Supply Chain Risk
The potential for security breaches, service disruptions, or compliance failures arising from an organization's dependence on third-party suppliers, vendors, service providers, and their sub-contractors throughout the technology and business supply chain.
Supply chain risk has become one of the most prominent concerns in information security, driven by high-profile incidents such as the SolarWinds and Kaseya attacks that demonstrated how compromising a single supplier can cascade to thousands of downstream organizations. Supply chain risk encompasses both cybersecurity threats (malicious code in software dependencies, compromised vendor credentials, insecure APIs) and operational risks (vendor business failure, service outages, regulatory non-compliance by a processor). The interconnected nature of modern technology ecosystems means that an organization's security posture is directly influenced by the security practices of every entity in its supply chain.
Supply chain risk management is increasingly emphasized across all compliance frameworks. ISO 27001 Annex A controls A.5.19 through A.5.23 specifically address information security in supplier relationships, including supplier service delivery management and addressing security within supplier agreements. SOC 2 evaluates how organizations manage vendor risk as part of their overall risk management program. GDPR Articles 28 and 29 impose strict requirements on data controllers regarding their processors and sub-processors. NIS2 explicitly identifies supply chain security as a core cybersecurity risk management measure, requiring essential entities to address security in their relationships with direct suppliers and service providers. In technology due diligence, supply chain risk assessment reveals the organization's exposure to third-party dependencies.
Managing supply chain risk requires a structured approach that spans the entire vendor lifecycle. This begins with vendor due diligence before engagement, including security assessments, compliance certifications review, and contractual security requirements. During the relationship, organizations should conduct ongoing monitoring through periodic reassessments, compliance evidence collection, and performance tracking. Vendor risk should be documented in the risk register and subject to the same treatment process as internal risks. Organizations should also maintain contingency plans for critical vendor failures and ensure that contract terms include security incident notification requirements, audit rights, and exit provisions.
Related frameworks
Related terms
Data Processor
Under GDPR, an entity that processes personal data on behalf of a data controller. The processor acts on the controller's instructions and must not process data for its own purposes. A Data Processing Agreement (DPA) governs the relationship between controller and processor.
Risk Assessment
A structured process for identifying, analyzing, and evaluating information security risks. Risk assessments determine the likelihood and potential impact of threats to an organization's information assets, guiding decisions about which controls to implement.
Risk Register
A structured document or database that records all identified risks, their assessment details (likelihood, impact, rating), assigned risk owners, selected treatment options, current control status, and residual risk levels. It serves as the central repository for an organization's risk management activities.
Third-Party Assurance
The independent validation of a service provider's security controls, processes, and compliance posture through recognized frameworks such as SOC 2 reports, ISO 27001 certification, or other standardized assessments that customers can rely upon to evaluate the provider's trustworthiness.
Vendor Risk Management
A systematic program for evaluating, monitoring, and mitigating the security and compliance risks introduced by third-party vendors, suppliers, and service providers throughout the entire vendor relationship lifecycle.
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