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Mitigating Third-Party Vendor Risk in Your Supply Chain

A recent survey by the analyst firm Gartner, showed that 89% of companies experienced a supplier risk event in the last five years; however, those companies' overall awareness and plans to mitigate lacked maturity. As a result, it is no longer enough to secure your own company's infrastructure. You must also evaluate the risk posed by third-party vendors and plan to monitor those organizations for breaches.

In today's interconnected world, an average auto manufacturer will have around 250 tier-one suppliers, which proliferates to 18,000 across the value chain. Key challenges lie in the time intensity, cost to maintain, no single source of truth, insufficient and obsolete controls, and a lack of visibility with third- and deeper-party relationships. 

Further issues arise around compliance to standards and regulations, such as NIST and the NIS Directive, ISO27001. While these standards are now more widely recognized and provide a common language to communicate, many third-party suppliers often do not adopt or use the frameworks. Thus, a level of baseline education is needed. 

There are many ways we can better prepare ourselves for these potential threats, moving towards a risk-based approach to provide a fast and quantitative way to achieve third-party assurance. 

The purpose of our work with clients using the Supply Chain Risk Diagnostic looks to increase the level of security awareness across an organization to better understand how we can reshape conversations regarding the supply chain. 

A few key lessons must be learned we navigate this ever-evolving landscape:

  1. Get the Basics Right– Organizations with good cyber hygiene and security basics prevent more attacks and find intrusions faster. It is imperative to have a baseline level of education of how one interacts with suppliers and build these security conscience behaviors into the company culture. 
  2. Move to a Risk-based Approach– A risk-based approach allows organizations to identify, prioritize, measure, and manage security controls in line with an enterprise risk management framework. This approach helps identify the top-tier high-risk suppliers and implement the necessary controls, moving away from a maturity-based approach, which has the potential pitfall of aspiring to a "monitor everything and everyone" mindset. 
  3. Ensure a Clear Governance Process for Procurement -Do you know who is accountable for what information and security controls? Unfortunately, this line often blurs with third parties and contractual agreements, as companies normally place more emphasis on reducing project costs and delivery times. Establishing a clear governance process allows both parties to put the necessary security controls in place. 

Trustwave's EMEA Cyber Advisory works with C-Suite and Executive Boards to develop a business-aligned security strategy and transformation programs. By taking a holistic approach that incorporates people, process, and technology, we bring cross-industry expertise to support business leaders and create a more cyber-resilient organization. For any questions, please contact Jessica.Charter@trustwave.com