How to Automate Third-Party Risk Management in the Supply Chain

Summary

Companies increasingly depend on third-party vendors to optimize operations and meet production demands in today's manufacturing landscape. However, this reliance also opens supply chains to heightened digital risks, as each vendor relationship introduces potential vulnerabilities. Cyber threats targeting supply chains have surged, with cybercriminals often exploiting weaker security practices among vendors to infiltrate larger organizations.
 
Cybersecurity automation has become essential for effectively managing third-party risks. Automating security processes can continuously monitor vendor activities, quickly detect and respond to threats and ensure compliance with industry regulations. This proactive approach reduces the likelihood of costly breaches and maintains the integrity of operations.

1. Understand the scope of third-party risks

Identifying critical third-party vendors within the supply chain is a complex yet essential task, especially since 60% of organizations now work with over 1,000 third parties. To effectively manage this vast network, businesses must first categorize vendors based on their access to sensitive data and their role in critical operations.
 
Mapping out these access points involves understanding the flow of information and pinpointing where each vendor interacts with the organization’s systems. Evaluating vendors' cybersecurity practices is equally crucial, as even a minor security lapse can compromise the entire supply chain.
 
Automation tools can streamline this evaluation process by continuously monitoring vendor compliance, conducting risk assessments and providing real-time insights into potential vulnerabilities. This automated approach enhances security and allows organizations to manage their extensive vendor networks more efficiently and confidently.

2. Automate compliance management

Automation ensures all third-party vendors adhere to industry regulations and standards, which is crucial for maintaining a secure and compliant supply chain. Businesses can continuously monitor vendor activities against the latest regulatory requirements by automating compliance checks and instantly flagging deviations or potential risks.
 
This automated oversight ensures vendors remain compliant and simplifies the creation of detailed compliance reports and audit trails. These reports can be generated in real time, offering a transparent view of each vendor's adherence to standards without time-consuming manual audits. As a result, companies can reduce manual effort, minimize the risk of human error and maintain consistent compliance across their entire vendor network.

3. Leverage AI and machine learning for threat detection

AI and machine learning are powerful tools in cybersecurity. They can identify unusual patterns signaling an impending cyber threat. These technologies analyze vast amounts of data to detect anomalies that human eyes could overlook, such as unexpected access requests or irregular data flows.
 
In fact, malicious actors leaked over 74 million U.S. telecommunications customers’ data within the first six weeks of 2023. This number underscores the need for more advanced threat detection methods. Leveraging predictive analytics can forecast potential security breaches by learning from historical data and identifying patterns and trends typically preceding a cyberattack. This proactive approach enables organizations to anticipate and neutralize threats before they cause harm.

4. Implement automated risk assessments

Automated tools provide continuous surveillance of vendor networks. They help companies detect vulnerabilities or breaches before they can escalate into serious threats. With 52% of companies reporting that their IT teams are bogged down by excessive manual data collection, automation offers a crucial solution by monitoring vendor networks in real-time. These tools scan for potential security weaknesses and flag suspicious activities and deviations from normal behavior.
 
Automated systems also enable companies to assign dynamic risk scores to vendors based on their security posture and organizational interactions. When these systems detect high-risk activities, they automatically trigger alerts, allowing IT teams to respond swiftly and mitigate potential damage. This proactive, automated approach enhances security and frees IT resources to focus on more strategic tasks.

5. Collaborate and train stakeholders

Working closely with vendors to integrate automated cybersecurity measures creates a seamless and secure supply chain. Collaboration ensures both parties are aligned on security protocols and automated tools are embedded into daily operations. However, internal teams must be properly trained to use and optimize them.
 
Training equips staff with the knowledge to maximize the benefits of automation and ensures they can respond swiftly to threats and manage systems efficiently. Fostering strong vendor partnerships and investing in thorough training can bolster their cybersecurity posture and reduce the risks associated with third-party interactions.

6. Establish automated response protocols

Automating responses to detected threats enhances an organization’s cybersecurity strategy, particularly when isolating compromised vendors and swiftly notifying relevant stakeholders. Leveraging automation can quarantine at-risk vendors to prevent potential breaches from spreading further into the supply chain.
 
This immediate action is critical, as studies show companies can save up to $2.22 million by using security automation in prevention. Beyond isolation, automation facilitates faster remediation and recovery processes by executing predefined response protocols. Organizations can react quickly and precisely with automated systems to maintain business continuity and protect critical assets.

Strengthening supply chain security with proactive cybersecurity automation

Managers must prioritize implementing or upgrading their cybersecurity automation systems to safeguard against third-party risks in their supply chains. Proactive and automated cybersecurity measures ensure a secure and resilient supply chain in today’s increasingly complex digital landscape.