Cyberattacks are everywhere, and the procurement industry is not an exception.
In ENISA’s (European Union Agency for Cybersecurity) report is revealed that 39% (WEF, 2022) and 62% (Anchore, 2022) of surveyed organisations were affected by a third-party cyber attack. On top of that, the report indicates that cyber threats in the supply chain industry account for 17% of all cyber attacks in 2021 (Mandiant, 2022). ENISA’s own studies also show that in 66% of the supply chain attacks analysed, suppliers did not know, or were not transparent about, how they were compromised. In 62% of these cases, malware was the attack technique employed.
The figures are concerning, yet not entirely unexpected. Nowadays, more and more businesses are relying on digital supply chains and e-procurement systems. In order to function, these virtual solutions necessitate the exchange of data, the kind that cyber attackers often target, including contact information of your company and your customers/suppliers, contract information, and credit card or other financial information.
In 2023, building resilience to cyber-attacks should be among your top priorities, and in this article, we will walk you through the most common types of cyber threats and how to implement cyber security in your procurement processes.
Here are the topics we will cover:
- What Are Cyberthreats And Where Do They Come From?
- Most Common Venues For Cyber Threats In Procurement
- 7 Key Steps to Ensure Cyber Security In Procurement
What Are Cyberthreats And Where Do They Come From?
Do you remember the days when business was conducted with pen and paper, and the biggest theft threat was a physical break-in?
Those times are almost history, and understanding the nature and complexity of cyber threats has now become a universal must-do to ensure the right level of cyber security in procurement.
So, what can be defined as a cyber threat?
In essence, a cyber threat is any potential malicious act that seeks to harm data, steal data, or disrupt digital life in general. From personal data breaches to significant disruptions of business operations, these threats can be catastrophic in the digital age.
Interestingly, cyber threats can originate both externally and internally. External cyber threats are often the ones we hear about most – hackers, organized crime groups, the list goes on and on. These attackers tend to exploit vulnerabilities in software, send malicious emails, or launch extensive attacks on infrastructure. On the other hand, internal threats might come from employees, unintended data leakage, or even just careless use of a company’s digital resources. It’s worth noting that while external threats often get more attention, internal threats can be just as damaging.
Diving deeper into the types of threats, we find:
- Phishing Attacks: Often masquerading as trustworthy entities, attackers trick individuals into giving away sensitive information. An unsuspecting procurement manager, for instance, might be coaxed into sharing payment details thinking they’re communicating with a trusted supplier.
- Malware and Ransomware: Malicious software designed to gain unauthorized access or damage a system. Imagine a manufacturer inadvertently downloading ransomware from a supplier’s infected invoice. This underscores why improving cyber security in procurement is important.
- Man-in-the-Middle Attacks: These occur when attackers secretly relay or alter the communication between two parties. Imagine a retailer placing an order with a trusted supplier. An attacker covertly intercepts this communication, altering the bank account details for payment. The retailer, thinking they’re paying their supplier, inadvertently sends funds to the attacker’s account.
- Denial of Service Attacks: Targeting systems, servers, or networks, these attacks overwhelm the target with traffic, causing a shutdown.
Identifying the various origins and forms of cyber threats is the first step in understanding the dangers you should be prepared for. Next, we will explore what are the most common venues for cyber threats in procurement.
Most Common Venues For Cyber Threats In Procurement
While digital transformation brings efficiency, it also exposes us to a plethora of cyber threats.
Here are the most common venues susceptible to cyber attacks in procurement:
- Cloud Security: As more organizations migrate towards cloud computing, they are simultaneously challenged with potential security breaches. Picture a major manufacturing company’s procurement department sharing specifications with suppliers via a cloud platform. One misconfiguration and sensitive blueprints could land in the wrong hands.
- Social Media: Imagine a supplier communicating over a popular social platform, only to fall prey to a hidden cyberattack launched through the same platform. Data breaches often exploit such social vulnerabilities, proving that even the most trusted online spaces aren’t always safe.
- Phishing Schemes: Digital procurements phishing attacks have become sophisticated. Consider a procurement manager receiving a perfectly timed, genuine-looking email requesting payment details for a shipment, only to discover it was a fake email trying to steal money.
- PDFs: In our age, even innocent-looking PDF invoices can be a trojan horse. When a procurement manager receives a PDF from a supposedly trusted supplier, they might unknowingly trigger a malware simply by opening it, bypassing the telltale signs often seen in suspicious emails.
- Databases: Picture a centralized procurement database, loaded with supplier rates, contracts, and transaction histories. Just one breach can fuel multiple social engineering attacks or expose a company’s entire supply chain strategy.
- Accidental Sharing: Human errors can lead to serious procurement risks. For example, imagine an employee accidentally emailing confidential bidding details to an external party instead of an internal team member.
