Cyberattacks - The Biggest Risk To Supply Chains Today?

Cyberattacks are becoming increasingly common in today’s world, with popular software tool “tj-actions/changed files” becoming the latest target. The attack exposed sensitive information from over 23,000 business repositories and also highlighted the importance of identifying suppliers lacking the financial stability to withstand such disruptions. 

Could it be that whilst the former, weak data security, is a significant concern, it is actually the latter, financial vulnerability, that poses the biggest risk to supply chains today? 

Understanding how the data breach occurred, its impact, and how RiskTrace can help detect financially unstable suppliers is crucial to risk mitigation and the protection of supply chains in the future.

The Attack

Hackers compromised the popular software tool, which helps developers track changes in their code, when they stole a password belonging to a system account. Once inside, they planted harmful code that secretly collected private passwords, access keys and other sensitive information from companies using the tool.

The attack affected nearly all versions of the software, meaning thousands of businesses were exposed simultaneously before anyone detected the problem.

"This incident shows how vulnerable business software has become and why companies need constant monitoring to catch these attacks quickly," explained Varun Sharma from StepSecurity, the company that discovered the breach. Another security expert, Jonathan Braley, added: "When someone gains access to a trusted software tool, the damage can spread extremely rapidly."

The Damage

Quite apart from the monumental data breach, the financial impact of this attack has been wide-reaching and particularly devastating for smaller suppliers.

Unlike large companies that can absorb the costs of security fixes, these businesses lack the financial reserves to handle unexpected security expenses while simultaneously dealing with business disruptions.

"We're seeing several smaller suppliers completely overwhelmed by the costs of responding to this incident," noted financial analyst Maria Chen. "Some are having to choose between paying for critical security fixes or meeting payroll, which is an impossible position."

The costs are substantial: replacing compromised systems, hiring emergency security consultants, lost productivity and potential penalties for data breaches. For suppliers already operating on thin margins, these unexpected costs can be catastrophic.

The Solution

We may not be able to stop cyberattacks, but it is questionable whether this actually is the biggest risk to supply chains today. Arguably, it is financial insecurity which poses the greatest threat of all. Identifying financially vulnerable suppliers before crisis hits is absolutely vital and can be the difference between continuation or collapse of the chain.

A thorough financial risk assessment is the best way to detect any weaknesses in supplier financial health, but these assessments themselves carry a risk of erroneous data entry when completed manually. As such, the automated FVRA tool by RiskTrace, which produces accurate, reliable results directly from sources such as Companies House, is critical when assessing suppliers. This flags financially stressed suppliers for more detailed analysis by specialist firms like Husain.

"Rather than waiting for a supplier to fail after a cybersecurity incident, forward-thinking companies are using FVRAs to identify financially vulnerable suppliers before an attack occurs," explains financial risk consultant James Wilson. "This allows businesses to either help strengthen critical suppliers or develop contingency plans for potential failures."

This preventative approach represents a significant shift in supply chain risk management, recognising that a supplier's financial health is often the determining factor in their ability to withstand an attack. By assessing and prioritising suppliers’ financial stability, businesses are addressing the root cause of potential supply chain failure should a cybersecurity breach happen. This allows them to get ahead of the hackers and ensure their supply chains have substantial and robust financial underpinning to survive an attack, should one occur.