Cyber Risk Management in The Supply Chain: Third-Party Cyber Risk Management


Third-Party Cyber Risk is a requirement for all cybersecurity regulations. The amount of supply chain cyber-attacks has increased significantly. And while large businesses are often the targets of these attacks, small businesses are not immune. Small businesses are actually at a higher risk of being targeted, as they often lack the resources and knowledge to properly protect themselves. Small businesses make up the majority of the supply chain. A supply chain is a connected system of organizations, activities, information and resources designed to source, produce and move goods from origination to a final destination—typically from a supplier to an end customer. Supply chains are reliant on technology, which means that they are susceptible to cyber-attacks. And if one component of the supply chain is attacked, it can have a ripple effect that impacts the entire supply chain. In this blog post, we will discuss risk management in the supply chain and suggestions of how to keep your business safe from cyber-attacks and what you can do to protect your business.

Cyber risk in the supply chain

Cyber risk in the supply chain refers to the potential to interrupt the flow of supplies and distribution of goods and services using cyber attacks. The supply chain is made up of third parties. Third-Party Cyber Risk Management (TPRM) is the process of analyzing and minimizing risks associated with outsourcing to third-party vendors or service providers. In the digital age, the supply chain has become increasingly complex, making it more vulnerable to cyberattacks. To protect their operations, businesses must understand the nature of cyber risks and take steps to mitigate them. This includes adopting strong cybersecurity practices, investing in risk management, and building resilient supply chains.

Step 1: Identifying Cyber Risk in the Supply Chain

Companies today are under pressure to deliver goods and services faster and at a lower cost. To meet these demands, supply chains have become increasingly complex, stretching across the globe. It creates a complex and dynamic system that is susceptible to a variety of risks. Given the importance of the supply chain to businesses, it is essential to have a robust cyber risk management plan in place. This plan should start with vendor due diligence. The due diligence process should identify the various risks that could impact the supply chain, and ascertain high-risk vendors. By identifying high-risk vendors the firm is using a proactive approach to further investigate the risks associated and to work with the vendor to mitigate these risks. Suppliers should be carefully screened and vetted to ensure they are capable of maintaining secure systems. It is also critical to ensure that all software and firmware used in the supply chain is up to date. Additionally, suppliers should develop and implement policies and procedures for managing access to sensitive data and systems.

Step 2: Cyber Risk Management in the Supply Chain

Once high-risk vendors are identified, a program should be put in place to measure the financial impact and likelihood of a cyber event related to the third party. It is important to understand what type of third party is in the supply chain to determine the type of financial and operational exposure the chain is susceptible to from a cyber-attack. As an example, if the third party is a cloud service provider, this involves the processing and storing of sensitive data. A data breach of this type of supplier will result in notification costs and other data breach costs to the firm. Accessing Third-Party cyber risk is a requirement to be compliant with Cybersecurity regulations. Having a process in place to access the cyber controls of your vendors is essential to meet this requirement. Selecting a cybersecurity platform to measure these risks and automate the assessment process is a key to success. Manual efforts are costly, prone to error and do not provide economies of scale.


In conclusion, supply chain risk management is a vital process for ensuring the smooth operation of businesses. By understanding the risks involved in the supply chain, businesses can make informed decisions about how to mitigate those risks. There are a variety of tools and resources available to help businesses with this process, but if you are looking for a tool to identify high-risk vendors that also will comply with the most common frameworks and guidelines for managing organizational and supply chain risk, contact us and learn how ValuRisQ can strengthen your chain before it will be attacked and broken.