NIS-2 does not solely focus on an organization’s own cybersecurity. The directive also requires that risks arising from relationships with direct suppliers and IT service providers be systematically assessed and managed. This brings third-party risk management (TPRM) into sharp focus. Contract management plays a central role in this process.
When implemented correctly, smart contract management is a valuable tool for creating transparency regarding third-party risks, continuously monitoring supply chain security, and ensuring long-term compliance with regulatory requirements.
NIS-2 does not solely focus on an organization’s own cybersecurity. The directive also requires that risks arising from relationships with direct suppliers and IT service providers be systematically assessed and managed. This brings third-party risk management (TPRM) into sharp focus. Contract management plays a central role in this process.
When implemented correctly, smart contract management is a valuable tool for creating transparency regarding third-party risks, continuously monitoring supply chain security, and ensuring long-term compliance with regulatory requirements.
How do contract management and third-party risk management work together?
Contract management links the requirements of NIS 2-compliant third-party risk management to the specific business relationship. It supports the entire lifecycle: from the selection and onboarding of an IT service provider, through the signing of the contract, to the ongoing monitoring and termination of the partnership.
1. Inventory and Onboarding of IT Service Providers
A complete and transparent overview of suppliers and IT service providers forms the foundation for effective TPRM. As a first step, it is therefore recommended to centrally record all active contracts in an inventory and classify them based on risk.
For new service providers, it is necessary to conduct risk-based due diligence and a structured security assessment. The security level of an IT service provider can be evaluated, for example, based on established standards, relevant certifications, and the technical architecture.
2. Incorporating Security Requirements into Contracts
Contracts establish the rules that govern collaboration. Therefore, all essential security requirements, minimum standards, obligations, and responsibilities should be included in both new and existing agreements. These include:
- Obligations to cooperate and report (e.g., incident reporting and assistance with security incidents)
- Technical and organizational measures (TOMs), such as multi-factor authentication, data encryption, access logging and monitoring, and vulnerability and patch management
- Audit, verification, and control mechanisms to ensure ongoing compliance, such as audit rights, certifications (e.g., ISO 27001), and mandatory reporting structures.
3. Continuous Monitoring and Risk Management
A signed contract alone does not guarantee security. Companies must regularly verify that their suppliers are complying with the agreed-upon security standards. Additional checks are often required for critical IT service providers regarding privileged access, for example, or as part of regular audits. Companies should also prepare for potential outages. Exit strategies, contingency plans, dual sourcing, and tested recovery processes can help increase supply chain resilience.
Furthermore, risks can change over the course of a business relationship. New services, contract amendments, adjustments to service level agreements (SLAs), and changes in a supplier’s subcontractors can impact the risk profile of the business relationship. Regular reassessments help identify these changes early and manage the associated risks effectively.
How does digital contract management support NIS 2 compliance?
With Fabasoft Contracts, a smart contract management software, you can map and manage the entire lifecycle of a supplier/service provider relationship.
- A digital inventory seamlessly links all relevant information, documents, deadlines, and reviews.
- Digital templates for supplier questionnaires, risk assessments, and exit plans combined with automated workflows support structured review and approval processes.
- AI-powered contract review identifies risks in existing agreements.
- Templates and clause libraries enable the simple and compliant creation of new contracts and amendments.
Recurring reviews, including deadline and escalation management as well as monitoring reports, provide timely reminders of upcoming tasks.
When all data is stored in a single digital location from the beginning of a collaboration, companies can transparently track and respond to changes in real time. With digital contract management serving as a "gatekeeper," existing compliance requirements can be taken into account during onboarding, codified in contracts, and monitored continuously throughout the collaboration.
