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Cyber Risk Management

How to Mitigate Cyber Risks in Your Third-Party Supply Chain


Supply chains are complex networks of organizations, people, processes, information, and resources, all collaborating to deliver goods and services to end consumers. Due to their intricate nature, supply chains are susceptible to various cybersecurity risks that can significantly affect the organizations involved. 

One of the largest supply chain attacks in recent years was the SolarWinds security incident in 2020. Hackers took advantage of multiple supply chain layers to compromise as many as 250 different organizations and affect up to 18,000 customers. This attack prompted other vendors with large supply chain networks to preemptively deploy safeguards and investigate their source code, build, and delivery process. Proactive cyber risk management is key to managing cyber supply chains, but this must be the approach for all organizations, not as a case-by-case approach. 

Cyber threats and vulnerabilities will always exist, and organizations must take a proactive and holistic approach to cyber risk management to ensure that there is end-to-end security. When attacks occur, people quickly point fingers at who is to blame. In reality, every entity is responsible for its security in order to stop the domino effect, build transparent communication, and create strong reporting networks with its partners.

The following will discuss why supply chains are targeted, the challenges to securing a supply chain, and best practices for managing supply chain cyber risks. 

Supply Chains are Lucrative Targets 

Cybercriminals target supply chains for various reasons, as these complex networks offer them multiple opportunities for financial gain, data theft, disruption, and other malicious activities.

  1. Weaker Links: Supply chains often involve multiple interconnected organizations, and some of these organizations may have weaker cybersecurity measures compared to larger entities. Attackers may target these weaker links as an entry point to access more valuable targets.
  2. Access to Valuable Data: Supply chains exchange sensitive data, including customer data, financial records, proprietary designs, and trade secrets. Cybercriminals aim to steal this data for financial gain, corporate espionage, or to sell on the dark web.
    1. Monetary Gain: Some attackers seek financial gain through ransomware attacks, encrypting an organization's data and demanding a ransom for its release. Ransomware attacks on supply chain partners can disrupt multiple organizations simultaneously.
  3. Malware: Attackers can compromise a supplier or partner's systems and then use those compromised systems to spread malware or attack other organizations within the supply chain, increasing their reach and impact.
    1. Longer Attack Chain: The interconnected nature of supply chains can make tracing attacks back to their source harder, allowing attackers to maintain anonymity and evade detection.
  4. Impact on Operations: Disrupting the operations of one or more organizations within a supply chain can have a cascading effect, leading to delays, loss of revenue, and reputational damage.
  5. Counterfeit Components: Attackers might introduce counterfeit or compromised components into the supply chain, leading to vulnerabilities or malfunctions in the final products. This can result in safety concerns or financial losses for end customers.
  6. Nation-State Espionage: State-sponsored threat actors may target supply chains to gather intelligence on critical infrastructure, defense systems, and other sensitive assets to further their geopolitical agendas.
  7. Lack of Awareness: Many organizations may be unaware of the potential cybersecurity risks within their supply chains. Attackers exploit this lack of awareness to infiltrate and compromise systems.
    1. Certain supply chains can be incredibly intricate, coupled with a lack of communication and transparency between vendors, cyber weaknesses can be exploited 
  8. Diverse Attack Vectors: Supply chains involve various communication channels, software, hardware, and processes, providing attackers with numerous attack vectors to exploit. IT and OT risks exist within a supply chain; security practitioners need continuously monitor and protect both.

Challenges in Monitoring Cyber Risks in Supply Chains

Monitoring cyber risks in supply chains can be challenging due to these networks' complexity and interconnected nature. Modern supply chains can involve numerous vendors, suppliers, partners, and subcontractors, each with its own IT systems, processes, and security measures. Managing cybersecurity across this intricate web of relationships can be overwhelming

Several factors contribute to the difficulty of effectively monitoring and managing cyber risks in supply chains, including third-party vulnerabilities. Vendors, suppliers, and partners come with their own cybersecurity practices and weaknesses. Each has its own level of maturity, leaving the weaker links vulnerable to malicious attacks. 

