Supply chain risk management: Why third parties could be your kryptonite

It starts with an email. Nothing out of the ordinary, nothing particularly suspicious, just a routine message from a trusted vendor. But hidden behind that everyday exchange is a vulnerability —an open door to your entire network. Welcome to third-party risk.

Hackers know they don’t have to go straight for your systems anymore. Why bother when they can slip through unnoticed via your vendor’s network? A single vulnerability — unpatched software, a weak password, or outdated security protocols — could compromise your entire organization, and worse, you might not even know it until it’s too late.

The reality is the biggest threat to your business might not even be inside your own walls.

The quiet danger of third-party risk

Since 2019, software supply chain attacks have increased, on average, by 742%. The number of supply chain breaches that negatively impact businesses rose 26% year over year, with the average organization experiencing 4.16 breaches through its supply chain, according to BlueVoyant’s 2023 State of Supply Chain Defense Report.

Many businesses, despite being aware of these risks, still fail to manage them. Just 47% of companies regularly monitor their supply chain vendors for cybersecurity risks.

For the other 53%, that’s like locking your doors but leaving your windows wide open.

Why hackers love supply chain attacks

Hackers are opportunists. They target what’s easy to exploit and hard to detect, and third-party vendors often fit that description.

Consider how the modern business world is structured. Every company now relies on dozens, sometimes hundreds, of external service providers for everything from software development to cloud storage. Each vendor in this sprawling network has access to sensitive data, intellectual property, or critical systems. Attackers know this. They also know that many organizations don’t scrutinize their vendors’ security measures. This leaves massive blind spots in your security posture.

These breaches can go undetected for months, sometimes even years. After an attacker infiltrates a vendor’s system, they can patiently collect information or wait for the right moment to launch an attack. By the time you detect the breach, the damage has already been done.

The cost of ignoring third-party risk

A single breach can cost an organization millions of dollars. But it’s not just the immediate financial cost of dealing with the attack — there’s also the long-term damage to your company’s reputation, operational capabilities, and compliance standing.

Organizations in heavily regulated industries like healthcare, finance, or retail are particularly vulnerable to supply chain attacks. If a third-party vendor experiences a breach and exposes sensitive customer information, your company could face hefty fines for failing to meet regulatory requirements, such as those under the General Data Protection Regulation (GDPR) or the California Consumer Protection Act (CCPA).

Fines are one thing, but the hit to customer trust and loyalty can be irreparable. And if that vendor also provides critical services, your business could grind to a halt while the breach is being addressed.

Unfortunately, just 31% of respondents in BlueVoyant’s report view supply chain risk as a key priority, and 26% admit they wouldn’t know if a risk emerged in a supplier. For many companies, the challenge in securing their supply chain is knowing where to start.

How to mitigate third-party risk

You must do more than just set up defenses for your own network; you must evaluate and monitor the security of every partner and vendor in your supply chain. However, a one-time assessment is not sufficient. Threats evolve, and so should your risk management.

A real-time view of what’s happening across your vendor ecosystem is essential. If a vulnerability is detected, you need to know immediately, not weeks or months later. Pairing continuous monitoring with regular risk assessments ensures that you’re identifying potential weaknesses and addressing them before they become catastrophic breaches.

Another critical step is developing an incident response plan tailored to supply chain attacks. You can’t wait until the attack happens to figure out how to respond. A well-defined plan ensures you can act swiftly, contain the breach, and minimize damage. And this isn’t just about your own company — your vendors must be held accountable for their role in preventing and managing breaches.

Not all vendors are created equal — some will have access to more sensitive data and systems than others. That’s why vendor tiering is a must. By categorizing vendors based on their risk levels, you can apply different levels of scrutiny and resources to ensure your most critical partners are adequately protected.

A proactive approach — with a proactive partner

Securing your supply chain can be a tall order. We’re here to help.

SHI provides comprehensive risk assessments, including a security posture review (SPR), to identify potential vulnerabilities across your entire supply chain and provide detailed insights into your current security gaps. We use this information to build a customized roadmap to help you secure both your internal systems and those of your external partners​.

Our solutions leverage industry-leading technologies, such as security information and event management (SIEM) and security orchestration, automation, and response (SOAR), to monitor threats in real time.

In the event of a breach, SHI’s managed detection and response (MDR) team is ready to act. Our 24/7 monitoring services ensure that threats are detected and responded to before they can cause significant damage​.

Every organization is unique, and so are its risks. SHI works with you to develop a customized third-party risk management strategy that’s tailored to your specific needs and industry requirements.

Third-party risk isn’t going away, and as attack surfaces continue to grow, businesses must stay vigilant. Continuous monitoring, proactive incident response, and effective vendor management can help you remain ahead of the threats.

Ready to protect your business from third-party vulnerabilities? Contact SHI to learn how we can help safeguard your supply chain from the risks you don’t see.