The Supply Chain Cybersecurity Challenge: Strategies to Secure Your Operations
Cybersecurity
Oct 29, 2025
As supply chain cyber risks increase, businesses need to take proactive measures to protect their operations. This includes securing your organization, addressing third-party risks, and reducing the financial impact of data breaches.
Supply chain cyber threats can slip past your firewall unnoticed. As supply chains grow more complex and connected, attackers look for the weakest link in your supplier network to reach important systems and data. The question is no longer if your organization will be targeted, but whether you are prepared to detect, respond, and bounce back.
October's Cybersecurity Awareness Month, championed by the Cybersecurity and Infrastructure Security Agency (CISA), serves as a critical reminder:
In today's industrial landscape, your security is only as strong as your weakest vendor.
Understanding the Cybersecurity Supply Chain
A cybersecurity supply chain includes all the connected people, processes, and technologies that help create, deliver, and support your organization's products and services. This covers third-party vendors, software providers, cloud services, contractors, business partners, and any outside software that interacts with your internal systems.
Most Common Cybersecurity Risks in the Supply Chain
Modern supply chains are complex, which makes them a top target for cyberattacks. Vendors, suppliers, contractors, and other third parties often have access to sensitive systems or data, so they can become weak points that cybercriminals exploit.
📌 For instance:
If one supplier is breached, the effects can spread through the supply chain and harm several organizations.
Targeted Supply Chain Attacks - have become cybercriminals' preferred strategy because one compromised supplier opens doors to countless connected organizations.
Software Vulnerabilities and Unpatched Systems - represent ticking time bombs in supply chains, with 62% of vendors falling short of basic security standards.
Phishing and Social Engineering Attacks. Simply put, human psychology remains the easiest vulnerability to exploit, with 90% of cyberattacks beginning with a deceptive email that bypasses even the most sophisticated technical defenses.
Ransomware targeting supply chains represents the perfect storm—one compromised supplier can shut down production across entire industries while extracting millions in ransom payments.
Cascading Supplier Compromises. The harsh reality: with just 150 companies controlling 90% of Fortune 500 technology infrastructure and 79% of organizations blind to third-party risks, a single supplier breach can cascade into thousands of compromised organizations before anyone realizes the attack is underway.
The interconnected nature of supply chains exposes organizations to a range of cyber risks that can affect entire industries. Recognizing these threats is essential for developing effective defenses.
Why Your Supply Chain is a Prime Target?
A combination of factors can fuel the rise in supply chain cyber vulnerabilities:
Growing Interconnectedness: Digital tools, cloud platforms, and IoT devices have made supply chains more efficient but have also increased the number of potential entry points for cybercriminals.
External Third-Party Access: Contractors, vendors, and suppliers frequently tap into your company’s network, multiplying the risks. One vulnerable link can jeopardize the security of the entire system.
Fragmented Security Standards: Managing cybersecurity across diverse vendors—each operating with different protocols, legacy systems, and security maturity levels—presents enormous challenges. The more suppliers in your ecosystem, the greater the attack surface and the harder it becomes to maintain consistent protection.
Expanded Supplier Ecosystem: Juggling cybersecurity across a maze of vendors, each with their own systems and rules, is a daunting task. The larger and more intricate your supply chain, the tougher it is to lock down security.
Supply chain cyberattacks are set to surge. IBM forecasts that by 2025, nearly 45% of companies worldwide will feel the impact. As supply chains go digital, the time to act is now.
💡 Did you know that...
Manufacturing remains the most attacked industry for the fourth consecutive year, representing 26% of all incidents.
What Constitutes a Third-Party Insider Threat?
Third-party insider risk refers to security vulnerabilities introduced by external individuals or entities who, through legitimate business relationships and trusted access, can cause harm to your organization—whether intentionally or accidentally. In industrial settings, this encompasses a broad ecosystem:
Contractors and subcontractors performing on-site work
HVAC, maintenance, and facility service providers with remote network access
IT service providers and system integrators managing operational technology
Suppliers and logistics partners connected to your supply chain systems
Engineering consultants and design firms accessing proprietary production data
Outsourced compliance, safety, and quality teams handling sensitive operational information
The critical distinction in industrial environments is that these third parties don't just access corporate networks—they often require direct connectivity to operational technology (OT) systems, programmable logic controllers (PLCs), supervisory control and data acquisition (SCADA) systems, as well as industrial control systems (ICS). This creates pathways that, if compromised, can have physical consequences far beyond data theft.
