Target Credential Theft Highlights Third-Party Vendor Risk

Target's disclosure that credentials stolen from a vendor were used to break into its network and steal 40 million credit- and debit-card numbers highlights the fact that a company's security is only as strong as the weakest link in its supply chain.

By Antone Gonsalves
Fri, January 31, 2014

CSO — Target's disclosure that credentials stolen from a vendor were used to break into its network and steal 40 million credit- and debit-card numbers highlights the fact that a company's security is only as strong as the weakest link in its supply chain.

No matter how strong Target's internal security was, if the breach started with a third-party vendor, then the weakness was in how the retailer managed the security risk all large companies face when partners and suppliers interact with their networks, experts say.

"Hackers have reached a new level of mastery and companies are really struggling," Torsten George, vice president of marketing and products at risk management vendor Agiliance, said. "They're putting a lot of effort in protecting their own networks, but how do you really go after your suppliers and vendors? How do you assess the risk in doing business with them?"

Many companies will send out questionnaires to new suppliers to get a description of the security of the systems that will be used to conduct business. The questionnaires will also cover the suppliers' security processes, including regular audits and penetration testing.

In addition, some companies will require some type of certification that suppliers' systems are secure and may even use a third-party for penetration testing.

Unfortunately, the security check often happens only once.

"A lot of times, for the most part, that's where it ends. So, it's kind of a one-point-in-time type of view and they never look at it again," said Stephen Boyer, chief technology officer for BitSight Technologies, which measures companies' security effectiveness.

That kind of approach to supply chain security is changing, led by the financial services industry. Besides sending questionnaires out regularly, banks are hiring consultants to conduct security audits or hiring companies to monitor suppliers' systems for unusual traffic, experts say.

Outside of the banking industry, companies are becoming more aware of the importance of third-party risk management as they increasingly integrate their systems with cloud services, Renee Murphy, analyst for Forrester Research, said.

"The cloud made everybody think a little differently about their third parties, because that integration to that particular third party is drastic," Murphy said. "That made them rethink everything else that they were doing and now they're taking the whole thing a lot more seriously."

Beyond confirming the credential theft, Target provided no other details on how the information was stolen or which portal the hackers used to enter the retailer's network and eventually install malware in the company's electronic cash registers, called point-of-sale systems.

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