities early, facilitating proactive measures to prevent disruptions to the supply chain. 
4. Centralized Management: Easily manage all supplier documents (contracts, certificates, compliance reports, etc.) on one platform for improved operational efficiency. 
5. Regulatory Compliance: Ensure that vendors comply with security and ESG governance standards.  

By integrating a solution like Alliance TPRM, businesses can prevent third-party breaches, protect sensitive data, and maintain strong vendor relationships. 

Learn More about How to Protect Your Business with TPRM here

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Data Breach Definition 

A data breach is a security incident where sensitive or confidential information is accessed or stolen from a system without authorization. 

Data Breach vs Security Breach 

Data breach is a specific type of security breach, but not all security breaches necessarily involve a data breach.  

A security breach broadly refers to any incident that poses a threat to the security of an organization’s system. This includes various types of incidents like unauthorized access, theft, disclosure, alteration, or destruction of data or systems. Whereas a data breach is a more specific type of security breach that focuses on the unauthorized access of data rather than the overall security of systems. 

Consequences of Data Breach: How Does it Impact Your Business? 

Data breaches result in database leaks that could compromise both the organization and their customers’ sensitive data. The compromised data could include customers’ personal information (names, phone numbers, credit card information leaked, password leak) or the corporate data (intellectual property, employee records, financial records). 

The consequences of data breach can be highly damaging, both to SMBs (Small and medium-sized businesses) and large organizations. 46% of cybersecurity breaches worldwide are aimed at SMBs, and especially for these small businesses, the consequences of a data breach can be even more devastating. As they may lack the financial resources and expertise to respond and recover from a data breach, they may end up being forced to entirely shut down due to impacts of the breach. Large businesses would also face significant impacts. Let’s look at how data breaches can damage your business: 

• Financial Loss   

Your business may incur direct financial losses from investigating the breach, notifying affected parties and implementing security measures such as incident response plans for future prevention. Additionally, there are indirect financial losses resulting from reputational damage, loss of customers, decreased sales and potential legal fees. 

According to IBM’s Cost of Data Breach Report 2023, the global average cost of a data breach reached an all-time high of $4.45 million, showing a 2.3% increase from 2022.  Organizations that use security AI and automation, however, have been reported to save an average of $1.76 million compared to organizations that don’t. 

• Reputational Damage   

A data breach can severely damage a business’s reputation, breaking customer trust and loyalty. When a company has been breached, customers may lose confidence in the company’s ability to protect their data and choose to leave. Moreover, it could lead to negative word-of-mouth publicity in addition to the already negative media press. This damage to your reputation will make it difficult to rebuild trust, restore the company’s reputation and attract new customers.  

A study has shown that in fact, in the US alone, 83% of consumers will stop spending at a business that has been breached, and 21% will never come back to that business again. 

• Legal Consequences   

Your business may also face legal and regulatory consequences, such as fines, penalties and lawsuits. Depending on the nature of the breach and the applicable laws and regulations (such as GDPR in Europe or HIPAA for healthcare data in the U.S.), your business may be held accountable for failing to protect customer data. Companies must ensure they meet data breach notification law requirements, which require businesses to notify affected individuals about the breach within a specified timeframe.  

The biggest fine for data breach is Meta (Facebook) being fined $1.3 billion for violation of the GDPR in 2023. The General Data Protection Regulation (GDPR) is the world’s most strict data privacy and security law that protects the personal information of the EU population. Meta was fined for transferring personal data from the EU to the US without adequate data privacy protections. 

• Operational Disruptions   

When your company has been breached, your company’s immediate priority would be to respond promptly to minimize its impact. This, however, disrupts normal business operations as it requires you to divert resources and personnel from regular tasks to this incident response. To add to that, the system downtime, time needed for data recovery and restoration, and supply chain disruption further disrupt normal operations. As a result, some companies may even opt to fully shut down all operations while they focus on recovering from the incident.  

Common Causes of Data Breach  

Let’s look at some of the common causes of data breach and how they happen in the first place: 

• Cyberattacks

Cyberattacks by hackers and cybercriminals are a significant cause of data breaches. These attacks can involve techniques like malware infections, phishing, ransomware, or brute force attacks targeting weaknesses in security defenses. 

