In today’s business world, supply chains have become global and digital. This interconnectedness boosts efficiency and growth but also opens the door to cyberattacks.

Since a supply chain is only as strong as its weakest link, just one breach in your supplier network can disrupt operations, harm your reputation, and expose customer data. For example, the 2013 Target cyberattack, which started with a third-party vendor, led to the compromise of 40 million credit and debit card accounts of shoppers and 70 million customer records and a cost to the company of over $200 million.

In this blog post, we explore basic but practical strategies to build a resilient supply chain that can combat evolving cyber threats.

Understanding Your Entire Digital Landscape

Traditionally, cybersecurity focused on Tier 1 suppliers – those directly providing goods or services. But this leaves gaps in the company’s protection. Companies need to look beyond just Tier 1.

Tier 2 and beyond include software vendors, logistics providers, and raw material suppliers. These layers can introduce vulnerabilities. To defend against cyberattacks, companies must map the entire digital landscape and identify every potential entry point for cybercriminals. A study by the Security Scorecard found that at least 29% of breaches have attack vectors from third parties.

Suppliers or customers in B2B sometimes use unapproved software or cloud services, creating security gaps. On the other hand, Application Programming Interfaces (APIs) and other integrations with third-party systems help information flow smoothly but can also be entry points for attackers. Before deploying these connections, conduct a tailored risk assessment, as will be discussed in the next section.

Tailored Risk Assessment

Not all suppliers pose the same risk. While it is important to focus on the key suppliers that account for most of your supply chain impact, smaller suppliers can also be vulnerable targets for cyberattacks, as demonstrated by the 2013 Target breach. In this instance, a tiny HVAC business called Fazio Mechanical Services gave hackers access to Target’s network. This company had remote access to Target’s network for electronic billing, contract submission, and project management. Attackers exploited this access, leading to a massive data breach. Therefore, an important first measure is to ensure the security robustness of any supplier from the beginning. Here is how companies can focus their resources effectively:

Starting at the First Negotiation Table: An effective approach begins at the negotiation table. Align what IT access is necessary for each supplier and establish clear security requirements. By setting expectations early, you can ensure that suppliers adhere to your security standards.
Prioritizing Sensitive Data: Suppliers handling sensitive information—such as customer records, intellectual property, or financial data—require extra examination. Conduct detailed security assessments of their data practices, access controls, and incident response capabilities to ensure they meet your security requirements.
Protecting Key Functions: Identify suppliers whose disruptions could significantly impact your operations. Evaluate their security measures thoroughly and ensure they have strong disaster recovery and business continuity plans (BCPs).
Watching for Past Breaches: If a supplier has a history of breaches, this serves as a warning sign. Apply stricter controls for such suppliers, conduct more frequent security assessments, and set up ongoing monitoring to spot and fix vulnerabilities.

Building a Culture of Security

Cybersecurity is not a one-time fix but an ongoing effort that requires a cultural shift in your entire supply network. Here’s how to create a collaborative environment:

Training Suppliers: Educate your suppliers about the latest cyber threats and best practices. Develop engaging training modules or workshops to help them identify and prevent cyberattacks. Regular training keeps everyone on the same page and maintains a proactive security stance.
Open Communication: The problem is, that it often takes a long time to detect that you’ve been breached, especially when a third-party supplier is involved. This delay can be disastrous, giving attackers a lot of time to steal data, disrupt operations, or damage your reputation. That’s why open communication with your suppliers is so important. Provide clear channels for reporting possible breaches or suspicious activity as this kind of transparency helps detect issues early and respond quickly.
Collaborating with High-Risk Suppliers: For high-risk suppliers, consider strategic partnerships and joint security initiatives. Co-invest in advanced security solutions or conduct joint incident response drills. This collaboration strengthens the whole ecosystem, protecting all participants.
Addressing Internal Security Threats: Human error is a major contributing cause in 95% of all cyber breaches, as found in IBM’s Cyber Security Intelligence Index Report. Employees sometimes engage in Shadow IT, creating security gaps. To address this, implement clear policies and ongoing training to educate them about these dangers. Regular monitoring helps identify and stop these practices before they cause problems. Additionally, adopt a zero-trust security approach. This means limiting access to data and systems based on job roles. This is especially crucial in today’s work-from-home culture.

Whether we like it or not, it’s impossible to foresee and prevent every possible scenario from sophisticated hackers. The key is to encourage a shared security culture among all parties involved and ensure readiness to effectively handle new challenges.

Final Thoughts

Creating a resilient supply chain against cyber threats requires a multi-faceted approach. By mapping your digital landscape, adapting risk assessments, encouraging a culture of security, and leveraging advanced technology like AI and Blockchain, you can greatly enhance your defenses. Remember, cybersecurity is a shared responsibility. Collaborating with your suppliers and partners is key to creating a robust ecosystem capable of combating evolving digital threats.

Explore more about AI, Blockchain, and other technologies in supply chain management: AI-Enabled Supply Chain Simulations for Risk Management, The Transformative Power of AI in Supply Chain Management, How IoT, AI, and Blockchain Can Create a Sustainable Supply Chain, IoT: Enabling Sustainable Shipping and Warehousing, Quantum Computing in Supply Chains: Future Impacts.