The Misconception: "Insider" Doesn't Mean "Employee"
A common misconception in industrial security is viewing insider threats as limited to employees. In reality, anyone with privileged access, including external partners, can pose a risk.
❗ Consider the supply chain implications: when you engage a contractor, you're not just trusting that individual company. You're implicitly trusting their subcontractors, their IT vendors, their employees, and anyone else in their extended network who might access the credentials or systems they use to connect with your operations.
Attackers increasingly target vendors and contractors who often have broad access with limited oversight. Compromising a less secure partner can allow threat actors to bypass strong perimeter defenses and gain access to larger organizations.
Operational Technology: Where Access Equals Physical Control
What distinguishes industrial third-party risk from other sectors is the direct connection to operational technology systems that control physical processes. When a contractor accesses your OT environment, they're not just viewing data—they potentially have the ability to impact:
Production line operations through programmable logic controllers
Safety systems including emergency shutdown mechanisms
Quality control processes affecting product specifications
Environmental monitoring systems tracking emissions and waste
Energy management systems controlling power consumption
Physical security systems including access controls and surveillance
Manufacturing companies face particular vulnerability because OT systems were historically designed for reliability and uptime, not cybersecurity. Many legacy systems lack basic security features like encryption, authentication protocols, or the ability to be patched without production downtime. Yet as industries embrace Industry 4.0 digitalization, these OT systems increasingly connect to IT networks, cloud platforms, and external partner systems—dramatically expanding the attack surface.
The Contractor Compliance Challenge
Industrial organizations face a particularly acute challenge when managing contractor risk because the volume and variety of third-party relationships is substantial:
Maintenance contractors requiring access to equipment and control systems
Safety and compliance auditors examining operational procedures
Engineering firms designing production improvements or expansions
Logistics providers integrating with supply chain management systems
Equipment vendors providing remote monitoring and predictive maintenance services
Temporary and seasonal workers supplementing production capacity
Each relationship introduces risk dimensions that must be managed:
Insurance verification: Ensuring contractors maintain adequate general liability, workers' compensation, and professional liability coverage to protect against incidents
Safety certification validation: Confirming OSHA training, industry-specific safety credentials, and compliance with site-specific requirements
Cybersecurity assessment: Evaluating contractors' own security practices, particularly for those requiring network or system access
Background screening: Conducting appropriate vetting proportional to access levels and sensitivity
Ongoing monitoring: Continuously tracking insurance renewals, credential expirations, and changes in risk profiles rather than relying on point-in-time assessments
Traditional approaches to contractor management—typically involving email exchanges and manual document reviews—simply cannot scale to manage these complex, dynamic relationships effectively.
For compliance officers and risk managers, this means countless hours spent chasing expired certificates, manually validating insurance coverage, and struggling to maintain current records across hundreds of active contractor relationships. It also means exposure to substantial liability when manual processes fail to catch a lapsed insurance policy or expired safety certification before an incident occurs.
The Cost of Manual Third-Party Risk Management
The financial and operational burden of traditional third-party risk management is staggering. Organizations typically see 40-60% of procurement teams' time consumed by administrative tasks related to vendor onboarding and compliance management.
Delayed vendor onboarding costs businesses an average of $15,000 per day in lost productivity.
Supply chain breaches cost an average of $4.91 million per incident.
Beyond the direct costs, manual processes create critical vulnerabilities:
Slow onboarding that prevents rapid scaling when business opportunities arise
Compliance gaps where expired credentials or lapsed insurance go undetected
Inconsistent verification that creates uneven risk exposure across different sites or business units
Audit nightmares when companies cannot quickly produce documentation demonstrating due diligence
Insurance exposure from inadequate verification that can result in denied claims or direct liability
For industrial companies where contractor incidents can result in production shutdowns, safety violations, environmental penalties, or equipment damage, the stakes of inadequate third-party risk management extend well beyond compliance concerns into core operational and financial performance.
Source: datapatrol.com
Cybersecurity Strategies for Industrial Third-Party Risk
Organizations must begin with a clear understanding of their cybersecurity attack surface before they can effectively defend it. The following strategies provide a roadmap to strengthen the supply chain defenses and build operational resilience.
