Supply chain risk is now recognized as a top challenge, with more than half of security breaches attributed to supply chain and third-party suppliers. This can be a costly vulnerability. The global average data breach cost was $4.35 million last year, according to IBM’s Cost of a Data Breach 2022 report.
These risks stem from many factors, such as the shift to a remote workforce, multi-tier supply chains, increasingly complex security architectures and regulations and the move to digital supply chains. As organizations recognize supply chain risk as a significant threat, the time is now to take steps to secure your organization and instill trust in your customers.
Hurdles to Securing the Supply Chain
Despite the need for more secure supply chains, there are four primary hurdles that arise when organizations look to secure their third-party and supply chain networks:
1. Risk identification. Identifying inherent risks in a complex ecosystem of third-party vendors and multi-tier suppliers is exceptionally challenging.
2. Infrastructure and application modernization. Cloud access and security for digital supply chain environments must be tailored to supply chain data, customer orders, manufacturing and cloud technology.
3. Limited threat intelligence for decision-making. Decision-making authority and budget decisions must be aligned with threat protection and strategy to benefit the organization.
4. Lack of operational resilience. Many organizations do not have a centralized program with appropriate staffing to manage the supply chain and identify major vulnerabilities that can cause a major breach.
So, how do you protect your business in the face of these challenges?
In today’s digital world, cyber risk management is essential to running a secure supply chain and third-party risk program. Cyber risk has become an increasingly important issue for businesses of all sizes, and it can significantly impact the health and stability of a supply chain.
What is Cyber Risk Management?
Cyber risk management is the process of assessing, monitoring and mitigating cyber threats to an organization’s data, systems and networks. It is a proactive approach to managing cyber risks, including anything from malicious software and phishing attacks to data breaches and ransomware. Cyber risk management involves identifying potential risks, assessing their impact on the organization and implementing strategies to minimize or eliminate them.
Supply chains can be particularly prone to cyber threats because they are composed of multiple vendors, manufacturers and other third-party organizations. Since each organization often has access to the same data and systems, determining which entity is responsible for an incident can be difficult. The complexity of the supply chain network can also make it challenging to identify critical vulnerabilities.
A successful cyberattack on a supply chain can significantly impact an organization’s operations. This leads to setbacks such as business disruption, monetary losses and reputational damage. That is why ensuring that even your supplier’s suppliers are secure is critical.
Implementing Cyber Risk Management into Your Supply Chain
Cyber risk management helps organizations respond quickly and effectively to potential cyber threats. Implementing a cyber risk management plan provides many benefits, such as:
- Increased visibility into potential cyber threats
- Improved response time to security incidents
- Reduced risk of data breaches and other security incidents
- Improved compliance with industry regulations
- Increased customer trust and confidence.
When implementing a cyber risk management plan, there are several steps that you should take:
- Keep an accurate inventory of all suppliers/vendors
- Establish tiering based on criticality and data classification
- Assess current cyber risk levels
- Identify potential cyber threats and vulnerabilities
- Develop a risk management strategy
- Implement a policy and procedural framework
- Train employees on cybersecurity best practices
- Establish a system for monitoring and responding to cyber threats.
By taking these steps, you can ensure that your supply chain is protected from cyber threats.
Related: 5 Proactive Steps to Secure Your Supply Chain
Best Practices for Third-Party Due Diligence
When working with third-party vendors, it is essential to ensure that they have adequate cybersecurity measures in place. This process is known as third-party due diligence, which involves verifying that vendors follow best practices for cybersecurity.
When conducting third-party due diligence, organizations should look for vendors that have implemented strong security measures, such as encryption, two-factor authentication and regular security audits. Organizations should also ask vendors about their data breach response plans, prompt communication of breaches, disaster recovery plans and policies for dealing with cyber threats, amongst other security controls.
How Mature is Your Third-Party Cyber Risk Management Strategy?
Many organizations currently use a fragmented approach to supply chain security, working in silos with no (or limited) information sharing. Despite the massive threat to the business, third-party risk management is the least mature security function for most organizations. To set your business apart, you want to move away from an ad-hoc reactive strategy. Instead, organizations should embrace solutions defined, adapted and optimized by data and artificial intelligence.
Securing your supply chain is a journey; IBM can be your trusted partner. Using IBM Security Supply Chain Cyber Risk Management Services, your organizations can develop a comprehensive approach to identify and mitigate security and regulatory risks that your current and potential suppliers may carry.
Learn more about this new service offering in the upcoming webinar on March 16, “How to Make Supply Chain Cybersecurity a Competitive Advantage,” featuring IBM Security Services and Prevalent. You can also read the solution brief or schedule a consultation today.
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