• Insider Threats

Data breaches can also result from insider threats, where current or former employees or partners compromise sensitive data. This can include actions like unauthorized access, data theft, or negligence in handling sensitive information that leads to the data leak. 

• Weak Authentication and Access Controls

Weak or default passwords, lack of multi-factor authentication, and improper user permissions can make it easier for attackers to gain unauthorized access to sensitive information. 

• System Vulnerabilities

Exploiting vulnerabilities in systems is a common tactic used by hackers, for example injecting malware such as spyware to monitor your keystrokes and secretly collect sensitive data without your knowledge. Failure to promptly patch or update systems to address known vulnerabilities can increase the risk of a data breach. Vulnerability Management Tools like 8iSoft YODA can help your organization identify, assess and remediate vulnerabilities in your systems. These tools scan your system for any security weaknesses such as outdated software or known vulnerabilities and provide insights to help you proactively address any issues before they can be exploited by attackers. 

Check out the Top 10 Vulnerability Management Tools you can use. 

• Third-Party Risks

Data breaches can occur through third-party vendors, suppliers, or service providers that have access to your organization’s systems or data. If these third parties have inadequate security measures, they can expose your sensitive information to unauthorized parties.  

Learn more about Third Party Breaches. 

To mitigate these risks effectively, organizations can implement third-party risk management (TPRM) tools such as the Alliance TPRM. Tools like Alliance help organizations assess the security posture of their third-party vendors and suppliers. 

• Social Engineering

Social engineering is the psychological manipulation of talking a person into revealing sensitive information or granting unauthorized access to systems. Common social engineering techniques include impersonations and phishing through scam emails or text messages. The main goal of these techniques is to trick the target into downloading malware or sharing confidential information. 

How to Prevent Data Breach  

To prevent breaches, your organization should implement the following best practices of data breach prevention: 

• Establish Incident Response Plans

Your company will need to develop an incident response plan to ensure a rapid and effective response to security incidents like data breaches. This Incident Response Plan (IRP) will act as a strategic step-by-step guideline for your organization to know how to manage cyberattacks while minimizing the damage, recovery time and total costs. 

• AI and Automation

Companies need security AI and automation to prevent data breaches due to the scale and complexity of modern cybersecurity threats. Traditional methods are often too slow to effectively counteract cyberattacks. AI enables quick, proactive measures to address threats using technologies like anomaly detection and predictive analytics. The 8iSoft YODA Risk Mitigation Platform is an example of a vulnerability management tool that incorporates AI to help your organization identify, mitigate and patch vulnerabilities in real-time. 

In addition to saving time, AI also helps your company save money. According to the global 2023 Cost of Data Breach report, businesses using artificial intelligence (AI) and automation were able to save about $1.8 million in data breach expenses. They were also able to speed up the data breach response process by more than 100 days. 

Learn more about the role and benefits of AI in Cybersecurity.

• Secure Third-Party Relationships

To prevent any risks of third party breaches, it’s important to evaluate the security practices of your third-party vendors, suppliers, and service providers before engaging with them. Utilizing a Third-Party Risk Management (TPRM) tool like the Alliance TPRM can help you streamline this process by offering a centralized vendor management, automating risk assessments, and enabling continuous monitoring of third-party vendors’ security performance. 

• Train Employees

We have seen how some of the common causes of data breaches include phishing, social engineering and malware. It is thus crucial to provide comprehensive cybersecurity training to employees to raise awareness on these threats, such as how to identify and report suspicious activities or the best practices for data security. 

• Implement Strong Access Controls

Limit access to sensitive data only to authorized individuals. Use multi-factor authentication (MFA), strong password policies, password managers and single sign-on (SSO) to ensure that only authenticated users can access sensitive information. 

Data Breach Response Plan: What To Do After a Data Breach   

A Data Breach Response Plan is essential for organizations to effectively mitigate the impact of a breach and minimize potential damages to sensitive information and reputation. Here’s a guide on creating and implementing a Data Breach Response Plan: 

       1.   Activate the Response Team 

Act quickly and immediately assemble your data breach response team comprising of experts from the following areas: IT, legal, public relations, investor relations, human resources and management. Most importantly, to stop further data loss, a data forensics team is required to locate the source of the breach. 

       2.   Detection and Assessment 

Implement monitoring tools to thoroughly investigate and detect data breaches as soon as possible. Once a breach is detected, promptly assess the scope and severity of the incident, including the type of data compromised, the extent of unauthorized access, and potential impact on affected individuals and the organization. 

