In this Explainer, we offer insights into why data protection and confidentiality should be top-of-mind of any cyber security team, and how to ensure that your external vendors and service providers to not pose a risk to your or your customers' data.
Any cybersecurity professional responsible for data breach prevention and safeguarding their organisation knows that protecting data at every link in your supply chain is essential to keeping your business secure and running smoothly.
With breaches rising 26% from 2022 to 2023 and up to 60% linked to third-party vendors—and an average breach cost nearing $4.9 million—comprehensive protection is a must.
Here, we discuss how you can assess vulnerabilities, implement effective security measures, and ensure regulatory compliance across your supply chain.
Your organisation's daily operations require data exchange with multiple third parties, creating an expanded attack surface that threatens data confidentiality.
Cloud providers, software vendors, and service partners continuously process your customer records, financial data, and intellectual property. Threat actors actively target these necessary operational connections.
The 2023 MOVEit transfer breach demonstrated the cascading impact of supply chain vulnerabilities. Attackers compromised a single file transfer application and gained unauthorised access to sensitive data across hundreds of organisations. The breach affected both direct users of the software and companies whose suppliers relied on MOVEit for data transfer operations.
Managed service providers and cloud platforms pose significant risks because they maintain privileged access across multiple client environments. The Kaseya VSA attack highlighted this vulnerability when attackers disrupted operations across 1,500 businesses by compromising a single management platform.
Software vendors can introduce additional risk vectors through privileged maintenance and update credentials. Threat actors specifically target payment processors and financial service providers to gain unauthorised access to valuable transaction data.
Supply chain breaches trigger multiple adverse consequences. Your organisation could face immediate financial penalties through regulatory fines and legal expenses. You can experience sustained damage to customer trust and partner relationships. Supplier bankruptcy from liability claims could further disrupt your critical operations. Customer exposure to identity theft or financial fraud often leads to class-action litigation.
There are 5 core principles to follow for any professional or organisation looking to protect their data.
You must evaluate new suppliers thoroughly through documented assessment protocols. Review their security policies, including specific controls for data protection, access management, and incident response. Measure key metrics including security training frequency, security budget allocation, and mean time to patch critical vulnerabilities.
Suppliers must implement definitive technical standards, including:
Furthermore, complying with international guidelines and standards such as the GDPR and CCPA frameworks is essential to ensure safe data handling.
Static security assessments fail to provide sufficient risk visibility in dynamic technology environments, with evolving threats and continuous system changes requiring cybersecurity professionals to implement persistent monitoring protocols.
Organisations are increasingly in need of being able to detect and respond immediately to security posture changes, including cloud storage misconfigurations and zero-day vulnerability discoveries.
Modern monitoring solutions can help by scanning your external attack surface every 4-6 hours.
These systems:
Your organisation must classify data based on sensitivity and implement corresponding access controls. Define clear categories for data types and assign specific handling requirements to each level. Implement strict access controls to enforce data handling policies across your supplier network.
The principle of least privilege requires you to limit user access to the minimum required data and systems. Monitor and audit all access regularly. Revoke unnecessary privileges immediately when users change roles or leave the organisation.
Deploy strong encryption across all data storage and transmission channels. Implement AES-256 encryption for stored data and enforce TLS 1.3 protocols for data in transit. Establish robust key management procedures and rotate encryption keys according to defined schedules.
Data masking protects sensitive information during testing and development. Replace actual customer data with realistic but false information when sharing them with suppliers for system testing. Implement automated masking tools to maintain consistency and prevent accidental exposure of sensitive data.
Your organisation must also establish and maintain comprehensive incident response procedures for supply chain security incidents. Document clear escalation paths and response protocols for various incident types. Define specific roles and responsibilities for both internal teams and third-party suppliers.
Communication protocols must specify exact notification requirements and timelines. Include regulatory reporting obligations and customer notification procedures in your response documentation. Establish secure communication channels for incident coordination with suppliers and external response teams.
Your incident response plan must address various breach scenarios, including:
Test your incident response procedures regularly through realistic scenarios involving key suppliers. Document and address all gaps identified during testing. Update response procedures based on evolving threats and organisational changes.
Implement comprehensive security awareness training for all employees who interact with supplier systems and who handle sensitive organisational or customer data. Conduct role-specific training on secure data handling procedures and supplier management protocols. Track completion rates and measure effectiveness through practical assessments.
Your training programme must cover:
Update training materials regularly to address new threats and vulnerabilities. Require suppliers to maintain comparable training standards for their personnel who access your systems and data.
Establish formal security collaboration programmes with key suppliers. Share threat intelligence and incident data through secure channels. Conduct joint security assessments and improvement initiatives.
Include specific security requirements in supplier contracts. Define clear metrics for security performance and compliance. Implement incentive programs to encourage suppliers to exceed baseline security requirements.
Create a supplier security working group to:
Your organisation must put data breach prevention top-of-mind.
Start by assessing supplier security controls, implementing continuous monitoring systems, strengthening incident response, enhancing vendor collaboration, and upgrading encryption and access controls. As supply chain attacks become more frequent and sophisticated, fragmented vendor assessments simply aren’t enough.
Risk Ledger offers a streamlined solution that automates bi-annual assessments and enables access to already peer-reviewed complete vendor security profiles—fully aligned with standards like NIST, ISO27001, UK CAF, and Cyber Essentials Plus. Join over 8,000 suppliers already on our platform and gain continuous visibility into your evolving vendor risk landscape.
Book a Risk Ledger demo today and secure your organisation’s data with a comprehensive, proactive approach to third-party risk management.
Sign up to our monthly newsletter to receive exclusive research and analyses by our experts, the latest case studies from our clients as well as guides, explainers and more to turn your supply chain risk management programme into a resounding success story.
