Securing the Supply Chain: Managing Third-Party Cyber Risk in a Hyper-Connected World
15 December 2025
When Your Risk Becomes Their Risk
Modern business no longer operates in isolation. It runs on a vast, hyper-connected ecosystem of SaaS providers, cloud platforms, outsourced IT partners, contractors, and data processors. While this web creates enormous opportunity, it also generates substantial cyber exposure. The grim reality is that cyber adversaries now target the supply chain as their primary method of attack. Incidents, from SolarWinds to MOVEit, demonstrate that supply chain compromise has become a mainstream threat vector.
Statistics underline this danger: 62% of breaches originate from a third party, and 98% of organisations work with at least one breached vendor. Worse, 52% of businesses admit they do not have full visibility of all their suppliers.
Why Supply Chain Risk Is Exploding
The rapid rise in third-party risk is driven by three key factors:
- Rapid Digital Transformation: Organisations are adopting cloud and SaaS services faster than ever, often without formal security due diligence.
- Interconnectedness: Data, API integrations, and automated workflows mean suppliers frequently hold sensitive assets such as customer data, access credentials, and network trust relationships.
- Attackers Target the Weakest Point: Threat actors compromise smaller, less secure suppliers (such as Managed Service Providers or SaaS platforms) to efficiently reach larger targets. Supply chain attacks are efficient for attackers and devastating for organisations.
The Regulatory Mandate for Oversight
Supply chain security is no longer optional. Regulators now mandate it:
- ISO 27001:2022 introduced strengthened supplier controls, specifically addressing security in supplier relationships (A.5.19) and agreements (A.5.20).
- NIS2 Directive (EU) includes mandatory third-party assessment for essential and important entities.
- DORA (EU Financial Sector) requires a third-party risk strategy, a register of critical suppliers, and exit/contingency planning.
- GDPR regulates processor/controller relationships, contractual obligations, and requires evidence of suitable controls for data handling.
Regulators expect proactive, repeatable, and evidence-based supplier governance.
The Third-Party Risk Management (TPRM) Lifecycle
To meet these expectations, organisations must follow a structured, repeatable process:
IDENTIFY → ASSESS → MANAGE → MONITOR → REVIEW
| Stage | Key Actions |
| Identify | Maintain a supplier inventory, classify suppliers by risk (e.g., high/medium/low), and understand data flows, access, and dependencies. |
| Assess | Conduct due diligence questionnaires (aligned to CIS, NIST, ISO), sample evidence (policies, certifications), and review audit reports. |
| Manage | Implement contractual controls, enforce minimum security requirements, agree on remediations, and restrict access. |
| Monitor | Perform periodic reviews, track incident notifications, and manage supplier change management. |
| Review | Renew periodic supplier risk renewals, check certifications (ISO 27001, CE+), and execute formal offboarding & exit procedures. |
This lifecycle is powered by risk tiering, which ensures resources are focused where they matter most. High-risk suppliers (Tier 1, with access to data or systems) demand full due diligence and annual audits, while low-risk suppliers (Tier 3, non-critical) may only require a basic questionnaire.
Hidden Risks Most Organisations Miss
Even with a formal programme, specific hidden risks continue to undermine supply chain security:
- Shadow SaaS: Employees adopt tools without approval, creating unknown data exposure.
- Orphaned Access: Former suppliers retaining access to systems or data.
- API Risk: APIs now represent over 40% of all external attack surfaces, yet they remain frequently under-assessed.
- Concentration Risk: Over-relying on a single supplier increases operational and cyber risk.
Practical Measures for Resilience
To reduce third-party cyber exposure, organisations must integrate security into procurement and contracts:
- Implement Minimum Security Requirements: Mandate MFA everywhere, CIS/ISO/NIST-aligned controls, and strict patch SLAs.
- Strengthen Contractual Obligations: Include clear security responsibilities, incident reporting within specific timelines, the right to audit, and formal offboarding processes.
- Mandate Certification: Increasingly, critical vendors must achieve CE+ or ISO 27001.
KA2 Approach
We support customers throughout the entire Third-Party Risk Management lifecycle, ensuring governance is embedded from onboarding to offboarding.
Our Security Assurance Services include:
- Supplier Inventory & Classification: Building risk-based inventories
- Due Diligence Assessments: Conducting assessments aligned to major frameworks and regulations (CIS, NIST, ISO, DORA, GDPR)
- Evidence Review & Validation: Reviewing technical controls, certifications, and architecture diagrams
- Governance & Policy Development: Creating formal supplier risk policies and procedures
- Continuous Monitoring: Establishing periodic supplier assessments and risk-scoring dashboards
- Executive Reporting: Providing clear risk scoring for boards and leadership
Conclusion
If you rely on SaaS, MSPs, contractors, cloud platforms, or outsourced services, you need structured third-party cyber risk management. Our Security Assurance Services provide a comprehensive solution to map your supplier ecosystem, score risk, and build a practical roadmap to strengthen your security posture.