       3.  Containment and Mitigation 

To prevent the breach from spreading further, immediately isolate affected systems/servers/networks, reset passwords and change other access credentials. Activate Intrusion Detection Systems (IDS) to monitor network traffic for suspicious activity and block any potential threats in real-time. These systems can help detect and mitigate ongoing attacks before they cause further damage. Identify gaps in your security posture and implement necessary improvements. 

        4.  Notify Relevant Stakeholders 

Notify affected individuals (customers, employees), regulatory authorities and law enforcement agencies. Communicate transparently and promptly about the breach, its potential impact, and the steps being taken to address it. Provide guidance and support to affected individuals on how to protect themselves from potential harm.

Latest Data Breach Example: Data Breach 2024  

Data breaches have become increasingly common, with organizations across various industries facing the constant threat of cyberattacks. Despite advancements in security measures, cyber attackers continue to exploit vulnerabilities in systems and networks. For example, recently in 2024 an alarming breach incident had occurred to Dell Technologies: 

• What happened? Technology giant Dell has been breached by a hacker who has stolen access to Dell’s database of purchase records from 2017 to 2024. The hacker has listed the stolen data for sale on the Breached hacking forum. The stolen data included sensitive information such as full names, addresses, service tags, shipping dates, warranty plans, serial numbers and Dell customer/order numbers. 

• What caused it? The hacker was able to access the database through a loophole in Dell’s partner registration process. By registering multiple accounts under fake company names, the hacker gained access to the Dell portal for partners, resellers, and retailers, that could be used to look up order information without verification. 

• Impact: Even though Dell mentioned that the breach does not include highly sensitive data such as financial information, the hacker could still use the collected information for malicious activities such as phishing. For example, the hacker could use the address, serial number and order information to send USBs containing malware and trick people into installing this malware. Due to this data breach incident, customers could lose trust in Dell products as they have become a “technology company that has been hacked.” 

• Response: Dell has notified customers of the data breach through email, informing them what type of data has been exposed, what the company is doing to mitigate the breach, and offering guidance on what customers can do in response to this incident. The company also emphasized that no critical customer data such as sensitive personal or financial information was compromised. 

The Dell Data Breach 2024 incident serves as another reminder that even well-established companies are vulnerable to cyberattacks, highlighting the constant need for robust cybersecurity measures.   

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Third Party Data Breach Definition | Third Party Data Breach vs. Data Breach 

A third party data breach is a specific type of data breach that occurs when a third party vendor has been breached, resulting in the unauthorized access, disclosure, or compromise of your sensitive data. 

A data breach refers to when your sensitive data is accessed without authorization. This can happen through various means, including cyberattacks, insider threats, or accidental exposures.

Learn more about Data Breaches. 

In a third party data breach, the breach occurs not within your organization’s own systems, but through a third party that has access to your data. The definition of a third party is any organization that provides goods or services for your use. Some examples of a third party vendor include: 

• Software as a Service (SaaS) providers like Customer Relationship Management (CRM) systems 
• Suppliers 
• Marketing agencies 
• Outsourced Functions
• Contractors like an external accounting firm managing financial data or law firm providing legal services 

Consequences of Third Party Data Breaches 

When a third-party vendor or partner causes a data breach, it damages the trust in business relationships and could lead to strained communication, renegotiation of contracts or even termination of the relationship. Rebuilding these relationships takes time and effort, making it harder to work together in the future. Besides that, there are several other risks that can arise from a data breach caused by third parties: businesses also face financial losses, legal and regulatory compliance penalties, operational disruptions and damage to their reputation, which overall compromises customer trust and loyalty. 

Causes of Third Party Data Breach  

A third-party data breach is caused by a third party vendor holding your company’s data getting hacked. Hackers target vulnerabilities in the third party’s system and gain access to it, compromising the security of your sensitive information. This breach can occur due to various factors, including inadequate network and information security measures, insider threats, or social engineering attacks targeting employees of the third party: 

1. Inadequate Security Practices: Third-party vendors may have insufficient security measures in place to protect sensitive data, such as weak password policies, outdated software, lack of encryption protocols, and other vulnerabilities that can be exploited by hackers. 

