In 2021, supply chain attacks like the SolarWinds, Kronos and Kaseya hacks have made third-party risk a prime topic of discussion. Many companies are reevaluating their vendor and supplier relationships and their impacts on corporate security.

However, supply chain risks don’t stop with third-party risk. Cyber threat actors can exploit security gaps and trust relationships at any point in the supply chain, making fourth, fifth, and Nth party risk part of a mature enterprise risk management strategy.

Managing Nth Party Risks

An enterprise’s third-party risk originates from organizations with which it has a direct relationship. This makes third-party risk management more manageable because third-party risks and required security controls can be addressed via contracts.

Companies may lack this same close, contractual relationship with their fourth, fifth, and Nth part suppliers. They often only have access via their direct suppliers, making it difficult or impossible to completely mitigate these supply chain risks. However, by taking some key steps, companies can dramatically decrease their exposure to Nth party risk.

Perform Security Vetting for Critical Suppliers

Not all of an organization’s vendors and suppliers are created equal. Some vendors may have greater access to an organization’s environment, create critical product components, or play a key role in the corporate supply chain.

An organization may need to perform security vetting to ensure that these critical suppliers are maintaining an acceptable level of cybersecurity. This can be accomplished via a combination of contractual obligations, SOC 2 audits, and third-party security assessments. The question usually asked is—is that enough?

Implement a Zero Trust Security Model

Most organizations have a large, diverse, and mostly opaque supply chain. While an enterprise may be able to map out its third-party relationships with direct vendors and suppliers, working down the supply chain to fourth, fifth, and Nth party suppliers is much more difficult. Without this visibility, it can be difficult to ensure that third-party vendors are enforcing security requirements down their supply chains.

Managing Nth party risk requires minimizing the access that third parties have to an organization’s environment and the potential impacts if they are compromised. This can be accomplished via a zero-trust security strategy, where access and permissions are limited to the minimum necessary for a third-party vendor or supplier to fulfill their role within the organization.

Work With Your Vendors and Suppliers

Companies often lack direct access to all of the organizations in their supply chains. Instead, they may be indirectly dependent on other organizations via relationships with their vendors and suppliers.

However, while an organization may lack direct access to these fourth parties, they do have access to their direct vendors and suppliers. By working with these third parties to improve their security posture and third-party risk management strategies, an organization can help strong security to filter down through their supply chain, decreasing their Nth party risk.

How MorganFranklin Can Help

The focus on supply chain security is relatively new and addressing third-party risk and beyond can be overwhelming. Organizations may lack a complete inventory of their current vendors and suppliers, let alone an understanding of their vendors’ security postures and potential fourth, fifth, and Nth party risk relationships.

MorganFranklin has experience in supply chain risk management and can help with the development and implementation of an Nth party risk management strategy. This includes mapping out an organization’s existing relationships, identifying and prioritizing critical suppliers, and creating and executing a strategy to improve both an organization’s internal cybersecurity (via a zero trust security strategy) and its management of supply chain security risks.

MorganFranklin analysts help map and prioritize your third-party and fourth-party risk relationships and develop a strategy for managing risks and improving the security of your organization’s supply chain.

Talk to one of our cybersecurity experts