Your business depends on vendors to deliver products and services to your customers. That said, globalization has also made highly competitive complex vendor supply chains a challenge for business security.
Working with suppliers through supply chain integration means you can outsource activities efficiently. Conversely, it also presents vendor cybersecurity risks. Unlike the tight security control you have internally, you have to contend with a much broader approach. Your supply chain integration then becomes a weakness to both you and your vendors.
Many cyberattacks can be traced back to a vendor. US retailer Target was hit by a major data breach in 2013. Cybercriminals used credentials from a HVAC vendor to gain access. HVAC company clients would’ve also been at risk. This gives cybercriminals the ability to hit multiple companies at the same time. Essentially, that’s something you need to consider when assessing your own business’s supply chain.
You shouldn’t leave vendor cyber risks to chance. In this article, I’ll show you how you can manage your vendor security. First though, let’s take a look at how vendor threats can arise.
Vendor Cybersecurity Threats
Attack vectors cybercriminals use to enter any business are the same. Conversely, all businesses are unique and have different security measures and policies. The weakest security policy will compromise the entire supply chain. Actions that result in cyber risks include:
- Having a weak cybersecurity policy
- Transferring company data to personal devices
- Facing weak employee cybersecurity awareness
- Sharing passwords
- Falling for phishing and malware attacks
- Losing or suffering mobile device theft
The primary issue when using a vendor’s product or service is a breach that can expose your data. These data leaks will also impact your security and undermine customer confidence. Let’s check how.
How Supply Chain Vulnerabilities Impact Internal Cybersecurity
Since a vendor breach occurs elsewhere, it can remain invisible and may take time before you discover it. This could lead to significant data loss and system downtime. You may also inadvertently pass on malware downstream to your clients.
Often, cyber criminals won’t have any interest in the vendor. Instead, they use them as a means to gain access to more valuable targets.
That’s why you must actively manage your supply chain’s cybersecurity. The question is: how do you do this?
How to Manage Supply Chain Cybersecurity?
Robust supply chain cybersecurity doesn’t occur by accident. Then, you have to take the lead in encouraging and facilitating compliance with best practices. Consider these 4 ways to effectively manage vendor cybersecurity:
1. Risk Assessment
Tackle risk management from a preventative approach versus after-the-fact. That’s because understanding risk through early risk assessment is critical to plan your company’s defense. You must also ensure to take measures to include it in your contracting process.
Any vendor with access to confidential customer, employee, or organization data needs vetting first. Certain vendors will naturally carry a greater cyber risk and will need to undergo a more rigorous assessment. This will likely include a site visit and inspection.
That said, risk assessments aren’t one-off tasks a business should conduct. Completing these every one to three years, depending on a vendor’s risk level, is vital. The assessment should cover the policies, processes, and procedures the vendor has set. It should also ensure vendor cybersecurity systems are secure and conform to best practices.
You should also understand your vendor’s security level and their position in your supply chain. From this, you can determine if you’re secure with their current controls and measures. Yet, you should look elsewhere if you find their security lackluster.
2. Impose Tiered Risk-Based Security Requirement
In addition to having a cybersecurity policy for your vendors, your approach is more likely to be successful if you define tiers based on risk. Stringent security for critical vendors, and relaxed rules for low risk suppliers will give you a balanced response to security.
The requirements you set for each supplier can vary considerably. Everything from GDPR to awareness and training is possible. That said, you don’t have to reinvent the wheel. For instance, the UK’s Cyber Essentials standard is a well-established standard for checking your vendor’s cyber risk. The payment card industry also has the PCI-DSS. Find standards that meet your business requirements and align them where relevant to ensure you don’t miss anything.
You could require that high-risk vendors use a product lifecycle management (PLM) solution for visibility and auditing.
Note that the requirements for the highest risk vendors should be robust, but also achievable. It’s not in your interest to set standards that make it overly expensive for any vendor to work with you. They’ll likely pass these costs onto you.
3. Facilitate Cybersecurity Training
You can trace many cybersecurity incidents back to unintentional human action or inaction. This means cybersecurity is also a human issue, and not just a technological one. That’s why, conducting regular internal cybersecurity training helps reduce security breaches. Training isn’t just beneficial for your employees, but to your vendors and clients, too.
The vendor won’t train their entire organization to deal with your data. Yet, any employee handling your sensitive data must also be up to speed with the best practices. Training should cover:
- Internet governance
- Email and social media threat awareness
- Password security
- Threat response
- Complaint data handling
- PLM data management; where applicable
You want vendor staff to know about common threats and also how to respond to them. Regular cybersecurity training should also be a security requirement within your vendor policy. That’s why you should start spreading helpful resources and advice through your supply chain to help your own security.
4. Lead by Example
Your vendors aren’t your employees. They also aren’t contracted to do what your company wants. Even so, vendors read cues and understand obligations. That’s why it’s important you set the right tone when approaching vendors. The last thing you need is for your vendors to think you’re imposing strict requirements on them that you don’t abide by.
You can always look for another supplier, but you’d want to avoid this time consuming process. This costs you time and impacts your bottom line. That’s why it’s good to encourage pre-existing vendors to comply with your cybersecurity requirements to save your company money. Yes, you’re paying for the product or service, but you also want to foster long-term partnerships.
One way to achieve vendor alignment is when you lead by example. That way, you gain expertise to share with your vendors. This includes the tools to use, standards to follow, and training to follow.
Vendors can be a security blind spot as supply chains grow in size and complexity. A cyber secure supply chain is an asset for your business. As such, getting your vendors on the same cybersecurity management level as you isn’t a one-off event. Daily consideration will help ensure stable business growth without exploitation, impacting your bottom line.
You should also work to establish a security framework proportional with the vendors’ risk level and their exposure to bad actors. Realistically, you can never eliminate cyber risks completely in your supply chain. You’re after all dealing with autonomous entities that retain full governance and control. Still, it helps reduce preventable security incidents and ensures you’re less vulnerable to attack.
What is PLM and how do vendors use it?
Product lifecycle management (PLM) software aligns data workflow steps to a product’s lifecycle. Some supply chains that create products use these to manage their data. PLMs also secure company data and log data exported to external companies. That said, you’ll have zero control over your data once it reaches others. In this consideration, it helps to audit data and spot data breaches. You can even give third-party vendors guest accounts, too. That allows them to work on internal projects using a VPN.
What is Payment Card Industry Data Security Standard (PCI-DSS)?
PCI-DSS is a security standard aimed at protecting debit and credit card transactions from fraud and data theft. This helps businesses shield themselves and vendors through using up-to-date security best practices.
What is the General Data Protection Regulation (GDPR)?
The GDPR is the European Union’s data protection and privacy law that came into effect in May 2018. It imposes requirements on any organization that collects or targets data from EU citizens. This also means staff identification using onsite security cameras or marketing footage is sensitive data. That’s why companies now need to get releases signed-off to use and store this data. That’s because identifying people without consent is a privacy violation under the GDPR.
Why is cybersecurity awareness so important?
Employees are the weakest link in your security infrastructure. When armed with the right cybersecurity information, employees are a vital asset for your cyber defense. In a supply chain, you also need to propagate the same policies and best practices to vendors.
What is the average time it takes for a data breach to be discovered and contained?
According to IBM’s Cost of a Data Breach Report 2021, it takes 287 days. This can be due to financial losses and undermining customer confidence. In some cases, data breaches also cause irreparable damage to a company and force them to close. As you take supply chain security measures seriously, you reduce exposure risk to data breaches, too.
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