2.  Insider Threats: Employees or contractors of third-party vendors may pose an insider threat by intentionally or accidentally compromising data security. This could involve malicious actions such as stealing sensitive information or inadvertently exposing data through careless behavior or negligence. 

3. Lack of Oversight: Businesses may fail to monitor their third-party vendors and may unknowingly partner with vendors that have weak security postures, increasing the risk of a data breach. 

4. Shared Access and Permissions: Third-party vendors often require access to sensitive data or systems to fulfill their contractual obligations. However, granting excessive permissions or failing to implement proper access controls can increase the risk of unauthorized access and data exposure. 

5. Social Engineering Attacks: Cyber attackers may use social engineering techniques to manipulate employees of third-party vendors into disclosing sensitive information or providing access to systems. Phishing emails, pretexting, and other tactics can trick unsuspecting employees into inadvertently facilitating a data breach. 

Understanding these causes can help businesses identify potential vulnerabilities in their relationships with third-party vendors and implement proactive measures to mitigate the risk of a data breach. 

How to Prevent Third Party Data Breach  

Preventing third-party data breaches requires a proactive approach to managing third party risks and mitigating them. Businesses can utilize third party risk management (TPRM) tools for this. 

Third party risk management (TPRM) tools like Alliance TPRM are specifically designed to assess and manage the security risks associated with third-party vendors and partners. These tools enable businesses to conduct comprehensive risk assessments, monitor vendor performance, and track compliance with security requirements and contractual obligations. By centralizing vendor risk information and providing visibility into the entire vendor ecosystem, tools like Alliance empower organizations to make informed decisions about vendor relationships and ensure that appropriate security measures are in place to protect sensitive data. 

Here is how Third-Party Risk Management (TPRM) tools like Alliance can help businesses strengthen their defense against third-party data breaches: 

1. Comprehensive Risk Assessment: TPRM tools enable businesses to conduct comprehensive risk assessments of their third-party vendors and partners. By evaluating factors such as security practices, data handling procedures, and regulatory compliance, businesses can identify potential vulnerabilities and assess the level of risk posed by each vendor. 

2. Continuous Monitoring: TPRM tools facilitate continuous monitoring of third-party vendors, allowing businesses to stay informed about changes in risk posture and security incidents. By proactively monitoring vendor performance and security practices, businesses can detect and respond to emerging threats or vulnerabilities in a timely manner. 

3. Risk Prioritization: TPRM tools help businesses prioritize risk mitigation efforts based on the severity of vulnerabilities and the criticality of the assets involved. By focusing resources on high-risk vendors or systems, businesses can allocate resources more effectively and address the most pressing security concerns first. 

4. Contractual Safeguards: TPRM tools also assist businesses in implementing robust contractual agreements with third-party vendors that include specific security requirements, responsibilities, and expectations. By incorporating provisions for data protection and breach notification into contracts, businesses can establish clear guidelines for vendor security and accountability. 

5. Streamlined Compliance: TPRM tools help businesses streamline compliance efforts by providing centralized visibility into vendor compliance with regulatory requirements, industry standards, and contractual obligations. By automating compliance assessments and reporting processes, businesses can ensure that vendors meet the necessary security standards and mitigate compliance-related risks. 

Third Party Data Breach Example: Okta Breach 2023 

One notable example of a third party data breach is the Okta Data Breach in 2023. A cyberattack at Rightway Healthcare, a third-party vendor used by Okta for healthcare services, had exposed the personal and healthcare data of almost 5000 Okta employees. The data leak was of personal information files from April 2019 to 2020, and included data like names, social security numbers and health insurance plan numbers.  

As response, Okta stated that they would review their relationship with Rightway Healthcare. Okta also emphasized that this third-party data breach did not compromise the safety of any Okta customers, nor did it impact any Okta services. As for employees who were affected by the breach, they were offered two years of free credit monitoring, identity restoration and fraud detection services through Experian’s IdentityWorks product. 

Despite the breach stemming from a third-party vendor, Okta still suffered significant consequences from the breach. This shows just how important it is to ensure and maintain a strong security posture, not only within your organization but also among your partners — thus highlighting the critical importance of implementing Third Party Risk Management (TPRM) tools. With TPRM tools like Alliance, you could assess and monitor the security practices of your third-party vendors, reducing the risk of data breaches like the one experienced by Okta. 

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