Why does ISO 27001 matter for supply chain security?

Cyberattacks rarely impact a single company. Instead, the shockwaves are felt through the chain, impacting suppliers, technology providers, and other third parties. Recent high-profile information security incidents have highlighted this, with several affecting everything from online orders to the availability of products in stores. For Linda Porter, Principal Assessor, Information Security Management Systems at NQA, a Kiwa company, these incidents demonstrate why organizations are paying closer attention to how they manage their suppliers, and how ISO/IEC 27001:2022 for information security can help.

Why are supply chains facing higher risks?

While information security is an internal priority for many businesses, a weakness anywhere along the chain can cause problems. A business can have strong information security controls in place and still be exposed to risks elsewhere in its supply chain. "The risks are changing all the time," says Linda. But she identifies cyber-attacks as one of the biggest concerns, with the disruption caused by recent incidents highlighting the importance of supplier management.

It reveals how security isn't just about what happens in your own company. Information security also involves taking into account how suppliers protect information, manage incidents, and maintain critical services if something goes wrong. That is becoming increasingly visible in the way organizations assess their suppliers. Linda says she is seeing more businesses use supplier questionnaires to ask for evidence of security certifications, with those questionnaires becoming more detailed.

"They want to know how you protect data and if you've got a business continuity plan," says Linda.

What is ISO 27001?

ISO 27001 is the international standard for information security management. It helps organizations protect information through a structured, risk-based framework, including the information they share with, or rely on others to handle.

How does ISO 27001 help manage supplier risk?

ISO 27001 provides a structured, risk-based approach to information security. Rather than assuming that every organization faces the same threats, it requires businesses to understand their own context and identify the risks that could affect their information and operations.

This means it's also essential to analyze your relationship with suppliers. The standard addresses this directly. Annex A includes controls on managing information security within supplier relationships, covering areas such as supplier agreements, monitoring supplier services, and the use of cloud services. In other words, ISO 27001 doesn't just help you prove your own security to customers, it also gives you a framework for scrutinizing the suppliers you rely on.

As part of their supplier approval processes, organizations may ask potential suppliers to demonstrate how they manage information security. Linda says she is seeing greater demand for evidence such as ISO 27001 certification. For a supplier, being able to demonstrate that it has an established approach to information security can provide reassurance to customers. For the organization procuring the service, it can form part of a wider assessment of whether a supplier is suitable and what risks it may introduce.

Certification does not remove the need to understand those risks. Instead, it provides evidence that an organization has been independently assessed against an internationally recognized standard.

Can the supplier demonstrate its approach to information security?

Evidence of certifications such as ISO 27001 can help demonstrate that security is being actively managed.

Does the supplier have a business continuity plan?

If a supplier provides a critical service, organizations need to understand how it would respond to disruption and how quickly it could recover.

How would the supplier respond to a security incident?

Understanding how incidents are identified, managed and communicated can help organizations assess the potential impact of an incident affecting a third party.

What information and services does the supplier have access to?

The level of scrutiny should reflect the risk. A supplier handling sensitive information or providing a critical service may require a different level of assessment from one with limited access.

How is the relationship monitored over time?

Supplier risk does not end when a contract is signed. Organizations should continue to review important supplier relationships as circumstances, technologies and threats change.

Why does supply chain security matter for trust?

Promoting information security across your supply chain is more than just protecting data. It means maintaining confidence between businesses. For organizations buying services, knowing that suppliers have appropriate processes and controls in place can provide greater assurance. For suppliers, being able to demonstrate that information security is taken seriously can help build trust with existing and potential customers.

For many suppliers, the pressure is also contractual. ISO 27001 isn't legally mandatory, but Linda sees customers requiring it as a condition of doing business, sometimes even from companies of just one person. She says this is one reason ISO 27001 can provide a competitive advantage, particularly when organizations are tendering for work. Certification demonstrates that a business is working to an internationally recognized standard and has undergone independent third-party assessment. As supply chains become increasingly interconnected, that assurance can become an important part of the relationship between customer and supplier.

Understanding where information is held and handled across the chain, while safeguarding it in your own company, helps organizations build more resilient supply chains and stronger trust with their partners. As Linda puts it, "people are seeing the importance of managing that supplier relationship now."

Want to start your certification journey? Find out more about ISO 27001 or reach out to Kiwa today