When the Cloud Fails: Leadership in the Age of Third-Party Security Incidents

By Dr. Michael McCormick, Vice President, Innovation & Technology

Within hours, college and university presidents across the country faced the same challenge: How do you lead through a crisis you didn’t cause, involving systems you do not control and data you cannot directly inspect?

This scenario is no longer hypothetical. It’s the new reality facing higher education leadership.

For years, cybersecurity was treated primarily as an IT responsibility. That changed when cloud-based platforms became embedded in nearly every aspect of institutional operations.

Today, vendor incidents can disrupt registration, financial aid, payroll, learning management systems and donor operations. The consequences extend far beyond technology. They affect institutional reputation, regulatory compliance, operational continuity and public trust.¹

The Association of Governing Boards has emphasized that cybersecurity must be treated as an enterprise risk, not simply a technical issue.² Third-party incidents make that reality impossible to ignore.

Even institutions with mature internal security programs remain vulnerable through the vendors they depend on every day.

Vendor-related incidents create a unique leadership challenge because accountability does not disappear when the breach occurs elsewhere. A security incident may be the result of someone else’s technical failure, but the obligation to protect students, alumni and donors, comply with federal law, communicate transparently and maintain institutional trust remains entirely with the institution.

Higher education has seen the consequences firsthand.

The 2020 Blackbaud ransomware attack exposed donor and financial data across thousands of institutions, forcing colleges and universities to manage notification requirements, regulatory scrutiny and reputational fallout.^3,4 More recently, the MOVEit-related breach affecting the National Student Clearinghouse exposed records tied to nearly 900 colleges and universities.⁵

These incidents reinforced a defining reality of the cloud era: institutions inherit risk from the platforms they rely on.

Effective leadership during a third-party incident requires discipline, coordination and clear governance.

Institutions should not rely solely on vendor assurances. Leadership teams need written confirmation of impacted data, affected user populations and potential compromise of integrations or credentials before determining exposure.

Institutional accountability does not disappear simply because the breach originated elsewhere.

Delayed notification can jeopardize cyber insurance coverage and create additional regulatory risk. Early coordination with counsel, privacy officers and risk leaders ensures decisions align with legal and operational obligations.

Institutions participating in Title IV federal student aid programs may be required to report vendor-related breaches involving student data to the Department of Education’s Federal Student Aid (FSA) office.⁶ This is a compliance obligation, not an optional courtesy.

Transparency matters, but speculation creates additional risk. Institutions should communicate confirmed facts, reinforce user vigilance and avoid making unsupported claims about containment or impact.

Third-party incidents often expose weaknesses in governance and operational preparedness.

While presidents should not manage technical controls directly, leadership should set expectations around baseline protections including multifactor authentication, credential management and incident response planning.

These are governance decisions. They signal whether an institution is prepared to balance operational convenience with institutional protection.

Equally important is testing resilience before a crisis occurs. Institutions should conduct tabletop exercises that simulate vendor-driven disruptions to registration systems, financial aid operations or learning management platforms.

The institutions that respond most effectively are rarely improvising in real time.

Third-party incidents are no longer rare events. They are an operational reality.

Presidents and boards should be asking:

At Georgia State University, for example, a cybersecurity charter was put in place to communicate institution-wide that cybersecurity is not solely an IT responsibility, but is viewed as an enterprise-wide risk.¹ That kind of institutional alignment matters when rapid decisions must be made under pressure.

Security incidents should not be viewed solely as failures to avoid. In today’s environment, they are inevitable.

What ultimately defines institutional maturity is how leadership responds.

Well-governed institutions activate established protocols, verify impact with discipline, communicate transparently and make informed decisions under pressure. They treat incidents not simply as technical events, but as tests of governance and institutional trust.

Financial consequences are significant, but reputational damage often lasts longer than system recovery. Mishandling a breach can erode confidence among students, families, donors and regulators.

The opposite is also true. Institutions that respond with clarity and accountability can emerge stronger.

Cloud-based platforms have transformed higher education operations, but they have also introduced new forms of institutional dependency and shared risk.

In the cloud era, resilience is no longer defined solely by technology. It is defined by leadership.

Presidents and boards cannot delegate responsibility for governance, accountability and institutional resilience. Technical expertise remains essential, but leadership decisions ultimately determine how institutions prepare for and respond to vendor-driven crises.

The institutions that navigate these moments most effectively are not necessarily those with the largest internal teams or the most sophisticated technology stacks. They are the ones with clear governance structures, defined decision-making processes and experienced partners who understand both the technical realities and the operational complexities of higher education.

At Dynamic Campus, we work with institutional leaders to strengthen the alignment between technology, governance and operational resilience. From cybersecurity oversight and risk management to strategic technology leadership, our focus is helping colleges and universities build the clarity, preparedness and institutional confidence required to respond effectively in an increasingly interconnected environment.

The next third-party incident is not a matter of if. The question is whether institutions will respond with the governance maturity, leadership clarity and operational discipline required to protect trust when it matters most.

Dynamic Campus has served as a strategic partner for higher education institutions since 2002, enabling and accelerating success by helping transform technology processes and platforms.

¹ Tiffany Fishman and Cole Clark, Deloitte Insights, “Elevating Cybersecurity on the Higher Education Leadership Agenda,” February 22, 2018.

² Association of Governing Boards, “Cyber Risk Oversight for Higher Education Boards,” 2021.

³ Steve Alder, HIPAA Journal, “Blackbaud Settles Multistate Data Breach Investigation for $49.5 Million,” October 5, 2023.

⁴ New Jersey Office of the Attorney General, “$49.5 Million Multistate Settlement with Blackbaud,” October 5, 2023.

⁵ Natalie Schwartz, Higher Ed Dive, “MOVEit Breach Hit Nearly 900 Colleges,” September 27, 2023.

⁶ U.S. Department of Education, Federal Student Aid, Protecting Student Information.