What is Digital Supply Chain Risk ?

With the rise of digitalization, the supply chain has become more complex and interconnected than ever before. This increased complexity has led to new risks that must be managed in order to protect the supply chain from disruptions. One of these risks is digital supply chain risk.

Digital supply chain risk is the risk of a disruption to the supply chain due to a cyber attack. This type of attack can target any part of the digital supply chain, from the sensors and devices that collect data, to the systems that store and process this data, to the applications that use this data to make decisions.

In order to mitigate digital supply chain risk, organizations need to have a comprehensive TPRM risk management framework in place. Additionally, organizations should have processes and procedures in place to quickly identify and respond to disruptions should they occur.

What is a supply chain?

A supply chain is a network of organizations and systems that work together to create and deliver products or services to customers. The supply chain starts with the suppliers who provide the raw materials needed to produce the products or services, and it ends with the customers who receive them.

The supply chain also includes all of the organizations and systems that are involved in getting those raw materials from the suppliers to the producers, and then getting the finished products or services from producers to customers. This includes transportation companies, warehouses, distributors, retailers, and any other organization or system that is involved in making sure that products and services get to where they’re going.

Do the terms supplier and vendor mean the same?

The word “supplier” is typically used in the business world, while “vendor” is typically used in the consumer world. But both words generally refer to someone who provides a product or service.

However, the terms supplier and vendor can mean the same, but they don’t have to. A supplier is someone who sells you goods or services, while a vendor is someone who buys or leases goods from a supplier with the intention of selling them on themselves.

All vendors are third parties, but not all third parties are vendors.

What is a third-party ?

Third-parties are external entities that may include, for example, service providers, vendors, supply-side partners, demand-side partners, alliances, consortiums, and investors, and may include both contractual and non-contractual parties.

Common third-party service providers include web-hosting platforms, marketing agencies, software services (including analytics software), contractors, and consultants.

Source: Cybersecurity Framework Manufacturing Profile (nist.gov)

What is Third-Party Risk Management?

Third-party risk management (TPRM) is a form of risk management that focuses on identifying and reducing risks relating to the use of third parties.

Source: What is Third-Party Risk Management? | Blog | OneTrust

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What is Supply Chain Risk Management?

Supply Chain Risk Management is a systematic process for managing supply chain risk by identifying susceptibilities, vulnerabilities, and threats throughout the supply chain and developing mitigation strategies to combat those threats whether presented by the supplier, the supplies product and its subcomponents, or the supply chain.

Source: https://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.800-53r5.pdf

Supply chain risk management is the proactive identification, assessment, and mitigation of risks that could affect a company’s supply chain. Risks can include things like supplier bankruptcy, natural disasters, political instability, and labor disputes.

Mitigating supply chain risks can be difficult, but it’s important for companies to have a plan in place in case something goes wrong. This might include having backup suppliers lined up, having stockpiles of key materials, or diversifying your supplier base.

The Importance of Mitigating Digital Supply Chain Risk

Digital supply chain risk is a relatively new type of risk that has arisen due to the increasing digitization of the supply chain. As such, many organizations are not yet aware of this risk or how to mitigate it.

A digital supply chain disruption can have a significant impact on an organization. For example, a cyber attack that targets sensors or devices in the digital supply chain could result in inaccurate data being collected or processed. This could lead to incorrect decisions being made about inventory levels or production schedules, which could disrupt operations and result in lost revenue. Additionally, a cyber attack that targets systems used to store or process data could result in this data being corrupted or stolen. This could lead to critical business information being leaked or customers’ personal information being exposed, which could damage an organization’s reputation and result in financial losses.