Concerns are growing around the increased risk of cyberattacks on supply chains. Our research indicates that over half of companies believe these disruptions have significantly altered the cybersecurity threat landscape, thereby heightening the risk to their business operations. Notably, two-thirds of these companies have identified generative AI as a significant concern, fearing that malicious actors might exploit it to instigate new forms of cyberattacks. The evidence underscores that digital innovation comes with a heightened responsibility to manage, respond to, and recover from potential risks. According to the Global Cybersecurity Outlook 2024 report by the World Economic Forum and Accenture, 41% of organizations that experienced major cybersecurity incidents in 2023 attributed the issue to a third-party vendor, highlighting the issue of rising cyber inequity.
1. Transition to ongoing surveillance
Traditional risk management methods, which often rely on periodic assessments and supplier questionnaires, are proving insufficient in the face of increasingly sophisticated cyber threats. Companies typically spend a significant amount of time sending out questionnaires to suppliers to understand how they handle vulnerabilities, and then manually collecting and collating responses. More advanced companies may conduct “outside-in” scans of the internet to gather intelligence about their suppliers’ potential risk exposure. However, these approaches do not enable companies to accurately attribute risk; that is, determining which supplier is vulnerable to what specific threats.
Intelligent technologies and innovative practices offer a more effective way to manage third-party risk exposure. One essential step is switching from one-time risk assessments to continuous monitoring. Continuous monitoring provides real-time insights, allowing companies to quickly identify and mitigate vulnerabilities. Generative AI can play a pivotal role here by offering continuous threat detection from multiple sources, thereby automating risk assessments with up-to-date information. Additionally, behavioral analytics can identify unusual patterns or anomalies, helping to detect potential issues before they escalate into serious problems. Companies that have already implemented continuous monitoring report a significant reduction in their breach detection times, which can be up to four times faster, resulting in substantially lower costs associated with data breaches.
2. Collaborate closely with vendors
Building strong partnerships with suppliers is crucial in managing cybersecurity risks. A collaborative approach that involves risk identification and joint responses is essential. Day-to-day strategies include regular check-ins, sharing threat intelligence, and creating joint response plans with clearly defined lines of decision-making. This collaborative approach not only improves the overall cybersecurity posture but also ensures that all parties are prepared to respond swiftly and effectively in the event of a cyber incident.
To address the growing issue of cyber inequity, larger organizations should take steps to help smaller businesses within their supply chains to enhance their cybersecurity maturity. Many smaller businesses lack the financial resources and talent necessary to achieve an acceptable level of security. By offering support and guidance, larger organizations can help elevate the cybersecurity standards across the supply chain, reducing the risk of vulnerabilities and strengthening the partnerships, ultimately leading to a more secure and resilient network.
3. Review your cyber insurance
Ensuring that cyber insurance is up to date and adequately covers potential risks is another critical step in enhancing cybersecurity risk management. Many businesses only realize that their cyber insurance coverage is insufficient after an incident occurs. Investing in comprehensive cyber insurance can be a significant cost-saving measure in the event of a breach, covering expenses that could otherwise run into millions or even billions of dollars. Regularly reviewing and updating insurance policies to align with the evolving threat landscape is essential for maintaining adequate protection against cyber risks.
4. Invest in key partners and cultivate strong alliances
Investing in risk intelligence programs specifically for critical third parties, especially those with limited resources, is an effective strategy to manage and mitigate cybersecurity risks. While these programs can be costly—they often require investments in technology, software, consulting, continuous monitoring, data analysis, and cybersecurity experts—they play a crucial role in protecting the supply chain and strengthening partnerships.
Small and medium-sized businesses, particularly in emerging markets, may struggle with these costs. However, supporting them not only shields the supply chain from potential disruptions but also reinforces the partnerships, ensuring a more robust and resilient network. The threat exposure management space offers various advanced AI tools that utilize publicly available data to assess cyber-risk posture and identify threats. Consistent communication and setting clear expectations with suppliers further enhance security and partnership management.
5. Establish contractual duties for third parties
Including specific cybersecurity obligations in contracts with third parties is essential for effective risk management. Third parties must be contractually required to assist appropriately in the event of a cyber incident. This includes operating controls on behalf of the company or providing access to critical information necessary for an effective response if they are the ones attacked. Clear contractual terms ensure that all parties understand their roles and responsibilities in maintaining cybersecurity, and they provide a framework for a coordinated and timely response to incidents.
Staying ahead
Strong partnerships with suppliers are key to managing cybersecurity risks effectively. A collaborative strategy that focuses on risk identification and joint responses is essential. Daily strategies include regular check-ins, sharing threat intelligence, and creating joint response plans with clearly defined decision-making roles. This team-based approach not only enhances the overall cybersecurity stance but also ensures swift and effective responses to any cyber incident.
Addressing the issue of cyber inequity is also crucial. Larger organizations should take proactive steps to help smaller businesses within their supply chains improve their cybersecurity maturity. Many smaller businesses lack the financial resources and skilled personnel necessary to achieve robust security levels. By offering support and guidance, larger firms can elevate cybersecurity standards across the entire supply chain, reducing vulnerabilities and strengthening relationships. This collaboration creates a more secure and resilient network, benefiting all parties involved.
