by Kelly Butler ,
Head of Cyber, Marsh Speciality, Pacific
23/06/2022 · 5 min
Are cyberattacks against supply chains inevitable? The bad news: Yes. The good news: While it may not be possible to prevent all supply chain cyberattacks, the risk and impact can be potentially managed and minimised.
A supply chain attack is when an attacker gains access to your data through one of your vendors or partners. These types of attacks present threat actors with enormous opportunities for exploitation. A successful attack against even a single vendor or supplier can yield sensitive data across multiple organisations.
A digital supply chain can be defined as:
1. The digital aspects of a physical supply chain or a traditional supply chain powered by digital technology.
2. The chain of technology companies involved in the delivery of digital products.
These two definitions overlap, as almost all supply chains can be considered digital — and third-party technology vendors may supply the technology used in the digital supply chain.
Thus, it’s important to understand your vendor ecosystem and how they support your digital supply chain. Do you know who provides the digital products and services which your company relies on? Or any critical products/services, for that matter?
As you look deeper into your digital supply chain, consider potential risks from:
• Third-party vendor/suppliers, which include any entities that provide products or services to your organisation to maintain daily operations, and/or provide products or services on behalf of your organisation (for example, technology vendors and critical component/product suppliers). These third parties can pose a risk to all organisations, especially those that have technology connectivity or access to data.
• Fourth-party vendor/suppliers, which are the suppliers of your suppliers. Every company outsources parts of its operations to multiple vendors and suppliers. Those suppliers, in turn, outsource parts of their operations to other suppliers.
The larger your ecosystem is, the bigger your attack surface and potential vulnerabilities are.
Many organisations struggle to understand their complex digital supply chains and the myriad vendor relationships that support their operations — especially those that have access to IT systems and/or data. Regardless of how it’s defined, the expansion of an organisation’s digital supply chain can bring increased cyber risk.
Consider the digital supply chain risks in the following scenarios, where an organisation:
As we see more attacks on critical technology vendors and organisations’ digital supply chains, it’s more important than ever to define what is meant by digital supply chain, how the term is understood within your organisation, and what types of cyber risks manifest from your critical third-party vendors and digital supply chain.
While supply chain cyberattacks can’t all be prevented, they can be identified and managed to reduce impact. Supply chain resilience can be achieved through identification and understanding of the risks and their potential impact, planning for when an attack happens, and finding the right balance between risk mitigation and risk transfer.
In 2021, the US National Institute of Standards and Technology (NIST) issued supply chain guidance — Key Practices in Supply Chain Risk Management: Observations from Industry — to help companies find and fortify weaknesses in their supply chain. Among the practices to address cyber supply chain weaknesses, NIST recommends:
o Making supply chain cybersecurity an organisation-wide effort.
o Assessing the organisation’s supply chain and focusing risk management on the most critical suppliers.
o Closely collaborating with suppliers.
o Building cyber resilience.
NIST’s guidance also provides practical recommendations to implement the key practices. Regulators for critical infrastructure sectors like healthcare, transportation, and life sciences could potentially adopt similar cyber supply chain standards.
Most companies already have thorough processes for reviewing regulatory requirements. That process may now need to become more anticipatory. For example, a company might use software manufactured in a designated “adversarial nation” under the DOC rule but not banned by any regulation. Companies should not only monitor and respond to changes in regulations, but also evaluate their use of foreign-manufactured technology that could come under the rule. That examination could influence buying decisions today that could avoid disruptions in the future.
While developing assessments and metrics may be challenging, this may soon not be optional. Guidance issued by the United States Securities and Exchange Commission in 2018 states that companies must align cyber risk management to specific business impact categories. Following the widespread breaches of the supply chain and the federal government’s heightened attention to supply chain cybersecurity, organisations should consider whether the supply chain is within the scope of that guidance.
Organisations are recommended to use objective criteria to establish a process for assuring that the technology used to build the network meets their minimum standards for security and improve their overall risk position. Organisations can also leverage available guidance.
Insurance brokerage services designed to address losses caused by vendors and to digital supply chains.
For more information about Cyber Risk and how Marsh can support your business, please contact your Marsh representative.
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