In today’s interconnected world, supply chain security is an essential element of cybersecurity.

Supply chains can be complex, involving multiple tiers of suppliers, making assessing and managing risk a big challenge. They face various threats, such as cyber-attacks, physical attacks, theft, fraud, counterfeiting and even natural disasters. All of which can have significant consequences, including loss of data, financial loss, reputation damage and operational disruption.

As businesses increasingly rely on third-party vendors and suppliers, the potential for a breach or attack through the supply chain has grown. All organisations must understand the full security implications of their supply chain and implement suitable controls to mitigate risks.

Modern supply chains are highly interconnected, involving many vendors, suppliers and partners. And each entity is a potential entry point for cyber threats. Weaknesses or compromises at any point can be exploited to infiltrate the entire supply chain, making it crucial to secure every link in the chain to protect the overall ecosystem.

For example, organisations often rely on third-party vendors and suppliers for components, software, or services. But this reliance introduces additional security risks. A compromise or breach at a third-party supplier can have cascading effects on your organisation and customers.

Meanwhile, cybercriminals are increasingly targeting the supply chain as an attractive attack vector. By compromising a trusted supplier or injecting malware into the supply chain, adversaries can infiltrate target organisations without direct attacks, expanding the attack surface.

Implementing supply chain security also mitigates risks posed by counterfeit or tampered products. Unauthorised modifications or substitutions within the supply chain can lead to compromised products or malicious software embedded in hardware or software components.

Ensuring supply chain integrity helps safeguard against the distribution of counterfeit or tampered products that could result in financial loss, reputational damage or compromise of sensitive information.

In the face of rising security concerns, many industries and jurisdictions have introduced regulations and compliance standards emphasising supply chain security. Meeting these is essential to avoid legal penalties and to maintain trust with customers, partners and regulatory bodies.

All organisations need to demonstrate robust supply chain security practices to comply with industry-specific regulations, such as those governing data privacy, financial services and healthcare.

Organisational cyber security, data integrity and the ability of the organisation to deliver are all dependent on the supply chain cyber security.

Vulnerabilities in the supply chain could have severe consequences. For instance, if a company handling staff and customer data experiences a security breach, it could lead to the exposure of sensitive information, resulting in reputational damage and potential regulatory fines due to mishandling customer data.

Similarly, if an organisation supporting IT systems is compromised, cybercriminals may exploit this to create backdoor access into the organisation’s systems, leaving sensitive data and operations vulnerable to unauthorised access and control.

If a critical hardware component provider in the manufacturing process falls victim to ransomware attacks, their ability to supply essential components could be crippled, severely affecting production capabilities.

Another example would be where a software provider is compromised, if their software contains hidden backdoor accounts, it could allow unauthorised remote access to systems, opening up avenues for potential cyber-attacks and data breaches.

Analyse your chain

The first stage in understanding supply chain risks is to assess critical information assets, systems and services and where the supply chain fits into this.

To avoid duplication and promote consistency and reporting transparency, it makes sense to use a common risk assessment methodology for both internal cybersecurity assessments and across your supply chain. It makes sense to group risk assessments to cover multiple suppliers providing similar services. If adopting this approach, ensure differences in risk profile due to factors such as the geographical location are considered.

When assessing the risks, there are many questions to ask, such as what data and trade secrets each supplier has access to and processes, and what hardware and software systems the supply chain provides.

It is important to understand the level of access the supply chain has to the organisation’s systems, and how dependent on the hardware, software and services supplied by the organisation is. How would a loss of these services impact?

Assessment Steps

A supply chain risk assessment should include the following steps:

1. Identify the critical components of the supply chain essential to operations and determine their importance, on a scale of 1-10, for example.
2. Identify potential risks and vulnerabilities associated with each component, such as cyber attacks, theft, fraud, natural disasters, or political instability.
3. Evaluate the likelihood and impact of each risk on the organisation, including financial loss, reputational damage, operational disruption and regulatory non-compliance.
4. Prioritise risks based on their potential impact and likelihood – then develop a risk management plan.

Managing Supply Chain Risks

Once the risks to the supply chain are understood the organisations can look at managing them.

Management of supply chain risk should be aligned with organisational risk appetite. It’s best to apply the most effort and controls on the parts of the supply chain that pose the highest level of risk. Proper emergency management software will help in identifying the critical areas of the supply chain and will help to apply risk management strategies accordingly. What’s more, organizations should also ensure that they have a contingency plan in the event of a disruption to the supply chain.

Security contracts ensure security requirements are clear and concise. Any contract should cover the set-up operation and handover of the service at the service’s end from suppliers within the supply chain. Meanwhile, compliance frameworks provide a common, predetermined set of requirements and independent assessment for the implementation of controls. They can be applied to as a baseline standard. Example frameworks include CE and CE Plus, ISO/IEC 27001 and PCI DSS.

Targeted Controls

Targeted controls can achieve targeted assurance and treat supply chain risks. They can be included as part of contractual or compliance requirements.

Penetration Testing

Specific examples include evidence of ‘pen testing’ from a reputable accredited testing organisation such as a CREST-accredited pen testing company – which provides a quick and effective way to deliver assurance that the supply chain’s public and internal systems are free from known security vulnerabilities and configuration errors.

When looking at an organisation’s penetration testing regime, testing scope and frequency should also be reviewed.

Threat Hunting

Threat hunting involves actively searching for threats and indicators of compromise within an organisation’s systems and networks. It helps detect and respond to threats before they cause significant damage.

Especially if you are an organisation working in a high-threat context such as defence, then threat hunting can provide a level of assurance that your supply chain has not been compromised before authorising any direct connectivity with your networks, or before providing them with sensitive IPR and/or trade secrets.

Communities of Interest and Threat Intelligence Sharing

Such communities and ensuring a degree of TI sharing help you stay abreast of the latest threats and trends and help address emerging threats that may impact your supply chain.

Vetting

Requiring staff vetting among companies on the supply chain reduces the risk of security breaches from an insider threat.  This should be considered when suppliers have direct access to systems or large volumes of sensitive, sensitive personal data, and trade secrets or are involved in financial transactions.

Product Assurance

If a supply chain organisation provides a security-critical component, then product assurance mitigates risks to that component in terms of ensuring it operates as expected and is free from known vulnerabilities and embedded malicious code or backdoors.

Code Reviews and SDLC Frameworks

Code reviews and Software Development Life Cycle (SDLC) Framework Assessments involve reviewing the source code of software and the development lifecycles to identify potential vulnerabilities and weaknesses.

Requesting code reviews and SDLC Framework Assessments by organisations in the supply chain will help assure that security-critical software is securely designed and developed.

Another effective part of a good supply chain risk management plan is to ensure there are effective cyber incident response capabilities in place. This means incidents are more likely to be detected and responded to in an effective, timely manner.

It’s also a good idea to employ escrow – depositing any source code, documentation and other critical materials with a third-party provider. This can help ensure access to these mission-critical materials if a supplier goes out of business or fails to deliver.

Finally, any supply chain risk management plan needs to involve ongoing mechanisms for managing compliance, measuring the effectiveness of controls, and initiating corrective and preventative action where required.

This should occur as part of periodic reviews (such as annual checks) as well because of specific, identified triggers such as an incident, contract renewal, a significant change in services provided or a change in threat level.

If you need assistance in designing, implementing, or complying with supply chain security frameworks and supporting controls, AMR CyberSecurity can support you. Please contact enquiries@amrcybersecurity to speak to one of our consultants.