What is a supply chain attack?

A supply chain attack occurs when an attacker targets and exploits less secure organizations and elements within a target organization’s supply chain or partner network. Also referred to as a value-chain or third-party attack, this type of attack exploits the relationship between a business or organization and its suppliers. 

The objectives of a supply chain attack are to damage the target organization, gain unauthorized access to data or systems, distribute malware, or perform other malicious activities by exploiting less secure elements in the supply network.  

A supply chain attack can involve the compromise of software vendors, hardware manufacturers, service providers, or any other entity that delivers products or services to the primary target.

These attacks are particularly difficult to address because they leverage the trust established between an organization and its direct and indirect partners, making this type of cyber attack highly effective and challenging to defend against. 

The key characteristics of supply chain attacks include: 

• Difficult detection and attribution are due to the indirect nature of a supply chain attack, which makes it hard to identify the initial point of compromise and associate it with a specific threat actor
• Exploitation of trusted relationships sees attackers targeting third-party vendors that have close relationships with a target organization and access to its network 
• Multi-target impact results from a single compromised component in the supply chain affecting multiple downstream users or organizations, amplifying the impact of the supply chain attack 
• Stealth and complexity, hallmarks of supply chain attacks that are often sophisticated and designed to go undetected for extended periods, allowing attackers to gather information or cause damage without triggering security alarms 

Supply chain attack statistics

“In 2022, supply chain cyber attacks in the United States impacted 1743 entities. In the last measured year, the number of affected entities has increased by approximately 235 percent year-over-year.” 
—Statistica 

“More than 10 million people were impacted by supply chain attacks targeting 1,743 entities that had access to multiple organizations’ data in 2022.” 
—Identity Theft Resource Center 

“In 2023, there were 242 claimed supply chain attacks in the United States.”  
—Statistica 

“Supply chain attacks saw a year-over-year increase of 115 percent between 2022 and 2023.” 
—Statistica 

“The average number of supply chain breaches that negatively impact organizations increased by 26% from 2022 to 2023.” 
—The State of Supply Chain Defense Annual Global Insights Reports 2023 

“The mean number of supply chain breaches increased to 4.16 incidents in 2023 from 3.29 incidents in 2022.” 
—The State of Supply Chain Defense Annual Global Insights Reports 2023 

“Almost two-thirds (61%) of U.S. businesses were directly impacted by a software supply chain attack in the 12-month period ending in April 2023.” 
—Gartner, Inc. 

“Forty-five percent of global organizations will experience a supply chain attack by 2025—three times higher than in 2021.” 
—Gartner, Inc. 

“Software supply chain attacks on businesses will reach nearly $138 billion by 2031.” 
—2023 Software Supply Chain Attack Report 

“The total cost of software supply chain cyberattacks to businesses will exceed $80.6 billion globally by 2026, up from $45.8 billion in 2023. This growth of 76% reflects increasing risks from absent software supply chain security processes and the rising complexity of software supply chains overall.” 
—Juniper Research  

“Ninety-one percent of organizations experienced a software supply chain incident in 2023.” 
— Enterprise Strategy Group (ESG) 

Why supply chain attacks are increasing

The increase in supply chain attacks is the result of an evolving cyber threat landscape and cyber attackers’ awareness of vulnerabilities inherent in global supply chains. The following are several reasons for the surge in these supply chain attacks. 

Complexity of supply chains

Supply chains are intricate networks involving numerous disparate parties, including vendors, subcontractors, and service providers, which makes it challenging for organizations to monitor and secure every component fully. This complexity and lack of transparency provide opportunities for attackers to compromise and infiltrate the supply chain undetected.   

Digital transformation and interconnectivity

Growing interconnections through digital supply chains and increasing connections with partners, vendors, and service providers means that compromising one entity can potentially grant access to many others and create more points of vulnerability. This, coupled with the adoption of cloud services, internet of things (IoT) devices, and other digital technologies, is expanding the attack surface and providing more opportunities for exploitation. 