Here are the tips for mitigating risks in your supply chain:
1. Start with Risk Identification
Risk identification requires a systematic approach to cataloging all technology assets, connections, and data flows across the supply chain ecosystem.
Complete asset inventory: Document all computer equipment, IoT devices, cloud platforms, and endpoints connected to your network. Organizations with mature risk programs maintain real-time visibility into assets across all environments.
Data mapping: Identify where sensitive information is stored, processed, and transmitted—including third-party systems. SecurityScorecard's 2025 report reveals that 79% of companies lack visibility into their third-party supply chain, creating dangerous blind spots.
Vendor classification: Segment suppliers by risk level based on data access, system privileges, and business criticality. Not all vendors pose equal risk—high-risk suppliers handling sensitive data require more rigorous oversight than low-risk contractors.
Dependency mapping: Understand which suppliers are single points of failure. Just 150 companies power 90% of Fortune 500 technology infrastructure, meaning concentration risk can trigger systemic disruptions.
Organizations that implement comprehensive asset inventories and risk mapping can prioritize resources effectively, focusing intensive security measures on the most critical vulnerabilities while managing lower-risk suppliers through streamlined processes.
2. Conduct Comprehensive Vendor Risk Assessments
Effective third-party risk management begins before a contractor ever accesses your systems. Organizations must conduct thorough due diligence that evaluates multiple risk dimensions:
Cybersecurity posture: Assess the vendor's security practices, including whether they maintain relevant certifications (ISO 27001, SOC 2), conduct regular penetration testing, have incident response plans, and follow secure development practices.
Financial stability: Evaluate the vendor's financial health to ensure they can maintain security investments and won't suddenly cease operations mid-project.
Insurance adequacy: Verify coverage limits, policy types, required endorsements (additional insured status, waiver of subrogation), and that policies are current and placed with reputable carriers.
Safety qualifications: Confirm OSHA compliance, industry-specific safety training, incident history, and alignment with your site safety requirements.
Operational resilience: Understand the vendor's business continuity plans, backup systems, and ability to maintain service during disruptions.
However, it's critical to recognize that initial assessments provide only a point-in-time view. A vendor's security posture, financial condition, or insurance status can change significantly between annual reviews.
🦜 Parakeet tip:
This is why modern third-party risk management demands continuous monitoring rather than periodic snapshots.
3. Continuous Software Updates and Patch Management
Software vulnerabilities represent ticking time bombs, and organizations that fail to implement disciplined patch management processes remain sitting targets for attackers who actively scan for unpatched systems.
Continuously scan for known vulnerabilities across all systems, including third-party software components. 62% of vendors fail to meet basic cybersecurity requirements, often due to outdated software.
Vendor update requirements: Contractually require suppliers to maintain current software versions and provide advance notice of system changes that could introduce vulnerabilities.
4. Robust Data Backup and Recovery Strategies
Data backups serve as the last line of defense against ransomware attacks, hardware failures, and data corruption. With ransomware attacks doubling since April 2025 and projected to cost $60 billion globally in 2025, backup strategies have evolved from optional best practices to business continuity essentials.
5. Implement Strict Access Controls and Network Segmentation
Industrial organizations must implement robust access controls:
Principle of least privilege: Grant third parties only the minimum access necessary to perform their specific functions, and only for the duration required
Network segmentation: Isolate vendor access zones from operational technology systems, particularly safety-critical controls
Multi-factor authentication: Require MFA for all remote access, eliminating reliance solely on password credentials
Just-in-time access: Provide temporary, monitored access that automatically expires rather than standing privileges
Zero trust architecture: Continuously verify and validate third-party access rather than assuming trust once inside the network perimeter
For industrial environments, this means implementing industrial firewalls, intrusion detection systems, and anomaly monitoring specifically designed for OT networks.
6. Regular Security Audits and Penetration Testing
Periodic security assessments provide external validation of security controls and uncover vulnerabilities that internal teams might miss. Organizations with mature risk programs conduct third-party audits at least annually, with critical suppliers reviewed more frequently.
Key audit components:
Third-party penetration testing: Independent security researchers attempt to breach systems using real-world attack techniques, identifying exploitable vulnerabilities before malicious actors find them.
