Industry Trends
Supply Chain Cybersecurity

Why Supply Chain Cybersecurity is Becoming a New Priority

The supply chain industry is becoming more technology-dependent, accumulating large volumes of sensitive and expensive data. Over the last few years, many companies have been migrating to the cloud and intensifying digitalization due to imposed restrictions. Today, we have a much more efficient and transparent supply chain ecosystem than ever before. However, with all the benefits this transformation brings to businesses, digitalization is creating multiple challenges. As a result, cybersecurity is quickly moving to the top of IT professionals’ list of daily challenges. 

Why Has Cybersecurity Become the New Industry Concern?

The cybersecurity of supply chains has been an industry concern for a long time, with concerns focused on being targets for hackers. However, with more technology, devices, and software tools integrated, global supply chains have become a massively interlinked, cloud-based network. The interconnected data environment of many supply chain software systems has made it an even more appealing target for cyberattacks because the stakes are much higher now.

Instead of hacking the data infrastructure of a single company, ‘black hats’ now focus on intervention in the system of a third-party provider or software vendor. This way, then, can access unknowing users on the computers of multiple companies, ultimately granting attackers unrestricted access to the complete data of the companies using this software. Regardless of whose information is being exposed, it drives devastating results for software providers and supply chain executives, along with their business partners, who can suffer massive monetary losses.

Only 5-15% of companies feel prepared to deal with the cyber risks caused by third-party providers, according to the Marsh Microsoft 2019 Global Cyber Risk Perception Survey.

Here are also a few insights from the ENISA 2021 Report ‘Threat Landscape for Supply Chain Attacks’:

  • 58% of attacks aim to steal data
  • 62% of attacks rely on malware
  • 66% of episodes focus on the supplier’s code 

Considering how many stakeholders are involved in a supply chain with their software systems, many vulnerabilities can be uncovered in each company. Because of the growing number of supply chain risks, cybersecurity has become a very high priority. 

Why It’s Essential to Protect Your Supply Chain from Cyberattacks

Security breaches can be extremely devastating and significantly affect logistics customers and a software provider’s reputation. According to the survey by Ponemon Institute and IBM Security, a data breach can cost an organization up to $6.45 million on average.

During the COVID-19 pandemic, supply chain cyberattacks have become extremely common. With more organizations migrating their data to the cloud, embracing remote work environments, ramping up digitalization, and with an inflated need for connectivity, hacker attacks have multiplied since the start of 2020. Additionally, many large players acquired smaller businesses last year. Usually, small companies don’t have a budget that would allow them to invest in robust cybersecurity and thus can become a security liability for larger enterprises. One of the most common types of intervention is an attack on the cloud platform to steal sensitive data. 

Whether it be carriers’, customers’, or vendors’ information being exposed, at the very least, the company’s reputation will be destroyed and is usually accompanied by lawsuits, public scandals, and monetary loss. 

In September 2020, a French shipping company CMA CGM reportedly lost $50 million on a ransomware attack in one of its shipping subsidiaries. In February 2020, the TQL’s IT system was hacked, which led to the exposure of sensitive carrier data.

In 2021, the sequence of devastating attacks continued. On May 8th, the U.S. leading fuel pipeline operator Colonial Pipeline, which accounts for around 50% of fuel supply on the East Coast, had to shut down operations due to a significant ransomware attack. The incident induced a spike in fuel prices and disrupted numerous operational processes in the entire region. The attack is already considered one of the most harmful ransom schemes on energy infrastructure. 

The most recent cyberattacks uncover an uncomfortable truth: even software industry moguls like Microsoft are not bulletproof to breaches: in June, hackers compromised a Microsoft support worker’s computer

Federal Supply Chain Risk Management Policies

The issue has become increasingly problematic as supply chain attacks threaten governmental institutions. Additionally, these ransomware cases shed light on how large unprotected institutions are in terms of cybersecurity. As a result, in February 2021, President Biden signed Executive Order 14017 named “America’s Supply Chains.”

There are also other official recommendations and regulations established regarding supply chain risk management. For example, the Federal Acquisition Institute has developed and enforced a supply chain risk management policy. 

Such a rapid transition has exposed many security gaps across supply chains. Thus, companies have become more aware of possible security breaches, acknowledge the importance of vulnerability management, and list supply chain cybersecurity as a high priority. It is no longer an option to dismiss data safety, as it creates risks not just for the initial target of the attack but the entire supply chain involved. Investing in secure software is vital. 

Increasing Cybersecurity: Best Practices for Supply Chain Risk Management 

Both supply chain executives and supply chain technology providers are embracing strict security compliance policies to diminish risks and protect the company’s data, as well as their own reputation and credibility. While no company can be 100% immune to sophisticated hacker attacks, there are plenty of opportunities for firms to upgrade security management and substantially minimize the possibility of cyberattacks and data breaches. 

It is essential for supply chain organizations and technology providers to work together on tackling security issues and taking a responsible and proactive position in this area. Although internal security issues are more common in the industry, it is the software provider’s responsibility to deliver a product with proper vulnerability management, data encryption, and access transmission control, secure code, and proper security maintenance. Investing in a reputable software provider is the best protection against potential risks. 

Establish a Robust Third-Party Security Policy 

Businesses work with many third-party organizations for a diverse and agile supply chain, from suppliers to software providers. As more and more cloud services and IoT devices are being implemented in supply chains, there is a need for a stricter vendor risk assessment and the need to create a framework and robust security policy before starting work with any third-party provider. Companies should also make sure that new business partners are strictly in compliance with responsive industry certifications and common data protection standards such as GDPR or ISO.

It’s best to include the security requirements in an RFP or a contract to ensure compliance. Apart from that, working on vulnerability management with external parties’ IT departments would help detect potential security issues. 

Set Up an Internal Risk Management Strategy 

Risk management strategy implies having a framework for detecting, preventing, and dealing with security threats. It encompasses many different actions, but one of the primary steps is to educate employees about potential risks and their implications. Malware attacks often occur because of the negligence of the most straightforward security rules among employees. Educating staff and conducting regular cybersecurity training is essential to uplift security awareness in the company and prevent potential phishing and malware attempts. Additionally, automating certain operations within the company also reduces the risk of human error.

Security issues are mistakenly seen through the prism of IT or software problems. Every part of the supply chain, including operations, procurement, and employees, can be a security bridge. Regular security audits are vital to monitoring any emerging security threats. In the case of an attack that has already taken place, any company should have a clear and defined framework to minimize the damage. In terms of reaction to an attack, companies should think of ways to reduce the hackers’ possibility to exploit further the information they have obtained.

Choose a Reliable Software Vendor

The first step to better cybersecurity software-wise is to reduce the number of disparate systems and set up a centralized data infrastructure with high-level security. Just as for other third-party providers, software providers should ensure security testing and comply with the source-code policy, as well as secure-by-design development. 

The key benefit of implementing a secure and centralized data infrastructure is that it lets businesses streamline every transaction, operation, and data unit coming in and out of the supply chain. This, in turn, allows supply chain predictability and helps detect emerging alerts at an early stage. 
A software platform like Agistix can help you tackle many of your supply chain challenges with our high-end visibility software. Our key advantage is a centralized data infrastructure and seamless integration that requires no change to your regular business flow. Learn more about Agistix secure software solutions today.


Trevor Read

President at Agistix based in San Francisco. I am an entrepreneur with a passion for data, and technology. I am results-oriented and committed to developing fast-deployment solutions to help customers seize the new opportunity coming from big data in the global supply chain.