Cybersecurity in Supply Chain Management

What are the common cyber threats in supply chain management?

How can you mitigate the risk of cyberattacks? Read Details Here!

In Brief: 

  • Supply chain companies are vulnerable to malicious attacks from cybercriminals and hackers. 
  • Hackers use different types of attacks, including ransomware, malware, IoT-based, and data breaches, to steal sensitive information. 
  • Third parties are the most significant risk associated with supply chain management issues 
  • A clear cybersecurity policy, suitable software applications, and training employees are essential to safeguarding supply chain management and data security. 

Table of content:

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Supply chain companies rely on modern technologies to conduct business and streamline operations. However, managing the supply chain risks is daunting, time-consuming, and expensive. 

Organizations that fail to manage their supply chain management risks are more vulnerable to cyberattacks, causing severe disruptions. According to Osano, supply chain companies share their business data with over 730 vendors. 

Forbes reports that 53% of companies experience at least one cyberattack, including a data breach, caused by a third party. According to Cyber GRX, cyberattacks caused by third parties cost an average of $7.5 million. 

Besides data attacks, supply chain companies can experience risks caused by misunderstood customer demand, inappropriate products flow, including raw materials, parts, or finished goods, and natural disasters, including tornadoes, hurricanes, floods, and earthquakes. Read on! 

Types of Cyberattacks in Supply Chain 

Cybersecurity risks are daunting and frustrating for supply chain companies. Most organizations suffer from data disruptions, financial issues, and cyberattacks. These disruptions affect businesses and prevent them from achieving supply chain efficiency, precision, accuracy, and management. 

However, businesses rapidly adopt digital technologies, such as the Internet of Things (IoT), machine learning and artificial intelligence algorithms/software applications, and cutting-edge predictive modeling techniques to streamline their supply chain management and related operations. 

The problem is that businesses adopt modern technologies but fail to focus on cybersecurity threats, such as ransomware, malware, viruses, phishing, hacking, and online attacks. Common risks that affect a company’s overall supply chain management are:

  • Data breaches 
  • Malware attacks 
  • Ransomware attacks 
  • Cybersecurity breaches 
  • Data theft 
  • Stealing vendors/suppliers’ data 
  • Software disruptions 
  • Delays in data transfer 

Malware Attacks

Malware attacks have become common in recent years, allowing hackers to steal confidential information, change a company’s internal data, or destroy databases to prevent businesses from evaluating historical data. 

Malware is intrusive software that infiltrates a company’s computer system, steals confidential data, and damages the hardware and software applications. Viruses, worms, ransomware, and trojans are common malware attacks. 

According to Business Insider, SolarWinds malware attacks in 2020 were one of the most significant malware-based attacks. Hackers and criminals made a strategy to attack SolarWinds systems in Texas. 

Hackers added malicious software into the company’s system and stole confidential data. Over 33,000 company clients, including supply chain businesses, used the software to manage their IT-related operations. 

The most significant problem was that SolarWinds sent software updates and patches to its clients with malicious code installed by cybercriminals. So this allowed cybercriminals to access other systems and install malicious software to spy on businesses’ data operations. 

Ransomware Attacks

Ransomware is another cyberattack that allows criminals to encrypt data files and documents. It enables the criminal or hacker to demand money in exchange for decryption keys. 

In most situations, the cybercriminal demands the company to pay them via bitcoin and other cryptocurrencies. So this prevents the hacker from revealing their identity or personal information. 

According to Bloomberg, a ransomware attack on Colonial Pipeline enabled the hacker to threaten the company. The hacker/criminal encrypted the data operations and caused severe disruptions, leading to gasoline shortages in various parts of the southern U.S. 

Research highlights that the cybercriminal used a VPN technology to enter the Colonial’s network. Because the company did not install the multi-factor authentication feature in its network system, cybercriminals easily breached it and compromised different usernames and passwords. 

As a result, hackers stole confidential data, including login credentials. Colonial, a company that experienced the attack, paid over $4.4 million for decryption keys and data recovery. However, the decryption keys worked slowly and caused substantial complications in restoring the company’s operations. 

Data Attacks and Breaches

Data attacks are one of the most significant cyberattacks or threats experienced by supply chain companies. Therefore, companies must implement sophisticated data security programs and protocols to prevent cyberattacks and data breaches. 

According to Data Endure, cyberattacks can cause severe problems for supply chain companies, leading to reputational damage, financial loss, and data theft. Data Endure highlights the average cost of a data attack is between $3.5 and $4.2 million. 

VARONIS reports that supply chain companies find it challenging to identify a data breach after it has occurred, even if they have solid regulatory, compliance, and security standards. It takes around 197 days to identify a data breach, and the problem worsens for giant supply chain corporations. 

For example, according to IBM, it takes months to recover from data breaches because a supply chain company takes an average of 280 days to identify, detect, and recover from third-party breaches. 

