Supply Chain Attack

DEFINITION of 'Supply Chain Attack'

A cyberattack that attempts to inflict damage to a company by exploiting vulnerabilities in its supply chain network. A Supply Chain Attack entails continuous network hacking or infiltration processes to gain access to a firm’s network. More than 60% of cyberattacks originate from the supply chain or from external parties exploiting security vulnerabilities within the supply chain, according to a 2016 survey by Accenture.

BREAKING DOWN 'Supply Chain Attack'

The adoption of various forms of emergent technology has brought about an enormous amount of data in various forms. Through resources like the internet, cell phones, and cloud computing, companies can now electronically obtain data and share it with their partners and third party vendors. Entities like individuals, businesses, and governments believe that that relevant information that can be mined from the data set can be used to better improve their operations and processes, and thus, improve their customer engagement. But the exchange of data conducted among various companies brings with it a certain level of risk which entails cyber theft. Sophisticated cyber criminals also realize the importance of the data held by companies and device strategies to gain access to the sensitive data. The supply chain network is a frequent targets for cyber crimes, as a weak link in the supply chain can grant the cyber criminals access to the larger organization in custody of the data sought after.

The drive to minimize operational costs through technological progress brought about the need for a supply network. A company’s supply network usually consists of third party entities like manufacturers, suppliers, handlers, shippers, and purchasers all involved in the process of making products available to the end consumers. Because the target company may have a security system that may be impenetrable for even the sophisticated cyber criminals, supply chain attacks are carried out on the third party businesses on the chain who are deemed to have the weakest internal measures and processes in place. Once one member’s security protocols are found to be weak, the member’s vulnerabilities become the target company’s risk.

There are several ways a supply chain can be attacked. Theft of a vendor’s credentials can lead to the infiltration of the companies affiliated with the vendor. For example, Target was the victim of a supply chain attack in 2013. Its security measures were breached when one of its third-party’s security credentials was compromised. The credentials typically included login, passwords, and network access to Target’s computer. The vendor’s questionable security practices allowed hackers to gain entry into Target’s system resulting in the theft of 70 million customers’ personally identifiable information. The aftermath of the breach led to the CEO’s resignation and enormous costs for the company which topped $200 million.

Another way a supply chain can be attacked is through malicious software, popularly known as malware. By embedding malware such as worms, viruses, spyware, Trojan horses, along with counterfeit components that modify the source codes of a manufacturer’s software, cyber attackers can gain entry into the target company’s files and steal its proprietary information.

Supply chain attacks expose a conundrum in a company’s supply network which discloses that an organization’s cyber security controls are only as strong as that of the weakest party on the chain.