Economic and geopolitical motivations

Supply chain attacks are not only motivated by financial gain but also by geopolitical objectives. State-sponsored threat actors increasingly use this vector to conduct espionage, disrupt critical infrastructure, or exert influence. The nature of these attacks often means they are well-funded and strategically planned. 

Hardened security postures drive cyber attackers to find weaker access points

Larger organizations have become better at securing networks and systems, which has prompted cyber attackers to seek out less secure points of entry. Third-party vendors or components within the supply chain often have weaker security measures, making them attractive targets for cybercriminals.   

Lagging reputation and compliance

As regulatory compliance requirements increase, attackers exploit the gaps between different regulatory environments, targeting the weakest links in the supply chain where compliance may be less rigorous. In many cases, cybersecurity regulations and standards, specifically for implementation and enforcement into supply chains, lag behind the rapidly evolving threat landscape. 

Rapid response difficulties

Complexity and distributed supply chains can make it difficult to quickly identify and respond to security incidents, allowing attackers more time to exploit vulnerabilities and cause damage. 

Rise of zero-day exploits and sophisticated techniques 

Zero-day exploits, which take advantage of unknown vulnerabilities before they can be patched, along with advanced persistent threats (APTs), have fueled significant increases in both the sophistication and success rate of supply chain attacks. These methods allow attackers to breach systems undetected and maintain access for extended periods.   

Examples of supply chain attacks

Supply chain attacks have targeted various sectors and types of organizations, demonstrating the widespread vulnerability of global supply chains. The following examples highlight the diverse methods cyber attackers use to exploit supply chains, the importance of securing software development and distribution processes, and the need for vigilance across all third-party relationships. 

Malicious modification of an application development tool

A significant supply chain attack involved the compromise of a popular app development tool. Attackers inserted malicious code into a counterfeit version of the tool, which was then unwittingly used by developers to create and distribute apps. This resulted in numerous legitimate apps being infected with malware, affecting millions of devices.

Local ransomware attacks spread globally

Initially targeting local software, this supply chain attack involved a highly destructive piece of ransomware that spread worldwide. The cyber attackers leveraged compromised software updates and used sophisticated methods to propagate across networks, affecting multinational corporations and causing extensive financial damage and operational disruption.  

Network management software compromise

Network management software was compromised through a malicious software update in this supply chain attack. It led to unauthorized access to the networks of numerous government agencies, private companies, and organizations worldwide. This highly orchestrated cyber attack exploited the software’s widespread use to distribute malware to its users and allowed attackers to spy on the internal communications of affected organizations. 

Phishing attack leading to compromise of client networks 

Cyber attackers gained access to a global IT, consulting, and business process services company’s IT systems through phishing campaigns. They used the company’s infrastructure as a launch pad for further attacks against its clients.   

Exploitation of remote monitoring and management software

In a supply chain attack targeting the remote monitoring and management software used by IT service providers to manage networks and endpoints, cyber attackers exploited vulnerabilities to deploy ransomware across the networks of numerous businesses globally, including those managed by IT service providers using the compromised software. This supply chain attack not only disrupted the operations of the direct users of the software but also had a cascading effect on the businesses they serviced. 

Software development tool compromised and used to access systems

Cyber attackers gained unauthorized access to a software development tool and altered its script. This modification allowed them to secretly export sensitive information, such as credentials, tokens, and keys, from the tool’s users to external servers controlled by the cyber attackers. This supply chain attack affected numerous organizations by potentially exposing their internal codebases and critical infrastructure to espionage or further attacks.   

Software update mechanism exploited

A computer manufacturer’s software update mechanism was compromised, and cyber attackers distributed malware to users by embedding malicious code into the tool, targeting specific users for espionage. This sophisticated supply chain attack is known for its stealth and precision. 

