Is Your Virtual Supply Chain Ready for the Cyber Pandemic?
A virtual supply chain is much more than just adding electronic links to a chain or network.
It’s a powerful way of representing a physical supply chain network online, such as through data visualisation. A virtual supply chain is like a digital twin of your network assets, warehouses, logistics, and inventory placements. Using advanced analytics and artificial intelligence, you can identify and manage value loss, hazards and risks.
The increased reliance on virtual supply chains
Virtual supply chains are among the four top 2022 trends globally in supply chain management, according to the business news site, Forbes. Virtual supply chains offer visibility, collaboration, cost savings and sustainability across the value chain, according to professional services consultancy KPMG in its Future of Supply Chain report.
So what are the downsides?
With the pandemic seeing Australian SMEs rely more on digital technology, disruptions such as cyber breaches are having a big impact. And those issues can put physical and virtual supply chains at risk.
Even the World Economic Forum earlier this year warned of a looming cyber pandemic in its Global Risks Report. To find out more about cyber attacks with COVID-like characteristics that could spread further and wider than a biological virus, check out the WEF’s explanatory video. Technology experts are calling the cyber pandemic the next global crisis.
Knowing the cyber risks
Typical cyber risks to your virtual supply chain include:
- Malware, including ransomware
- Phishing emails
- Data leaks
- Supply chain breaches.
To ramp up your cybersecurity strategies to defend your virtual supply chain, use this four-step overarching approach:
- Review, learn and monitor supply chain breaches, malware attacks and data leaks that affect your business to understand their threat
- Assess your cybersecurity process to help you identify the weak points
- Keep improving your processes, such as by investing in the latest firewall
- Review cybersecurity, so it’s never set-and-forget.
Mitigating supply chain risks and disruption
SMEs can reduce their supply chain risks and disruption with these tips:
- Use multi-factor authentication and strong passwords
- Train staff to be hypervigilant about cybersecurity. Offer refresher courses.
- Make sure all staff can access online tools to stop unauthorised access, breaches, or data leaks
- Ensure you have up-to-date antivirus software and other protective tools
- Verify emails come from your vendors before your staff act on them
- Plan for back-up services to reduce disruption. For example, have reserves on standby if digital cameras are offline
- Build into your contracts a requirement that vendors and suppliers advise promptly if they suffer a cyber attack
- Invest in cybersecurity expertise to bolster your protection, especially as soon as a threat is identified.
Another tactic, suggests KPMG, is to create self-contained micro supply chains. That’s where you separate operations linked to different business streams. You can then optimise each chain to service a target customer segment without it affecting how your business supports other segments.
That’s ideal for customising products, workflows, policies and production systems and offers greater profitability, partly because you’re reducing reverse logistics. That involves any product returns or recycling that your business manages.
We can guide you on risk management for your virtual supply chain. For example, cyber security insurance is a valuable strategy that can boost your protection, including:
- First-party coverage, such as if your business suffers financially due to a cyber incident
- Incident response, for example a dedicated incident manager to support your business recovery from an attack
- Third-party (liability) coverage) where a client or third party suffers a loss for which your business or you are held liable
- Losses from crimes such as funds transfer fraud, identity theft, cyber extortion and telephone hacking.
Talk to us about customising a policy to match the unique needs of your business.