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Understanding Supply Chain Software Risk Management
Every industry faces unpredictability on any given day. Supply chain risk analysis is designed to combat small hiccups leveling up to more dangerous threats, like cybersecurity. A May 2021 Executive Order from U.S. President Biden describes these attacks as “persistent and increasingly sophisticated malicious cyber campaigns that threaten the public sector, the private sector, and ultimately the American people’s security and privacy.” Digital assaults are a global worry, as any platform might be next.
What Is Supply Chain Software Risk Management?
Risk management focuses on understanding all threats to a business. With technology front and center, secure software infrastructure is critical now more than ever. Modern companies suffer without access to appropriate tools for daily operations. Take this example: cybersecurity supply chains require hardware and software, cloud or local storage and distribution mechanisms. All these moving parts necessitate supply chain software risk management.
What Are Risks to Supply Chain Software?
While the first cybersecurity incident happened around four decades ago, supplier attacks were forecasted to quadruple by 2021. Supply chain hacks are scary, with threats resulting in negative effects like system downtime, monetary loss and reputational damage. Thousands of new vulnerabilities are released every year. There are different types of software risks to consider:
- Custom code software applications – Also referred to as bespoke software, it’s explained as “the process of designing, creating, deploying and maintaining software for a specific set of users, functions or organizations.”
- Open-source software – This code is publicly accessible so that anyone can review or change it.
- Off-the-shelf software from third parties – Used daily, examples include popular email providers (Gmail, Yahoo), photo editors (Adobe) and operating systems (Mac or Windows).
- Developer software tools for building, testing, and deployment – Information varies by industry.
Nearly all of today’s applications are built on open-source code, fueling the Internet’s rapid-fire updates. The most common risks to people and businesses involve:
- Malicious code packages – These attacks are classified as “unwanted files or programs that can cause harm to a computer or compromise data stored on a computer,” including viruses, worms, and Trojan horses.
- Remote code execution – This type of assault happens when software is taken over in multiple steps. More specifically, “RCE attacks are all achieved by exploiting vulnerabilities in the configuration of remote computers/servers in order to run arbitrary code on the target system.”
- Extraction of sensitive data – Occurs from the theft, deletion, or movement of information by an authorized user.
Risk can be blamed on different internal and external issues. Internal supply chain risks happen from changes in management, employee turnover, law non-compliance, and lack of planning. In cases of non-compliance, companies are presented with rising costs of monitoring and meeting statutory tax reporting and accounting rules.
Regarding external risks, the world is in distress due to what J.P. Morgan’s recent research article calls a “perfect storm” of factors not limited to consumer demand shifts, increased online purchases, labor constraints, COVID-19, sky-rocketing international shipping costs, inflation, high fuel costs, shifts in geographical supply and demand, calls for environmental sustainability and more.
What Are Supply Chain Software Risk Management Strategies?
From a general perspective, supply chain risk management strategies include all processes that companies take to secure supply chain software. Teams must work together to address the following steps:
- Identify – Pinpoint areas of focus and build an action plan around priority risks.
- Assess – Review systems through a full supply chain risk analysis. Transparency is vital, so do your research. This report found that over half (55.6%) of companies apply technology to study and report on supply chain disruptions. Implement automation for better data and decision-making.
- Mitigate – Anticipate problems and work with suppliers to alleviate issues. Most importantly, regularly review and revisit your supply chain risk management solution.
The ability to change on short notice is everything, and companies face great risks when failing to implement technology. Updated software fosters better security and reduced maintenance costs, plus new modules, products, and integration technologies to help companies achieve company- or industry-specific goals, solve problems and adapt to the current ways of working.
Securing open-source components within your supply chain software is one of the most important considerations to remember. Grasping the entire software supply chain results in overall risk reduction, providing the opportunity to apply appropriate processes and tools evenly. Further protect yourself and your business from cybersecurity threats by:
- Keeping antivirus software installed and active
- Using caution when opening unfamiliar links and attachments
- Avoiding using public Wi-Fi
- Blocking pop–up advertisements
- Regularly monitoring accounts for strange activity
- Setting up a strong authentication protocol
Security should always be prioritized. Documentation is also important to mitigating software risk, along with other specific practices:
- Know your applications end to end
- Assemble a software bill of materials
- Incorporate static application security testing for first-party code
- Keep your software up-to-date on the latest version
Final Thoughts on Managing Supply Chain Software Risk
Considering the risks undermining supply chains across all industries, businesses need to create improved collaboration, optimal sourcing, and quicker ways to respond to shifts in supply and demand. Integrated Supplier Management is an integral capability that strengthens supply chains to withstand challenges and disruptions, delivering the tools to improve real-time communication. It’s equally important to ensure your business is operating within a Connected Supply Chain. Instead of relying on spreadsheets, manufacturers gain the means to automate and streamline supplier lifecycle processes through a supplier portal, with access to a variety of QAD tools and training.
To learn more about how QAD can set your business up for success, visit our website.