Managing digital supply chain risks has become more challenging with the increase in cyber-attacks and security breaches in recent years. It is possible for cybercriminals to gain access to larger institutions by exploiting vulnerabilities in the ecosystem of less secure suppliers and third-party vendors. A successful cyber security strategy must look beyond the institutions’ own maturity to identify cyber risks all over the ecosystem.
Here we analyze the top 4 cybersecurity risks facing digital supply chains and provide practical tips for mitigating them.
What are the most common supply chain risks?
There are significant challenges in terms of privacy and cyber security faced by digital supply chains, but they cannot be avoided. Having a good understanding of the major types of risks is crucial to creating an effective risk management strategy.
There are four types of supply chain risks you need to know about :
Legal risks
There is a great deal of dependence on contractual relationships in supply chains. Supply chains are vulnerable to legal risks because they continue the purchasing, production, selling, and shipping of goods under legal agreements. As far as cybersecurity is concerned, data breaches pose the greatest legal risk to businesses. Working with third parties increases the risk of data misuse or inaccurate storage, which might jeopardise the security of consumers’ personal information. This puts the company liable for hefty fines and court fees.
Financial risks
The financial risks businesses face are not only driven by the financial instability of their suppliers but also by other factors. When the costs associated with disruptions of business, investigations, and credit monitoring are included, data breaches cost an average of $4.2 million. Data breaches caused by ransomware attacks, which are designed to extort money from companies in return for restoring access to their data, may also be costly, and sensitive data may be exposed.
Scheduling risks
A statement of work (SOW) issue is a common cause of scheduling risk, but less common issues can also cause delays. Today, more physical objects are connected to the Internet of Things (IoT). However, if equipment and processes are not properly secured, there is an increased risk of failure. Symptomatic supply chain disruptions might result from manufacturing or packing equipment vulnerabilities exploited.
Environmental risks
Companies are being held accountable for their own environmental impact as well as the environmental impact of their vendors and third-party partners. Discharges or emissions that may negatively impact air, water, or soil would be considered environmental risks.
Environmentally-driven supply chain risks also include climate change and the unpredictable weather events that accompany it. The growing threat of exponential flooding and extreme weather patterns from climate change will disrupt the flow of the supply chain over time as well as the quality and quantity of raw materials and manufacturing.
While growing the use of automation, cloud computing, artificial intelligence, and machine learning is crucial for firms aiming to minimise their environmental effect. If not properly protected, the increased use of these technologies could lead to further cybersecurity risks.
How to mitigate cybersecurity supply chain risks
Now that the various risk categories have been described, the next step is to determine which cybersecurity issues pertain to a business’s digital supply chain and develop a strategy to reduce these risks moving forward. To identify the cybersecurity risks that pose the greatest threat to your organisation and choose the best course of action for addressing them, consider the following actions and questions.
Identity, evaluate and address supplier risks
Understanding the risks your suppliers face is the first step in risk mitigation. Businesses must first determine which risks are most likely to influence their current suppliers and how much harm could result from those risks being exploited. Prioritising the maintenance of current supplier relationships should come before considering new alliances. Do the suppliers you now work with uphold appropriate digital hygiene? How are their customers’ personal details protected? What are some circumstances that can cause problems for your suppliers?
To ensure that your company recognises and addresses new dangers, designate a team of skilled employees to focus on current and evolving supply chain issues. Who else is monitoring the newly introduced threats if not you?
Ensure supplier quality
The quality of suppliers, especially their digital maturity, should then be assessed using a due diligence questionnaire. What rules and procedures apply to their cybersecurity policy? Who is in charge of overseeing the organization’s information security and privacy policy? Your company won’t ever have to learn about third-party hazards if you provide answers to these crucial questions and others.
Diversify vendors
Creating vendor diversity, particularly for the most critical components of the business, can add an extra degree of security. Is there a backup if there is just one provider who delivers a particularly critical resource and becomes inoperable due to a malware attack? Who else could provide the same resource or service on a consistent basis?
Consider vendor tiering
Vendors are categorised with vendor tiering based on the degree of security risk they pose to an organisation. Lower tiers indicate fewer significant cybersecurity risks. What kind of a financial and time impact, if any, would a vendor’s sudden inability to offer services have on the company overall? How likely is it that they’d have lengthy delays or even stop working altogether? Which providers’ backups should be in place the most?
Assess vendor risks routinely
Last but not least, because risks are not constant and unchanging over time, these assessments should be continued on a regular, repeating basis to guarantee that new risks are appropriately identified before they have the potential to become troublesome. Has the list of vendors expanded? Have checks been made to ensure that technological preventative measures such as firewalls, intrusion detection systems, and antivirus software are in place? Have plans been developed to mitigate each of the risks that have already been identified and assessed? Regular vendor risk management evaluations will assist your company in better identifying, evaluating, and mitigating any vendor risks that could otherwise go undiscovered.
How Nemasis can help prevent digital supply chain risks
It’s time to build up a vendor management system and an oversight procedure after determining the key third-party risks to your organisation. An ongoing third-party risk monitoring strategy must be part of the supervision procedure. There are ways to automate and make the process of continuous monitoring less complicated, even though it can be time-consuming and laborious.
Nemasis assists organisations in identifying and monitoring the vulnerabilities in their digital supply chains by offering advanced security ratings, automated assessments, third-party risk management, and thorough third-party security ratings. Nemasis makes it possible to continuously monitor every organisation in the intricate ecosystem in which enterprises operate, assisting organisations in developing supply chain risk management strategies that are effective and easy to implement. You may maintain service continuity and digital security without jeopardising the resources required to meet key business objectives by lowering the workload involved with monitoring digital supply chain risks.