In a manufacturing company and the operations require you to share confidential data with third parties, you are more likely to experience data breaches and leaks. Therefore, you must safeguard sensitive information and install state-of-the-art security and privacy protocols to secure your company’s data. 

Focus on unauthorized data access and implement sophisticated solutions to prevent this problem. Otherwise, data breaches caused by vendors due to unauthorized access through your company email accounts can cause severe problems. 

In addition, cybercriminals can hack your company’s email accounts, attack weaker encryption methods, and leverage unsecured digital platforms to steal login credentials. 

Likewise, third parties can use malicious methods to leak your client’s information to criminals for money. Imagine your company’s information/data in the hands of criminals and hackers and how they can destroy your supply chain management operations and bankrupt your business. 

IoT-Based Attacks

IoT-based attacks have become common because companies use these technologies to streamline operations but fail to implement a solid security strategy. Any device connected to the internet can pose supply chain risks. 

For instance, IoTs are consumer devices, such as smart thermostats, personal fitness trackers, smartwatches, smart security systems, medical sensors, refrigerators, etc. According to Statista, more than ten billion active IoT devices exist worldwide. 

IoT devices are common among organizations, including supply chain companies, empowering them on a large scale, streamlining production, and optimizing communication between suppliers and vendors internally and externally. In addition, IoT technology helps companies achieve efficiency, such as: 

  • Shorter time to market 
  • Streamlined asset training in the supply chain 
  • Cost reduction and safer workplaces 

Hackers and criminals understand that IoT devices with compromised security systems make it easier for them to launch attacks. According to Net Scout, an average IoT device experiences a cyberattack within five minutes after it is connected to the internet. 

However, the most common reason behind this is the lack of cybersecurity protocols incorporated into the devices. So, cybersecurity breaches via IoT devices can lead to severe problems and complications, including:

  • Production loss 
  • Lost revenues 
  • Data theft 
  • Equipment damage 
  • Industrial espionage

Supply chain companies use devices and sensors and connect them to the internet. The more devices come online, they create more data stores, ports, channels, and endpoints, allowing hackers to find vulnerabilities in the system and launch successful attacks. 

Cybersecurity Strategies in Supply Chain Management 

A supply chain attack, also known as a third-party or value chain attack, is one of the most significant problems for supply chain companies that use online models, portals, and platforms to streamline their operations. We have already discussed the type of cyberattacks. Let us now highlight the best practices or strategies to prevent cyberattacks. 

Develop a Sophisticated Policy 

Experts recommend developing clear policies about data security, information sharing, access, and authorization protocols. Your approach must define how your company will monitor data information and what security protocols require installation at the enterprise level. 

Discuss your requirements with your partners to determine what they do to protect against cybersecurity threats. Hire professional cybersecurity experts with experience in the supply chain to gain insights and use them to develop a tailored security approach for your organization. 

Train Your Employees 

Educating and training your employees is a perfect way to manage online operations, safely use usernames and passwords, and prevent cybersecurity issues. Research shows that 95% of all security attacks involve human errors, including:

  • Links to phishing scams 
  • Visiting unsecured websites 
  • Clicking suspicious links in emails 
  • Installing programs that contain malware 

We recommend discussing phishing scenarios and potential attacks and outlining the most appropriate practices your employees and management team can implement to protect the company’s online operations, including customer data, clients’ data, and other sensitive information. 

Define Data Access Protocols 

Who has access to your supply chain management systems? Answering this question is critical to define data access protocols. You can’t protect your systems, applications, and data networking platforms unless you have a well-defined mechanism that tells you who has access to these entities. 

In addition, evaluate your third-party relationships and determine whether they are reliable. Focus on the data and system you share with third parties and companies. According to CSO Online, about 35% of companies have a list of third parties they share information with via online channels. 

Update Technologies 

Cybersecurity requires consistent maintenance, and implementing a sophisticated approach is not an overnight job. The reason is that malware, ransomware, threats, and vulnerabilities evolve from time to time. 

Therefore, updating and patching the software system is essential to preventing cybersecurity risks and threats. It requires continuous monitoring of software features and network security, identifying vulnerabilities, and acting accordingly. 

CSO Online recommends supply chain companies conduct regular checks and inspections of their supply chain management systems. CSO Online highlights that 56% of companies experience data breaches and cyberattacks caused by one of their vendors. 

Final Words 

Supply chain management is a sophisticated approach to optimize operations, bring stability, and improve the company’s overall bottom line. However, the supply chain has become vulnerable to cyberattacks in recent years because more and more companies have digitalized their systems without solid security protocols. 

So this has leveraged cybercriminals to determine various entry points to get into the system, implement malicious software, such as ransomware and malware, and breach it to steal sensitive data and information. 

Therefore, companies in the supply chain industry must establish compliance standards for third-party vendors, including manufacturers, suppliers, vendors, and distributors. 

Finally, determine and document data standards and provide comprehensive training on supply chain security, data backups, and proper data access. Contact us today for more information.


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Patrick Gagne

By Patrick Gagné,
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