Film and media companies in the entertainment industry are increasingly reliant on third-party vendors and partners, which brings about numerous benefits in terms of cost savings, access to expertise, and technology. However, vendor relationships present the possibility of risk, as third parties can have a major impact on the company's operations, finances, and reputation. In this article, we'll outline the two major risks that entertainment companies face from vendors, and discuss strategies for mitigating these risks.
One of the biggest risks faced by entertainment companies is intellectual property and content theft, most commonly the theft of films, shows, and music. These valuable intellectual property assets, including copyrighted material, trademarks, and trade secrets, are something they don’t want leaked to the public or competitors. Third-party partners may attempt to steal or misuse this information for their own benefit, or, more often than not, bad actors can take advantage of security issues with vendors to access intellectual property and hold it for ransom or release it early.
For entertainment organizations, leaks can result in significant revenue loss. In an industry that prides itself on surprise, an element of magic is lost when fans are able to watch films or shows or listen to albums for free before their official release. This kind of theft can also harm an organization’s reputation, both with fans and within the industry.
In 2017, a hacking group accessed a major streaming service’s unreleased content through a security breach to their post-production vendor via unpatched software. The hackers attempted to hold the content for ransom but the organization refused to pay, which resulted in the content being leaked to the web before its release.
Vendor due diligence is an important part of vendor risk management. This means examining potential vendors as potential financial, operational, and reputational risks to your business operations. Exposing third party vulnerabilities before entering into a business relationship prevents thefts such as these and their repercussions.
Another major risk is data privacy breaches, or the loss of personal information of employees or clients. As the industry relies on the collection and processing of large amounts of sensitive personal and financial information, it's essential that you take steps to protect this data from unauthorized access, use, or mismanagement. According to IBM, the cost of a data breach in the U.S. in 2022 was, on average, $9.44M. Without proper security measures and continuous oversight, vendors become a weak link in your tight security, with more than data at risk.
In 2019, a major streaming service, along with many other companies, suffered a breach when their data management firm was found to be using leaky Amazon S3 storage buckets for backup data. The exposed information included personal data like passwords and contact information. This, of course, caused reputational damage and later that year they reported a loss in quarterly earnings and suffered a drop in stock prices.
This breach highlights the importance of conducting thorough ongoing vendor risk assessments on a regular basis. Because of data privacy breach risk, entertainment companies must regularly monitor and audit their vendors to ensure they are following best security practices. This means staying on top of the vendor lifecycle for all third party partners at all times.
Vendor risk management is a complex undertaking, requiring a significant amount of effort and resources to assess and monitor vendor risks to prevent breaches like the ones above. This is made more challenging by a large number of vendors and the need to have complete visibility into their activities and practices. However, vendor risk management for the Media and Entertainment industry can be streamlined for efficiency and better risk identification, no matter how many vendors you have.
You can simplify the VRM process by getting out of multiple spreadsheets and leaving manual email sends behind with the Start VRM platform. Bring everyone in the vendor approval process together into Start, a simple, customizable, and efficient workspace. Transform tedious manual work into automated processes and establish a consistent vetting process that reduces assessment time by 47%.
Luckily, it is possible to automate this process with VRM tools like START that can help you manage vendor risk without emails and spreadsheets and reduce workload. With START, you’ll be able to establish a consistent vetting process for new vendors and gain a comprehensible vendor lifecycle.
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Because we are specialists in the entertainment industry, we have fine-tuned Start to specifically cater to the needs of media organizations with a large number of vendors. Here are three of the ways that the platform simplifies the vendor risk management process for the entertainment industry.
Start automates the risk assessment process from a single platform that your team and vendors can both use. You can easily tailor our entertainment questionnaires and workflow templates to prevent being slowed down by repetitive work. This improves the efficiency of your risk management department and their ability to manage risk from multiple vendors.
Clear communication with an accessible history is important for vendor risk management. There can be a lot of back and forth during the assessment process and sometimes emails get lost in a chain or pushed down the inbox. Start keeps all communication on the vendor records so that both you and the vendor can easily access them. By prioritizing better communication, you can proactively prevent risks instead of merely reacting to them after they occur.
Start enables you to employ trackers and filters to gain insights into scheduled actions, ongoing remediations, and outstanding tasks. You can actually help your vendors remediate faster by creating action lists where you can both track the progress of assigned and completed actions. This visibility for all parties helps to create and foster trusted relationships and accountability with your vendors and third-parties, and keeps everyone focused on the tasks at hand.
As digitization of content sharing becomes more commonplace, it is crucial to be able to implement an effective and efficient vendor risk management program that isn’t unwieldy. We work with the biggest studios in the entertainment industry to ensure their vendors do their best to protect private information and follow top-notch compliance policies. Investing in strong vendor security practices protects projects and reinforces trust in the industry. It also ensures that companies operate at a high level of integrity and security, which enhances its reputation and protects its bottom line. Implementing best practices for vendor security is a necessary step in maintaining the long-term success and stability of the entertainment industry.
To read more about how we helped one of the biggest studios transform their vendor risk management, read our case study.