Explainers & Guides
What Is Supply Chain Security?
Cyber risk management is the structured process of identifying, assessing, and addressing threats to an organisation's digital assets, infrastructure, and supply chain.
In 2023, global cyber crime cost the world economy over $8 trillion, and is expected to exceed $13 trillion in 2025 (Statista). This staggering number demonstrates why any modern business, but particularly those with convoluted third-party networks, must pay special attention to managing their cyber security risk.
Business leaders must understand that a single cyber breach can, and will, ripple through supply chains, disrupt operations, erode customer trust, and trigger regulatory penalties. For businesses looking to grow and perform in the modern era, cyber risk management is far more than an IT issue. It is a core element of business continuity and longevity.
Cyber risk management is the application of risk management principles to the digital domain. It aims to safeguard information, systems, and operations by systematically identifying threats, analysing their potential impact, and implementing controls to mitigate or eliminate them.
In simple terms, it's the bridge between cyber security and business strategy. Effective cyber risk management requires coordination between technical teams, leadership, and vendors. It examines both the organisation’s internal systems and the wider ecosystem, including cloud services, third-party suppliers, and managed service providers.
For example, a manufacturing company might pinpoint its ERP system (responsible for controlling supply orders) as its most critical asset. Through cyber risk management, it is discovered that a key supplier's remote access privileges create a high-risk attack vector. Controls are then implemented to limit that access and monitor it continuously.
A successful cyber risk programme relies on actionable intelligence. This means having visibility into threats both inside and outside the organisation's network.
The more complete the intelligence picture, the faster an organisation can act. Proactive detection—rather than reactive firefighting—is the hallmark of mature cyber risk management.
Cyber risk management follows a cycle that ensures risks are continually identified, assessed, treated, and monitored. This is not a "set it and forget it" process.
Before diving into specific threats, organisations must set the context. This includes defining business priorities, risk appetite, and external/internal conditions. For instance, a financial services firm might set a low tolerance for downtime due to regulatory obligations, which in turn shapes how it frames and prioritises risks.
Once the context is established, the next step is to identify and analyse threats. Techniques include penetration testing, vulnerability scanning, and supply chain audits. The output is a prioritised list of risks, ranked by likelihood and impact.
Decisions here determine how each identified risk will be handled: avoided, accepted, transferred, or treated. The choice should align with business priorities and available resources.
Because the threat landscape evolves daily, ongoing monitoring is essential. This involves reviewing control performance, tracking incidents, and updating risk profiles to reflect new intelligence.
Poor cyber risk management can have severe consequences:
The 2020 SolarWinds attack showed how a single compromised vendor can create cascading effects across thousands of organisations, highlighting the urgency of robust cyber risk practices.
A framework provides a standardised, repeatable approach to managing cyber risks. Using a recognised framework helps ensure consistency across teams, makes it easier to meet compliance obligations, and supports scalability as the business grows.
Popular frameworks include the NIST Cybersecurity Framework, ISO/IEC 27005, and FAIR (Factor Analysis of Information Risk). They all share the goal of helping organisations systematically address cyber risks from identification through to monitoring.
Connect business objectives directly to cybersecurity goals. Identify the digital assets that matter most, such as customer databases, proprietary algorithms, or production control systems. Decide the acceptable level of risk for each. Involve stakeholders from IT, legal, compliance, operations, and procurement to ensure the approach is consistent across the organisation.
Set transparent governance from the start. Assign responsibility for making risk decisions and for carrying out those decisions. Consider compliance obligations, available resources, and budget limits, as these factors will shape the plan. Secure leadership commitment to ensure the strategy has the authority and support it needs to succeed.
Outline the specific threats your organisation faces. This may involve mapping the attack surface across endpoints, cloud services, and IoT devices. It can also include assessing dependencies on critical third-party vendors. A well-defined challenge keeps the strategy focused and measurable.
Choose a risk assessment and management approach that fits your needs. Quantitative models use numerical scoring to rank risks, while qualitative models use descriptive scales. A top-down approach draws direction from executives, while a bottom-up approach gathers insights from operational teams. Select the method your organisation can support and maintain over time.
Risk Avoidance
Remove the threat entirely by discontinuing insecure systems or services.
Risk Acceptance
Acknowledge low-probability, low-impact risks where mitigation would cost more than the potential loss, and document the decision.
Risk Transfer
Shift the impact to another party through cyber insurance or by outsourcing to a specialist provider.
Risk Treatment
Reduce risk by implementing new controls, processes, or training. Examples include multi-factor authentication, encryption, and incident response planning.
Keep open communication with stakeholders across internal teams, executives, vendors, and regulators. Regular updates build trust and ensure risk awareness remains a shared responsibility.
Deploy the selected controls. Test their effectiveness through simulations, audits, and security exercises. Make adjustments when results show misalignment with organisational goals.
Treat cyber risk management as a continuous process. Review risk registers, incident reports, and control performance on a regular schedule. Update strategies as threats evolve, and reassess when new risks emerge.
Cyber risk management is the process of identifying, assessing, and addressing cyber threats to minimise their potential impact on an organisation's operations, assets, and reputation.
Identification, assessment, response, monitoring, and communication.
Identify, analyse, evaluate, treat, and monitor, as each applies to cyber threats.
Change, Compliance, Cost, Continuity, and Coverage are known as the 5 C’s of cybersecurity, all of which are key focus areas for managing security effectively.
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