How to Conduct an Effective Supply Chain Cybersecurity Risk Assessment

We know that modern business operations rely on a complex web of suppliers, business partners, end users and agencies to get nearly anything done. And each link in the chain carries its own risks. The problem is that when other parties fail to manage their risks effectively, it has a boomerang effect that can reflect back to you.

These interdependencies are especially prominent in the tech world, where a single piece of information and communication technology (ICT), such as a device or an app, requires a host of software, firmware and third-party vendors to run. And given the complexities of the average tech stack, a single cybersecurity vulnerability in one network could expose a host of separate organizations to threats (look no further than SolarWinds for evidence).

To mitigate such third-party risks, companies must create a comprehensive cyber supply chain risk management (C-SCRM) strategy, which they can implement with a supply chain cybersecurity risk assessment. An end-to-end inventory of your customers, suppliers and processes, a supply chain cybersecurity risk assessment helps you identify where your greatest digital vulnerabilities lie and implement the protocols necessary to mitigate the risks they create. We’ll walk you through how it works and give some key resources you can consult in the process.

Preparing for Your Supply Chain Cybersecurity Risk Assessment

C-SCRM assessments have multiple components. The best way to prepare for your organization’s assessment is to take the following initial steps.

Define the Scope

Some organizations have larger supply chains than others, so determine how far your assessment will go. Start by clearly defining your C-SCRM team’s mission and purpose, and give measurable plans and processes for achieving them. Then, define which employees and team members will have a role in your C-SCRM operations and in conducting the risk assessment and state their responsibilities clearly.

Identify Key Stakeholders

Which suppliers and business partners are most critical to your operations? How would your business resiliency be disrupted if an incident occurred with them? Identify the main vendors, end-users and other stakeholders that you should include in your C-SCRM assessment as well as their importance for your business processes.

Gather Your Resources

A supply chain cybersecurity risk assessment requires a combination of internal and external resources. Internally, gather any documentation demonstrating your business partners’ role in your operations and what risk you incur. Examples could include contracts, bills of materials, service-level agreements (SLAs) or Statements of Work (SoWs). Externally, obtain documentation from your partners that shows what measures they’re taking to mitigate risk on their end so that you can verify your third-party risk management (TPRM) processes, including audit opinions (SOC, HITRUST, etc).

Leading regulatory authorities and industry standards also offer a host of resources to use as you craft your C-SCRM strategy and risk assessment. Some key resources are:

• The NIST Cybersecurity Framework (CSF), also known as NIST SP 800-161r1
• CISA ICT Supply Chain Risk Management Task Force
• ISO/IEC 27036-1:2021: Cybersecurity — Supplier Relationships

Leveraging these resources can help you maintain regulatory compliance, so consult them as you craft your C-SCRM strategy and assessment.

Conducting a C-SCRM Assessment: A Step-by-Step Guide

Once you’ve done the prep work, you can carry out your C-SCRM assessment.

1. Identify and map critical assets and processes. Discover which resources and processes your organization depends on the most, then identify all the different departments and other operations that link to them. This will allow you to see how far a cybersecurity incident would spread and how a broken link in the chain would disrupt your business continuity. It also helps you put protective layers in place that mitigate your third-party risk, such as establishing alternative suppliers.
2. Determine potential threats and vulnerabilities. Threat identification can help you determine the vulnerabilities associated with each of your assets and show you which attack vectors are most likely to exploit them. Conduct a vulnerability assessment as part of your IT risk management strategy to reveal which parts of your infrastructure are weakest. Examples include legacy or End of Life (EoL) software that’s missing the newest patches and updates or apps with known defects in their open-source code.
3. Assess the likelihood and impact of potential risks. It’s not enough to know which risks your supply chain is susceptible to — you need to know which ones are most likely and how severe the impact would be. Create a risk matrix plotting the likelihood of each incident occurring vs. its financial and operational impact. Then, list all the business processes that would be disrupted by each incident and the financial costs of each one.
4. Evaluate existing security controls. From continuous monitoring tools to vulnerability scanners, your cyber defense system likely already has multiple security controls in place. However, they may not be the right tools to safeguard you from the vulnerabilities that you discovered during threat identification, so conduct a security controls evaluation to see which tools would be most beneficial to implement and how your current ones are performing.

