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Understanding Supply Chain Risk Management (TPRM)


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Every company uses third party support organizations to operate their business, from office cleaning to sophisticated financial and operations management platforms. In our global and connected world these risks have increased in both frequency and severity. According to the Verizon 2025 Data Breach Investigations Report (DBIR), “the percentages of breaches where a third party was involved doubled, going from 15% to 30%.” Below is a short list of major incidents, which originated within the supply chain of the target organization:

 

  • Target (2013)

  • NotPetya (2017)

  • SolarWinds (2020)

  • Kaseya VSA (2021)

  • Codecov (2021)

  • MOVEit (2023)

  • XZ Utils (2024)

  • Change Healthcare (2024)

  • Polyfill (2024)

  • Lottie Player (2024)

  • CrowdStrike (2024 – not malicious)

 

Notice that the risk isn’t only from malicious actors, it can also arise from normal practices, performed poorly, which was true regarding the CrowdStrike outage.

 

What are the third party risks you need to be aware of?

 

Supply Chain / Vendor Compromise Attacks: Hackers breach a vendor or software provider you rely on, then use that access to infiltrate your network.

 

Credential Theft and Unauthorized Access via Vendors: Attackers steal login credentials from a third party and use them to pivot into your environment.

 

Data Exposure from Misconfigured or Insecure Third-Party Services: Vendors expose your sensitive data through poor security practices, such as unencrypted storage, open cloud buckets, or improper data handling.

 

Ransomware Delivered Through the Supply Chain: Attackers compromise a vendor to push ransomware into downstream customers.

 

Fourth Party/Nth-Party Risks: Your vendor gets compromised through their vendors, subcontractors or deeper in the supply chain.

 

Regulatory and Compliance Violations: A third party fails to meet standards e.g., GDPR, CCPA, HIPPA, NYDFS, CMMC, or DORA requirements, exposing you to fines, audits, or liability.

 

Operational Disruption from Vendor Incidents: A cyber event at a critical vendor halts your business processes, even if your data isn't directly stolen.

 

Building a Budget-Friendly TPRM Program

 

You do not need to hire consultants or buy premium software right away. Start small, prioritize, and use free or low-cost resources. Here's a straightforward process based on best practices.

 

Inventory Your Third Parties First, list all your vendors and partners. Who has access to your data or systems? Include everyone from email providers to payroll services.

 

Budget Tip: Use a simple spreadsheet or free tools like Google Sheets. Categorize vendors by risk level; high means they handle sensitive data, medium is limited access, or low where there is no data sharing. Focus your efforts on the high-risk ones first to save time and money.

Why It Works for SMBs: This step costs nothing but a few hours and helps you spot overlooked risks, like that old software plugin you forgot about.

 

Assess Risks Up Front Before signing a contract or renewing one, check the vendor's security. Ask for proof of their practices.

 

Key Checks: Send a short questionnaire about their cybersecurity including questions asking if they use multi-factor authentication, how do they handle patches and updates, and other key areas. For more advanced needs you can request certifications like SOC 2 or ISO 27001

Cost Savings: Use free templates from sources like the National Institute of Standards and Technology (NIST) or cybersecurity nonprofits. Free tools from security rating services, such as the basic versions of Bitsight or SecurityScorecard, can give you an external view of a vendor's online security posture without paying.

SMB Angle: Prioritize questions that matter most to your business, like data encryption and incident response plans. This avoids overwhelming the capacity of your team.

 

Build Strong Contracts Don't just sign what's given, add clauses to protect yourself.

 

Essentials: Include rights to audit the vendor, quick notification if there's a breach (within 24-72 hours), and clear rules on data handling. Make sure they agree to delete your data if the partnership ends. For high-risk vendors, negotiate indemnification where they cover costs if their fault causes a problem.

Why It Matters: Good contracts shift some financial risk back to the vendor, saving you money in the long run. You cannot shift your risk responsibility, but you can mitigate potential costs due to a breach arising from a third party.

 

Monitor Continuously TPRM isn't a one-and-done; threats change, so keep an eye out. The days of checking a box, once a year, is passing.

 

Strategies: Set up alerts for vendor news, such as Google Alerts, for free. Reassess high-risk partners annually or after big changes, like if they add AI features, which could introduce new data leakage risks.

Stretch Your Dollar: Leverage cost-effective automation, like open-source tools or affordable platforms that scan for vulnerabilities. Additionally partnering with a Managed Security Service Provider (MSSP) for shared expertise and solutions is often cheaper than building everything in-house.

SMB Focus: Use tabletop exercises to simulate events and incidents with your team to practice responses. If the real thing occurs, you will be ready and potentially save a lot of time and money, and preserve brand value.

 

Handle Incidents and Exit Smoothly If something goes wrong, have a plan.

 

Incident Response Plan: Require vendors to share their incident response plans and test them together if possible.

Offboarding: When ending a relationship, confirm they delete your data securely.

Budget Friendly: You can document everything in your existing incident response plan without buying any new software.

 

Tools and Trends to Watch Moving Forward In 2025, AI is both a tool and a threat, vendors using AI might expose your data if not handled right, ask about their AI governance. Make sure you have thought through how you are going to manage AI as well. For budget-savvy SMBs, start with free resources:

 

NIST Cybersecurity Framework (CSF): A free guide for assessments.

Shared Assessments or SIG Lite: Standardized questionnaires at low or no cost.

Cloud alliances: If you're on AWS or Microsoft Azure, use their built-in vendor checks.

 

Emerging trends include using predictive analytics to foresee risks, and blockchain for secure tracking, however, stick to basics until your program matures. Advocate for a dedicated TPRM budget as a part of your cybersecurity program. Show leadership the ROI expressed in the cost savings by preventing one breach or in minimizing the financial hit because you are demonstrating due diligence and due care as an organization.

 

Take control today, protecting your SMB from third-party risks doesn't have to drain your budget. By starting with an inventory, assessing smartly, and monitoring efficiently, you will build resilience against cyber threats. Remember, the goal is progress, not perfection, these steps can be implemented one at a time. If you're unsure where to begin, reach out to industry groups or free webinars for more guidance. Your business's security and bottom line will thank you.

 

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