Configuration reviews: Verify that systems are configured according to security baselines. Misconfigurations—like the Capital One breach involving an AWS firewall—cause preventable breaches.
Compliance audits: Verify adherence to regulatory requirements and industry standards (ISO 27001, SOC 2, NIST CSF). Only 8% of businesses believe they have full control over supply chain risks, highlighting the gap between confidence and reality.
Vendor security assessments: Don't rely solely on vendor self-attestations. 56% of organizations still use point-in-time questionnaires, which provide limited value. Third-party security ratings and continuous monitoring offer more reliable assessments.
Remediation tracking: Audits are only valuable if findings drive action. Establish clear remediation timelines and track vulnerability closure rates to ensure improvements occur.
Organizations that treat security audits as checkbox exercises rather than opportunities for improvement remain blind to their most critical vulnerabilities.
7. Enable Continuous Monitoring and Real-Time Alerts
The shift from annual vendor assessments to continuous monitoring represents one of the most critical evolutions in third-party risk management.
Modern platforms provide real-time visibility across multiple risk dimensions:
Insurance compliance: Automated tracking of policy expiration dates with alerts when certificates require renewal, reducing gaps in coverage
Cybersecurity posture: Daily updates on vendor security ratings based on external indicators such as patch levels, exposed systems, breach history, and dark web monitoring
Financial health: Ongoing assessment of vendor financial stability through credit monitoring and business intelligence feeds
Regulatory changes: Automated alerts when regulations affecting your industry or contractors change, enabling proactive compliance adjustments
Behavioral anomalies: Real-time detection of unusual access patterns, data transfers, or system interactions that may indicate compromise
8. Leverage Automation to Scale Third-Party Risk Management
Given the volume of third-party relationships most industrial companies manage, manual processes simply cannot provide adequate oversight. Automation transforms third-party risk from a labor-intensive administrative burden into a strategic capability.
Key automation opportunities include:
Vendor onboarding: Automated workflows that collect required documentation, verify credentials, assess risk profiles, and route approvals—reducing onboarding time from 45 days to just 6 days in documented cases
Insurance verification: Systems that automatically validate certificates of insurance against project requirements, check coverage limits, confirm policy dates, and flag non-compliance—cutting verification time from 15-30 minutes to 30 seconds per certificate
Compliance documentation: Platforms that centralize storage of safety certifications, training records, background checks, and other credentials with automated expiration tracking
Risk scoring: AI-powered assessment tools that continuously calculate vendor risk scores based on multiple data sources and automatically adjust based on new information
The benefits extend beyond efficiency. Automation dramatically reduces human error—which accounts for 28% of security breaches according to Verizon research—while providing complete audit trails that demonstrate due diligence during regulatory reviews or incident investigations.
Incident Response Planning with Supply Chain Focus
Traditional incident response plans often overlook supply chain scenarios, yet 71% of organizations experienced third-party cyber incidents in the past year. Supply chain incident response requires specialized procedures and cross-functional coordination.
Supply chain incident response essentials:
Distinct third-party protocols: Only 37% of organizations maintain separate incident response plans for supply chain events, despite their unique characteristics. These plans must address vendor notification, relationship owner engagement, and coordinated remediation.
TPRM-SOC collaboration: 92% of organizations rely on Security Operations Centers for supply chain security, yet 47% report that collaboration could be better. Establish clear roles and communication channels before incidents occur.
Vendor escalation paths: Define how incidents are escalated to business relationship owners who can apply commercial pressure for rapid vendor remediation.
Joint tabletop exercises: Only 26% of organizations conduct joint exercises with vendors, missing opportunities to test coordination and identify gaps before real incidents.
Communication templates: Pre-approved messaging for stakeholders, customers, and regulators accelerates response and ensures consistent, legally-vetted communications.
Recovery priorities: Define which systems and data require immediate restoration, which can tolerate delays, and which vendors provide critical services that demand priority attention.
When supply chain incidents occur, organizations with tested, vendor-inclusive response plans recover faster, minimize disruptions, and preserve stakeholder trust.
The question each industrial organization must answer: Will you be the next cautionary tale, or will you transform third-party risk from vulnerability into strategic capability?
Ready to transform your third-party risk management? Discover what's possible with Parakeet Risk and learn how leading industrial companies are turning regulatory uncertainty into operational confidence.