Additionally, there are other challenges within a supply chain network: 

  • Large supply chains can have numerous layers of suppliers and subcontractors, making it difficult to have complete visibility and control over cybersecurity practices across the entire chain. This lack of visibility makes it difficult to accurately assess the entire supply chain's security posture.
        • How can security teams lead confidently if they do not clearly understand their security posture? 
  • Relying heavily on a single supplier or vendor for critical components can create a significant risk. If that supplier is compromised, it can lead to disruptions in the supply chain.
  • A lack of coordinated incident response plans across the supply chain can delay identifying and mitigating cyber threats.
  • While collaboration and information sharing among supply chain partners are crucial for effective risk management, some organizations may hesitate to share sensitive information about their cybersecurity vulnerabilities, incidents, or mitigation strategies.
  • Organizations may use various technologies, software applications, and communication protocols, challenging standardizing cybersecurity measures and monitoring approaches.
  • Different regions and industries may have varying cybersecurity regulations and standards, making ensuring compliance across the entire supply chain complex.
  • Small and medium-sized businesses within the supply chain may have limited resources to invest in robust cybersecurity measures, making them more susceptible to attacks and breaches.
  • Supply chains are dynamic and can change rapidly due to factors such as market demands, disruptions, and new partnerships. This makes it challenging to keep cybersecurity measures up to date.
  • Coordinating cybersecurity efforts across multiple organizations and ensuring effective communication about emerging threats can be challenging, particularly when response plans are not well-defined.

Ensure Effective Cyber Supply Chain Risk Management

Despite the listed challenges, it is essential for organizations to invest in proactive monitoring and cyber risk management strategies within their supply chains.

In order for security leaders to make cyber-informed decisions, they must first assess and identify vulnerabilities and risks in their security posture. This step consists of conducting thorough cyber risk assessments of the organization and of third-party vendors, suppliers, and partners. Risk assessments are the basis for which security professionals can devise risk mitigation efforts. 

It’s true that every organization within a supply chain has different technology, compliance requirements, and budgets. Despite these variables, organizational leaders must come to a consensus on a base layer of expected cyber risk management and safeguards. Leaders should include cyber requirements in vendor and partner contracts that outline expectations and responsibilities. Again, in times of crisis, people tend to find a person to scapegoat, but contracts help establish roles, responsibilities, and processes. 

By setting a set standard of cyber risk management in contracts, supply chain members also need to establish a regular communication network and reporting structure. While some entities may be reluctant to share sensitive information or acknowledge vulnerabilities within their system, a lack of insight only proves to be a disservice to all parties involved. 

As important as it is to be transparent about existing risks and vulnerabilities, security professionals should also share best practices and solutions that have worked for them. Open communication can lead to a certain degree of standardization regarding best practices, solutions, and common cyber standards and frameworks. 

In a time of crisis, it is crucial for organizations to have a set incident response plan that involves all relevant supply chain partners to ensure a coordinated response to cyber incidents. By having a well-defined response plan, all parties involved will understand their roles and what needs to be done to contain the incident and recover in a timely manner. 

Security professionals should regularly test their incident response plans for vulnerabilities and update partners accordingly. 

Cyber risk management is a holistic and ongoing process that involves continuous monitoring of the supply chain, network, and control changes. Point-in-time assessments underserve security practitioners because they are working with dated information. Continuous monitoring solutions, like CyberStrong’s Continuous Control Automation (CCA), will update security teams in real-time on control changes and deliver an accurate representation of the security posture. 

Involve and update senior leadership regularly. The Board and executive leaders want to know the security posture and what is being done to maintain or improve the security posture. Some cyber frameworks are now mandating regular cyber reporting

Communication with leadership is a crucial part of cyber risk management. This is where CISOs and other security leaders can discuss remediation efforts, resource allocation, risk management progress, and the Return on Security Investment (RoSI). 

Wrapping Up 

It’s near impossible to ensure your organization's security without considering your partners, vendors, and suppliers. And while the interconnectedness of supply chains might seem overwhelming, there are steps leaders can take to ensure the security and proactive risk management of the supply chain. Effective cyber supply chain risk management starts with open communication and real-time cyber risk assessments. 

Learn more about CyberSaint’s third and fourth-party risk management approach with its partnership with IBM Cloud Security and Compliance Center. Schedule a conversation with us to learn how we support cyber risk management for the digital era.

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