The last step in the supply chain cybersecurity risk assessment process is prioritizing your response to each risk based on their potential impact and severity. Some risks will always exist in your business processes. The question is how best to manage them. Risk prioritization lets you triage which risk to mitigate first and can show you how best to absorb it.

Tools and Methodologies

Conducting a supply chain cybersecurity risk assessment requires you to take a broad inventory of your operations. That can be a daunting task, but there are plenty of resources available to help you get started. Some important tools for you to consult are:

• NIST CSF. The NIST CSF is the leading standard that governs C-SCRM processes. It contains a host of recommendations for implementation and best practices, as well as a series of Categories and Subcategories that help guide your C-SCRM strategy. Refer to it early and often.
• C-SCRM tools. Many different tools help organizations perform their C-SCRM workflows. CISA’s Cybersecurity Supply Chain Risk Management (C-SCRM) Acquisition Guide provides companies and stakeholders with recommendations and guidelines on how to choose their C-SCRM tools and which ones best align with certain risk management tasks.
• Automated risk assessment platforms. From drafting request for information (RFI) documents to generating legal contracts, risk management involves many time-consuming tasks. Third-party risk management (TPRM) platforms possess advanced automation functionalities to make risk management teams more efficient.

Another key tool to leverage in your C-SCRM assessment is the business partners within your supply chain. Vendors, customers, and other supply chain members may possess valuable information that can give you better visibility into your supply chain, so consult them to see how they’re conducting their GRC processes.

Challenges and Solutions

Even with the right tools in place, conducting your C-SCRM assessment can still pose some challenges. Some hurdles to clear are:

• Global supply chain complexity. Supply chains are highly complex networks of vendors, customers, business partners, and agencies. The interactions between each player become even more dynamic as global policies and governing standards shift, so harmonizing them all can be a chore.
• Managing third-party and fourth-party risks. Risk management seeks to mitigate the vulnerabilities incurred from doing business with your partners, but they incur risk from their partners, too. Be sure that each vendor is doing their part to protect you from risk.
• Balancing security with operational efficiency. Safeguarding your operations from risks can impede your teams’ efficiency. Strike a balance between the two by protecting yourself from the most pressing threats and absorbing acceptable risks for the sake of getting more done.

Careful analysis and adherence to regulatory standards can help you navigate these challenges, but another key solution is to leverage the capabilities of a GRC platform like Onspring. These tools help you automate your risk assessment processes to improve your team’s efficiency and align with leading governing standards to help boost compliance.

Reporting and Communication

Documentation is a critical part of a C-SCRM assessment. Requests for Proposal (RFP), Statements of Objective (SOO), and Performance Work Statements (PWS) — are just a few important risk assessment documents that teams must create. Thorough reporting can help you:

• Create comprehensive risk assessment reports
• Effectively communicate risk materiality findings to stakeholders
• Develop action plans based on assessment results

Since documentation is essential to risk management and assessment, use a GRC tool that can simplify your report creation with built-in templates and automation.

Supply Chain Cybersecurity Risk Assessments: Reducing Your Digital Risk

The cyber threat landscape has never been more sophisticated, and supply chains have never been more complex. Threat actors are increasingly looking to exploit the vulnerabilities of business partners within an organization’s supply chains to gain access to your digital assets and anyone else they can spread to from there. A supply chain cybersecurity risk assessment can help improve your visibility over your supply chain vulnerabilities, letting you know where your most significant risk lies. That way, you can take the appropriate measures to minimize your third-party risk.

At Onspring, we provide the integrated GRC platform that makes C-SCRM assessments smooth sailing. Our solution has the full range of functionalities you need to identify vulnerabilities within your supply chain, assess the risk they pose to your business continuity, and help you implement the risk management protocols needed to mitigate them.

Plus, we’ve been ranked as the top GRC software in Info-Tech Research Group’s Leader Quadrant for five straight years. Reach out to us today to schedule a demo and see what we can do.