July 17, 2023 | Supply Chain Strategy
Internal security measures in an organization are no longer sufficient to prevent an intrusion. That’s because cybersecurity threats often trickle down from an organization’s supply chain. In fact, supply chains have emerged as the biggest, and perhaps the most vulnerable, risk to an organization’s cybersecurity.
In 2022, the number of compromises from supply chain attacks was far more than those caused by malware, according to the data breach report published by Identity Theft Resource Center.
Recent attacks such as 3CX (2023), Kaseya (2021) and SolarWinds (2020) have all originated from a third-party supplier in the supply chain.
Not only are supply chain attacks from a third-party vendor difficult to detect, but they can also cause massive damage and impact multiple organizations across different industries and regions. These risks have doubled in magnitude since the onset of the pandemic in 2020, when businesses were compelled to switch to a remote work setting and depend on local networks.
Since then, many suppliers and third-party vendors have adopted latest technology to streamline their operations. Although they have benefited from deploying technology, they often do not have appropriate security measures in place to protect their systems. This means the risk to the parent organization’s cybersecurity remains high. Cybercriminals can easily exploit these vulnerabilities in third-party systems and gain access to multiple projects, applications and systems.
Not surprisingly, third-party cyber risk management has become a top priority for businesses today. With increasing dependence on interconnected, digital supply chains, businesses must understand third-party risks and, more importantly, take proactive steps to mitigate their impact.
In addition to mitigating third-party cyber risks, a well-designed third-party cyber risk management program can also provide clear guidelines for onboarding and managing third-party vendors.
Here are 5 best practices businesses should follow for effective third-party cyber risk management.
Map out the supplier base and identify vendors that have access to sensitive data, systems and applications. Evaluate their ability to adequately protect company data with secured access. Take necessary action if the vendor does not have necessary security measures in place. If this is the case, the business should identify alternate vendors that are fit for purpose.
Determine the risk potential of different vendors and assign a risk rating based on their level of threat to the business. Ask employees owning the vendor relationship to capture vital information such as the level of data access and service being offered. You can also classify vendors as high risk, medium risk and low risk and develop mitigation plans accordingly.
Restrict the level of access given to third parties by identifying their specific requirements. Providing restricted access to third parties can help minimize internal damage caused in case of a breach on their end.
Make cybersecurity a part of the contract by asking technology suppliers to clearly mention the components used in building software. Procurement can also ask technology suppliers to test and check their products for vulnerabilities before sending them out.
Make all employees and business units understand the importance of cybersecurity. As procurement may not be directly involved in all purchases, it is vital to train employees outside procurement and security teams on how to choose a supplier and prevent a security threat. Reviewing supplier scorecards can help non-procurement staff in this exercise.
Businesses must make third-party cyber risk management a part of their overall organization-wide cybersecurity strategy. Monitoring security procedures of third parties and doing due diligence are vital in this process. It is also important to spread security awareness throughout the organization.
Additionally, businesses must have a robust incident response plan to effectively deal with a security breach. Such a plan can help a business understand how to act quickly and prevent a breach from affecting vital systems and networks. It is also a good idea to prepare staff by stress testing this plan with realistic scenarios.