System maintenance tool compromised 

Cyber attackers infiltrated the software development environment of a popular system maintenance tool, injecting malicious code into its official release. This compromised version was then distributed to millions of users worldwide through the software’s regular update mechanism. This supply chain attack targeted specific technology and telecommunications companies by installing a secondary payload designed for espionage.   

Detecting and preventing supply chain attacks

Continuous monitoring and analysis 
Implement continuous monitoring of networks and systems for unusual activities that could indicate a compromise, such as unexpected outbound communications and unusual behavior by software or systems. 

Software integrity verification 
Regularly verify the integrity of software and updates received from third-party vendors through checksums, digital signatures, and other cryptographic verification methods to ensure they have not been compromised. 

Supplier risk assessments 
Conduct regular security assessments of suppliers and third-party vendors to identify and mitigate risks proactively. 

Supply chain attack prevention strategies

Education and training
Conduct training regularly to educate employees about cybersecurity best practices and the risks associated with supply chain attacks.

Least privilege access controls 
Restrict access rights for users, accounts, and systems to the minimum necessary to perform their functions.   

Multi-factor authentication (MFA) 
Require MFA for all users, especially for accessing critical systems and for all third-party vendors. 

Network segmentation and microsegmentation 
Implement network segmentation and microsegmentation to limit lateral movement by attackers within the network, isolating critical systems and data from third-party systems. 

Regular patching and updates 
Promptly apply security updates and patches to software and systems to address known vulnerabilities and protect against exploitation through supply chain attacks. 

Secure software development practices 
Employ secure software development practices, including code reviews, security testing, and secure coding libraries and frameworks, to minimize vulnerabilities. 

Vet suppliers and vendors 
Establish minimum security standards for suppliers to meet. Then, the security practices of all suppliers and vendors should be assessed against these criteria. This assessment should be done before integrating them into the supply chain and allowing access to internal systems. 

How a supply chain attack is conducted

A supply chain attack is conducted by compromising a component of the supply chain—a vendor, software, or hardware that a target organization relies on and trusts. Cyber attackers typically target less-secure elements within the supply chain to insert malicious software or exploit vulnerabilities.

The exploit of vulnerabilities can involve tampering with software updates, corrupting legitimate software before it reaches the end user, or breaching a supplier’s network to leverage their access to target organizations. Once the compromised component is integrated into the target’s environment, attackers can then execute malicious activities, such as data theft, espionage, or spreading malware, exploiting the trust placed in third parties. 

Types of supply chain attacks

There are many types of supply chain attacks, including the following: 

• Cloud service provider attacks target vulnerabilities in cloud services to gain access to multiple organizations’ data or systems hosted by a cloud service provider. 
• Compromised software updates infect software updates with malware to distribute it to unsuspecting users. 
• Counterfeit component swaps use fake or compromised hardware components that contain malicious functionalities. 
• Hardware interceptions infiltrate the manufacturing or delivery process to implant hardware-based spying devices or vulnerabilities. 
• Insider threats leverage compromised employees or insiders within the supply chain to introduce malware or vulnerabilities intentionally or unintentionally. 
• Open-source code compromises insert malicious code into open-source projects that are then used within commercial or private software. 
• Software tampering alters legitimate software to include malicious code before it reaches the end-user. 
• Third-party vendor breaches exploit security weaknesses in a vendor or supplier’s systems to gain access to the target organization’s network. 

Trust but verify to avoid supply chain attacks

Supply chain attacks capitalize on the trust and interdependencies characteristic of supply chains. Organizations should adopt a thorough, multi-layered security approach coupled with strict policies and procedures for onboarding and continually assessing supply chain partners.  

Supply chain partners’ security should be evaluated in detail. Assessments should delve into the specific security measures and practices of their partners and suppliers. By ensuring a unified and comprehensive security posture throughout the supply chain, organizations can better protect against the vulnerabilities and risks introduced by these interconnected relationships. 

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