Cyber risk assessment

Cyber Risk Assessment in Digital Supply Chains

Technology has always been the driving force for supply chain evolution over the years. Many organizations are now shifting towards digitalization. While some are willing to move towards a digitalized world by themselves, some are compelled by the disruption in the last year due to COVID. Organizations are making heavy supply chain technology investment; these investments are driving the supply chain evolution from linear to interconnected smart network enabling enterprises to meet unique customer value propositions. Industry 4.0, Internet of Things (IoT) and a host of new technologies enable supply chain partners to see, predict and respond effectively to consumer demand signals. As per a recent study by Gartner valuing the supply chain technology market at $13 billion in 2017, up by 11 percent in 2016, and on track to exceed $19 billion by 2021.

Some of the most widely promoted supply chain technology enabled improvement include robotics, driverless vehicle, drones, facial recognition technology, smart labels, QR codes and blockchain technology. Those who embrace these technologies face a tremendous boost in their supply chain performance, which includes, less inventory, better service levels, less returns, increase in overall customer experience. Paradoxically, the reasons that make these technologies so beneficial for the companies also make them vulnerable to cyber-attacks. There are many examples where supply chain vulnerabilities are identified and actively exploited. The more these smart and interconnected technology network increase in complexity and sophistication, the more the potential risks and impact of cyber-attacks.

Cyber security risks and consideration:

Third party service providers or vendors:

According to a survey conducted by Spice works in 2019, out of 600 businesses, 44 percent experienced data breaches caused by a third-party vendor. Global business giants generally have no idea how secure and updated systems are used by their suppliers. This is one of the primary deficits faced by the logistics industry. How many companies are making sure that their low-end retailers stay up to date on emerging systems, networks, and application-level vulnerabilities? Businesses that take an effective approach to third party management can effectively reduce the risk of data breach and protect important product privacy from competitors or markets where intellectual property theft is common.

Lack of cyber-security awareness in employees:

Cyber attackers are always looking to enter the most easy route into the organization’s system. They are now realizing that the shortest way to enter is through the “weaker links” that makes up the digital supply chain. And with serious talent shortage these links become more vulnerable to exploit. Moreover, very few organizations conduct an assessment to test the basic cyber security knowledge of candidates when hiring for key supply chain positions. Without an adequate cyber security infrastructure, it becomes harder and harder to detect threats.

Risk of cryptocurrency in supply chain:

Cryptocurrency has been all the rage these days in the stock market. Blockchain and cryptocurrency work together to ensure the safety of the transportation of goods from point A to point B. A cryptocurrency is a decentralized digital currency not associated with any specific government, which can be exchanged for traditional currencies, products or even services. A pol conducted on LinkedIn states that, 75% of the respondents see cryptocurrency becoming more commonplace in supply chain market and transportation.

  • Poor valuation of cryptocurrencies: One of the biggest concerns in cryptocurrencies is its price. Bitcoin that utilises blockchain technology, can see huge jumps and fall in its prices, leaving a lot of investors empty handed.
  • Payment with cryptocurrency: Simply put, buying in cryptocurrency means paying for goods and services in digital currencies rather than traditional backed funds and loans, removing threats like stolen credit card numbers, but there is currently no way to deter cybercriminals from gaining access to user’s wallets.

Some of the ways to secure your supply chain
from cyberattacks include:

Training and Education:

– Training and sharing security best practices with employees and key vendors: Cyber security is not just a technology problem but people, knowledge, and process issue. Education and training are suggested for both own employees and those of key suppliers.
– Adequate cybersecurity infrastructure: Investing in good cybersecurity awareness program and infrastructure to mitigate the impact of cyber-attacks. Every employee and trading partner should be involved in the security framework and Clear roles and responsibility should be allocated for own employees and third-party entities as essential safety measure.

Using technology:

– Using proper cyber security protection systems like two-factor authentications and bio metric access control across all internal as well as third party systems. Risk and recovery plans should be documented as a standard procedure.
– Blockchain technology: Blockchain and cryptocurrency work hand in hand to ensure safety by enhancing transparency and efficiency along with high level of data-security multiple trading partners. Innovation in block chain have high potential in delivering tremendous business value by increasing transparency, reducing compliance risks and disruptions in supply chain. It can drive transparency and visibility into product origin, product transformation, and product movement to reduce fraud.

Third Party Management:

– Using a third-party management process can reduce the potential risk while working with third party organizations. It can help in monitoring while managing the risks that arise from an external party interaction involved with contractual and non-contractual business relationships.
– Third-party screening and due diligence: Businesses should have a screening process before onboarding any third party to understand what risks they are potentially exposed to in terms of integrity, technology, and financial risk.

Be informed about cryptocurrency:

– Once cryptocurrency has been purchased, it should be protected from hackers, a problem that is rarely seen in the traditional banking system. Due to its newness, many organizations face lack of knowledge about cryptocurrency. Firms will need a lot of knowledge expertise that can assist with the nuances and the unknown The future of supply chain includes cryptocurrency, and its impact will be felt sooner than later.

While all businesses want higher visibility and transparency in their supply chain through significant technology investments, they are also opening themselves up to malicious cyber-attacks if they do not take appropriate action. Cyber criminals are looking for vulnerabilities to attack an organization. Risk associated with third party providers and lack of basic cyber security knowledge among employees are among the most “weak links” in supply chain. Whilst finding the correct strategies and technology to mitigate risk in this digital world. By finding the correct strategies and technologies an organisation can mitigate risks and detect potential threats and breaches more proactively. A journey towards a digital supply chain can be costly and a time-consuming process, but clearly worth it.

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