Management of cybersecurity threats in your supply chain should be embedded into every part of your business. Every high-risk vendor relationship or third-party supplier from the front office to the far depths of your supply chain can introduce risk to your entire business.

To be clear, supply chain risk management (SCRM) and cyber supply chain risk management (C-SCRM) are not solely the responsibility of the IT department. Instead, both are part of your business’s risk management framework, which should be developed based on the level of risk you are willing to tolerate.

When we hear “supply chain,” we think of physical components that have to be available at a particular time: materials to complete a construction project, for example. Supplier risk management involves an organization taking steps to identify, assess, and mitigate risk to the supply chain.

The cyber supply chain works the same way, without the physical parts. Instead of focusing on the delivery of nuts and bolts at a specific time, the cyber supply chain focuses on business continuity by linking software applications, information systems, service providers, and vendors together so you can get your job done.

NIST Best Practices for Cyber Supply Chain Risk Management

The National Institute of Standards and Technology (NIST) released a set of best practices for cyber supply chain risk management in 2016 and followed up with a newer paper, Key Practices in Cyber Supply Chain Management, in 2021.

NIST identifies eight supply chain risk management areas to consider when you develop a cyber supply chain risk management system (C-SCRM):

  • First, integrate C-SCRM across your organization.
  • Establish a formal C-SCRM program that is evaluated and updated in real-time.
  • Know your critical suppliers and how to manage them.
  • Understand your organization’s supply chain.
  • Collaborate with key suppliers and incorporate them in your supplier risk management program.
  • Include critical suppliers in your resilience and improvement activities as part of your vendor risk assessment process.
  • Constantly and vigorously provide continuous monitoring of your C-SCRM.
  • Have a plan for all business operations, not just for what appears to be the most critical parts of your organization’s various functions.

NIST includes a long list of potential questions to ask suppliers, vendors, and third parties about C-SCRM. In addition, vendors must have a vulnerability management program, and notify their customers on how best to mitigate discovered vulnerabilities in their products and assure security throughout their product’s lifecycle.

Common Risks for Supply Chains

Many risks can cause supply chain disruption, and those threats can have severe consequences for your business. Some of the more common risks are:

Cybersecurity Risks

Hackers can enter your supply chain at any point and then move throughout your firm. Cybersecurity breaches can also wreak havoc on your day-to-day operations. So information security should be at the forefront of your mind when considering new vendors.

Compliance Risks

You’ll need to make sure your vendor can meet any regulatory compliance requirements your company has, which will subsequently affect your supply chain. For example, suppose a vendor bribes foreign government officials on your behalf. In that case, your company will be charged with violating the U.S. Foreign Corrupt Practices Act and all the legal ramifications that it entails.

Financial Risks

When collaborating with other companies, the risk of financial loss is always present. For example, if your contractor goes bankrupt or faces its own supply issues, this could have significant economic consequences for you and your organization.

Reputational Risks

Reputational risk is the most unpredictable type of risk because incidents that affect your reputation might happen out of nowhere. Damage to your contractors’ reputations can also harm yours, so consider reputational risk when choosing providers.

Cyber Supply Chain Principles and Supply Chain Risks

NIST identifies primary principles to consider for successful C-SCRM. These considerations are comprehensive and broadly apply to critical infrastructure, business processes, and intellectual property.

Understand the Security Risks Posed by Your Supply Chain

Examine the specific dangers that each supplier exposes you to, the products or services they provide, and the value chain as a whole.

Supply chain risks come in a variety of shapes and sizes. A supplier, for example, may not have enough security, may have a hostile insider, or its employees may not correctly handle your information. Gather sufficient information to better evaluate these security concerns, such as an insider data collection report or risk assessment.

Develop Your Organizational Defenses With “Assume Breach” in Mind

Assuming a breach means an organization approaches its cybersecurity posture by anticipating that its networks, systems, and applications are already compromised. Treating an internal network as if it’s as open as the internet readies the system for various threats and compromises.

Set Minimum Security Requirements for Your Suppliers

You should establish minimum security requirements and metrics for suppliers that are justified, proportionate, and achievable. Make sure that these standards reflect not only your evaluation of security risks but also the maturity of your suppliers’ security arrangements and their capacity to achieve the requirements you’ve set.

Minimum requirements should be documented and standardized to streamline enforcement. This technique will help you lower your effort and prevent giving these parties unnecessary work.

Cybersecurity is a People, Process, and Technology Problem

People, processes, and technology are the triad of solving problems. Supply chain management also focuses on these three areas to enhance supply chain performance, make it more secure, and do more with less.

Look at the Entire Landscape

There are multiple security standards that interact with each other in a variety of cybersecurity frameworks and best practices. A few examples are the NIST Cybersecurity Framework (CSF), Center for Internet Security (CIS) Controls, and the International Organization for Standardization (ISO) series.

To be efficient and flexible, your C-SCRM should follow the guidelines established by your third-party risk management program. That is especially important today, where outsourcing is common. Always remember that your C-SCRM program is only as good as the data security provided by your least secure third- or fourth-party supplier.

Encourage the Continuous Improvement of Security within Your Supply Chain

Encourage your vendors to keep improving their security measures, emphasizing how this will help them compete for and win future contracts with you.

Advise and support your suppliers as they seek to make these improvements. Allow your suppliers time to achieve improvements but require them to provide you with timelines and project plans.

Listen to and act on any issues arising from performance monitoring, incidents, or bottom-up supplier reports that imply current approaches aren’t functioning as well as they should.

Best Practices for Cyber Supply Chain Risk Management

An organization can employ a variety of best practices in its C-SCRM program. Best practices improve the ability to identify and mitigate potential risks over time. In addition, these practices include remediation steps to apply if you experience a data breach.

Here is a list of some of the best practices to keep in mind as you set to work on your cyber supply chain risk management program:

  • Security requirements need to be defined in requests for proposals (RFP). In addition, use security questionnaires to hone in on the current standards practiced by each bidder.
  • An organization’s security team must assess all vendors, and you must remediate vulnerabilities before sharing information, data, or goods and services with them.
  • Engineers must use secure software development programs and keep up-to-date on training.
  • Software updates need to be available to patch systems for vulnerabilities, and they must be downloaded and installed in real-time.
  • Dedicate staff that is assigned to ongoing supply chain cybersecurity activities.
    Implement and enforce tight access controls to service vendors.

Reciprocity ROAR Helps Businesses with Cyber Supply Chain Risk Management

With global supply chains, disruptions on the other side of the world directly affect procurement and sourcing, leading to business continuity and financial risks. Cyber supply chain risk management is essential in our interconnected world. C-SCRM is an integral part of an information technology program to address cybersecurity risks holistically.

Reciprocity ROAR allows you to centralize and streamline your workflows and compliance efforts – including monitoring your vendors and contractors. Questionnaires and assessments can be distributed, collected, analyzed, and stored in this integrated platform. This software provides a clear view of risk throughout your company, allowing you to track threats in real-time.

It is a single source of truth that assures your organization is aligned and audit-ready. Policies and procedures are revision-controlled and easy to find in the document repository. Workflow management features offer easy tracking, automated reminders, and audit trails. Insightful reporting and dashboards give visibility to gaps and high-risk areas.

Schedule a demo today to see how Reciprocity ROAR can help efficiently manage and monitor your cyber supply chain risk.

Best Practices to Mitigate Vendor
Risk Within Your Supply Chain