Supply Chain Risk Management (SCRM) involves identifying, assessing, and mitigating potential threats and vulnerabilities that could disrupt the flow of goods and services, potentially leading to significant financial losses, reputational damage and operational disruption.
By proactively addressing supply chain risks, organisations can realise several important benefits. These include protecting their sensitive data, maintaining business continuity and enhancing their resilience to cyber-attacks.
The challenges of global supply chains
Organisations face an increasing myriad of challenges when managing their supply chains. The complexity and interconnectedness of global supply chains with complex tiered relationships between multiple suppliers makes tracking and managing risk a problem that organisations are finding increasingly difficult to resolve.
The problem space is dominated by limited visibility and transparency of supply chains, along with dynamic and evolving risks from geopolitical factors to cyber security threats. This makes it difficult for organisations to assess the risks their supplier ecosystems represent and then prioritise them according to their risk appetite and tolerances.
Once an organisation has determined what its supply chain risk profile looks like, the key to managing this risk effectively is having the ability to develop and deliver risk mitigation strategies. This is often done on a cost benefit analysis basis, but it should also consider the impact that a potential risk could have on operations – whilst being flexible to adapt to changing circumstances or unexpected disruptions.
This flexible approach should also take into account an evolving regulatory environment that provides transparency, is sustainable and is ESG (Environmental, Social and Governance) compliant.
Successful Supply Chain Risk Management transformation programmes ultimately manage an organisation’s aversion to change and provide a greater awareness of supply chain risk. A transformation programme seeks to build a resilient supply chain that can sustain through shocks and risk events in order to support an organisation’s operations.
Evaluating supply chain risk
With today’s challenging landscape in mind, organisations must take the time to understand their SCRM maturity and the context surrounding the need to enhance their SCRM capabilities. This is where Supply Chain and Risk (SCAR) assessments have a key role to play.
By going through the SCAR assessment process, organisations can gain a clearer understanding of the ‘as is’ state of their SCRM maturity, then planning and executing transformation strategies that take their SCRM capability into business-as-usual operations. This journey will be unique to the individual organisation, depending on- a range of factors such as their degree of maturity and aspirations for their SCRM capabilities.
The process is typically delivered in four phases:
1. Identify
Use threat intelligence research to identify threats to the supply chain within the context of the target organisations, including identifying the threat actors, their motivations, how they operate, and the perceived threat level to the client.
This requires an understanding of the organisation’s supply chain – its critical suppliers, the technologies used, their geographical/cyber footprint, and any previous compromises. There’s also an organisational modelling component. What is the organisation’s structure? How are its products and services used and where could any potential vulnerabilities lie?
When all the information has been collated, it should be validated with the organisation to confirm what the threat landscape looks like from its perspective.
2. Understand
This phase involves understanding what the client’s supply chain looks like and the level of it’s ‘as-is’ SCRM capability. This starts by validating the organisation’s critical suppliers, followed by an analysis of each critical supplier to identify any known vulnerabilities and determine their security posture. This helps to evaluate risk in terms of impact, probability and proximity to the organisation.
Next comes the ‘as-is’ maturity assessment. This typically consists of a series of interviews, questionnaires and focus groups to evaluate the organisations SCRM maturity across six perspectives: People, Processes, Technology, Data, GRC (Governance, Risk & Compliance) and Security Operations.
This allows the organisation to identify any gaps in its control environment and design an improvement plan to close those gaps by enhancing its SCRM capability. Key stakeholders must feed into this stage by establishing a ‘desired state’ for SCRM across the six perspectives mentioned above, providing a roadmap for progress.
3. Transform
This phase involves developing and implementing a strategy to take SCRM capability across all six perspectives from the ‘as-is’ to the ‘desired’ state.
- People: Develop a resourcing model, roles and responsibilities and SCRM training capability
- Process: Design, build and integrate an SCRM lifecycle process flow (based on supplier selecting, onboarding, monitoring and off-boarding) and standard operating procedures for the process
- Technology: Develop the requirements for SCRM tooling to be either build on premises or acquired and configured through a third-party vendor
- Data: Map the sources of SCRM data across the organisation, creating a single source of truth' database linking all existing data. Establish a cadence of regular data quality assurance checkpoints
- Governance, Risk & Compliance) GRC): Develop and integrate SCRM policies and standards across the organisation, along with a governance function to support procurement and SCRM operationsSecurity operations: Develop security standards and inculcate them into contracts. Establish security monitoring for critical suppliers and a regular cadence of table top exercises and rehearsals to practice playbook responses.
4. Monitor and review
Once the ‘Transform’ phase has been completed, this final phase involves periodically reviewing the six SCRM perspectives, using a gap analysis to reassess the current as-is state and the progress towards the desired state. Where there are still SCRM capability gaps, the improvement plan from Phase 2 is updated with new actions, tasks or deliverables to close those gaps.
The outputs from the gap analysis – along with any feedback from key stakeholders – can then be incorporated into an updated transformation plan, which provides a roadmap of how to close any remaining capability gaps.
Ultimately, going through this process can deliver many benefits. Most notably: increased awareness and ownership of supply chain risk among staff; a repeatable and efficient framework for delivering the SCRM lifecycle; access to high-quality and assured data relating to an organisation’s supply chain and wider ecosystem; and an enhanced ability to manage the inherent risks that supply chains represent.
Get in touch to find out how we can help your organisation improve the management and security of its supply chain.
Cyber Security Services from BAE Systems Digital Intelligence
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