It is getting almost stale to be warning about the need to assure security throughout the supply chain. Most businesses have had third party assurance programmes in place for many years and are well versed with the challenges and struggles in the fight against cyber crime.
Cases like the Target breach from a few years back, where the keys to the network were stolen from the hacked systems of an air conditioning contractor, only serve to reinforce the point.
Why is it still a problem?
There are several reasons why this is still a challenge. Partly it is due to the sheer numbers involved.
Companies often have tens, hundreds, thousands of suppliers; and these are both direct suppliers who they deal with and have contacts, but also indirect ones that are suppliers to their suppliers (one, two or more degrees of separation away). Of course, new suppliers could be introduced at any time.
These suppliers will provide a variety of services to numerous parts of the business within different business units and with different points of contact (on both sides) so introduce a wide range of vectors for cyber crime to be a risk that ultimately your business faces.
The range of roles is diverse. Some suppliers may hold data, and this might be sensitive or non-sensitive, some might have access to or connect into systems, some might interact with staff or with customers, some might be regular or routine and others might be ad hoc and highly specialised. They could even be part of the security defence themselves – like a managed security service provider (MSSP), CCTV operator or manned guarding company.
However, supply chain/third party risk is still a problem as was highlighted in recent research from Forrester, Harvard Business Review and the International Association of Privacy Professionals (IAPP).
“According to our survey of network security decision makers, third-party incidents were the cause of 17% of confirmed breaches in 2017.
Protect your extended ecosystem with third-party cyber-risk scoring – Continually quantify the cyber risk of your third parties for actionable insights”
Forrester, July 2018
“According to our research, over 60% of reported attacks on publicly traded U.S. firms in 2017 were launched through the IT systems of suppliers or other third parties such as contractors, up from less than one-quarter of attacks in 2010…”
HBR, July 2018
“Third parties are very often the weak link”
IAPP, February 2018
Current approaches to managing supplier risk can fall short
The above linked Forrester Research report (“Protect your extended ecosystem with third-party cyber-risk scoring”) highlights some of the challenges well:
“The process is manual and slow, failing to scale with today’s business ecosystem.”
The commonest approach for security and procurement teams is to use some form of questionnaire or spreadsheet. This is easy to set up and could even be used to drive reporting and tracking, but as soon as the numbers of suppliers or third parties gets into the hundreds it is unwieldy and cumbersome.
Similarly for the supplier, if they have a large number of customers all undertaking similar audits the filling in of multiple questionnaires in different formats is a high overhead.
“Risk evaluations are often limited to the initial stages of the relationship.”
Initial supplier onboarding, as a process, is a logical juncture for a security questionnaire, audit or assessment. However repeating this activity every quarter or annually, not only increases the overhead but also means that differences need to be identified (not easy in Excel) and deficiencies be re-examined over time. Are there changes that are negative? Are there temporary exemptions granted from past audits that have not been remediated?
As threats and the technical environment change continuously it is no use checking security at a single moment and then forgetting about it; allowing new risks to develop and grow unchecked.
“Extensive audits, certifications, and compliance still cannot guarantee security.”
The degree of quality in the answers or control and process claims does not necessarily mean that the underlying environment is secure or robust. Even certifications only typically cover a specified scope and a risk-derived subset of controls. Risks that are acceptable to the supplier might not be to your business, and controls that are reported to be present, effective and operational may not be.
The issues of the Outside-In approach
Alternatives do exist; there are businesses that will perform external perimeter audits to assess the outward facing systems and configurations ability to withstand attack. For example scanning web servers, firewalls and applications to find externally exploitable vulnerabilities or information that could be used in criminal endeavours.
This scales easily to the number of suppliers affected but can be intrusive (the supplier might be trying to provide services using the very systems that the scanning is trying to exploit) and of course only covers one very narrow threat vector.
So the cyber crime risk your suppliers are exposed to, and consequently the risk they are exposing your business to, is not an easy one to assess.
The benefits of the Inside-Out approach
The outside-in approaches all suffer from flaws. A more advantageous approach – and one that both sides of the relationship can benefit from – is a more “inside-out” approach where the security and key data protection controls are monitored in an unobtrusive way that doesn’t impact the technology or require huge amounts of man power to gather information and report on it.
Such an approach alleviates manual effort and biases. It also enables more accurate, trustworthy data and reports and delivers continuous visibility across the entirety of an environment that is relied upon by the supplier to provide services or to hold and protect data.
Cyber crime and supplier risk
It is a commonly accepted principle that all companies can, maybe even will, fall victim to cyber crime at some point. This includes your suppliers and third parties, and if you have a lot of them who process your data, access your systems and who you rely on, then their risk is your risk.
More worryingly it may even be that they are targets because they are your suppliers and they form an easier route to get to your business, for a determined attacker, than a more direct assault.
Accepting this as a risk means having a way to manage and monitor it. That needs to be something that happens continuously, rather than on an ad hocbasis. It needs to be direct and not dependent on people’s interpretations or guesses so that the information you base decisions on is real data from real systems. It also needs to allow you visibility of both insider and external risks as cyber crime may be a traditional web site based attack, or it may use techniques like phishing to compromise an internal user.
Finally, this process is an overhead for both you as a customer and the supplier – so it needs to be as automatic and unobtrusive as possible.
Many technology vendors, Huntsman Security included, have been looking into the problem from their own viewpoints. Network vendors take a very network/technology centric angle, GRC vendors start from the policies and compliance status, security solutions start with the threats they specialise in. Our assessment of the market has been that the real demand is for automated collection of data, enrichment with appropriate context and generation of audience-specific outputs as the key factors.
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