- SMS: These so-called Smishing attacks might target a procurement manager, luring them to click on a malicious link through a seemingly innocent text message about a shipment or invoice.
- IoT Devices: As supply chain IoT (Internet of Things) integrations amplify, so do the associated cyber threats. A sensor on a shipping container transmitting location data could be hacked, diverting goods to an unauthorized location and causing significant supply chain disruptions.
- Poor Housekeeping: Basics matter. A top-tier supply chain firm might have state-of-the-art cyber defences, but if an employee’s login is a predictable ‘1234’, they’re inviting trouble. Proper cyber hygiene is a foundational pillar of effective cyber security in procurement.
- Ransomware: Picture a global retailer’s entire inventory system held hostage, with operations paralyzed unless a ransom is paid. Such are the stakes with ransomware attacks, especially when entire supply chains are at risk.
All in all, while the advancements in technology in procurement have made transactions swifter and global collaborations more seamless, they have undeniably brought forth new avenues for cyber vulnerabilities. Thus, it’s important for you to not only be vigilant but also implement robust cyber security across your procurement processes.
In the next section, we will explore 7 best practices every procurement professional should always follow.
7 Key Steps to Ensure Cyber Security In Procurement
As we’ve already covered, nowadays, cyber threats in procurement can lurk behind every email, transaction, or virtual exchange.
So, how can you build resilience across your supply chain?
Here are 7 best practices you should follow:
- Risk assessment: The realm of cyber security in procurement is vast and ever-evolving, and at its heart is the risk assessment process. To significantly reduce the chance of a cyberattack, every company, regardless of size, must recognize the procurement risks they face. This involves an in-depth risk assessment. This process might include among others:
a. Vendor Software Analysis: Examine third-party software for security protocols and past breaches.
b. Employee Access Points: Monitor and secure employee data access across various devices and locations.
c. Email Phishing Drills: Conduct mock phishing tests to gauge employee vulnerability.
d. Cloud Storage Vulnerabilities: Assess the security measures of your cloud provider, ensuring robust encryption and backup protocols.
While this may seem daunting and time-consuming, remember that ignoring this step could cost significantly more in the long run.
- IT Collaboration: Collaboration is the bridge between procurement and cyber security. For instance, imagine a large healthcare organization deciding to adopt a new ERP (Enterprise resource planning) system for inventory management. The procurement team identifies a system that’s cost-effective and meets functional requirements. However, collaborating with the IT team they discover that this particular system has a history of security breaches, so they finally decide to opt for a more secure solution.
- Limit Access Permission: Access to your network should be a privilege, not a right. To manage and reduce procurement risks, it’s prudent to grant network access only to essential personnel. A smaller, well-versed procurement team can drastically diminish the odds of breaches stemming from human error.
- Data encryption: ERP systems in procurement constantly pass information between different departments using connectors like APIs. To make sure this information isn’t intercepted or read by anyone unauthorized, it can be encrypted. Imagine a procurement manager sending confidential pricing details to a supplier through an ERP system. Instead of sending this information as plain text that could be intercepted and understood by hackers, encryption turns it into a jumble of characters. On the supplier’s end, their system decrypts it, revealing the original information.
- Lack of Ownership or Stewardship of Data: A common pitfall many companies stumble into is a muddled supply chain cyber security management system. Juggling multiple roles and responsibilities without clear demarcation can heighten the probability of errors. Therefore, having a singular point of ownership or using data tools for a comprehensive overview can be a game-changer.
- Developing an incident response plan: Even the most fortified walls can be breached. If (or when) this happens, how you respond determines the impact. A well-structured incident response plan acts as your contingency, ensuring a swift and efficient reaction. Imagine a procurement department receiving fake invoices from a supposed supplier due to a system breach. Instead of panicking, they quickly activate their incident response plan. This plan – developed beforehand – guides them to immediately freeze any payments to the suspicious supplier, notify IT to trace and seal the breach and alert all other suppliers to validate recent communications. Thanks to their rapid and organized response, they are able to contain the situation, prevent financial losses, and restore system security in a timely manner.
- Keep up to date with current cyber threats: In the battle against supply chain threats, complacency is the enemy. As cyber threats continually evolve, staying updated with the latest software security standards ensures you’re better prepared to counter emerging challenges.
All in all, why is cyber security in procurement important?
In today’s digital era, a single wrong click could spell disaster. Understanding this reality is the foundation for implementing strong cyber security processes across your whole supply chain.
In this article, we walked you through the most common cyber threats in procurement (like phishing scams targeting your online buying processes) and we shared 7 best practices to build resilience against ever-evolving supply chain threats.
As a last note remember, your procurement process isn’t just about the sourcing and purchasing of goods, but it is also about safeguarding the integrity, authenticity, and confidentiality of every transaction.