The €1.2 billion penalty fined to Meta for GDPR non-compliance highlighted the importance of regulatory compliance and how it has become increasingly challenging for companies to meet them as they come under the scrutiny of various regulators responsible for their audit and review. This challenge will only grow larger as companies continue to expand to reach new markets in the global economy and are required to comply with multiple regulatory frameworks. 

As a result, organizations are doing everything in their power to take the proper steps and implement best practices towards global supply chain compliance, and in particular,  the identification and mitigation of third-party risk in their supply chain.  

The Challenges of Multi-Framework Global Supply Chain Compliance

The key regulatory frameworks impacting global supply chains, such as the General Data Protection Regulation (GDPR), NIST Cybersecurity Framework (NIS T CSF), Digital Operational Resilience Act (DORA), and California Consumer Privacy Act (CCPA) are each different in their scope and focus. For example, both the GDPR and CCPA focus on data protection and privacy while NIST CSF and DORA are both cybersecurity frameworks with a focus on third-party risk management. NIST, however, focuses on cybersecurity in all industries while DORA is limited to third-party risk management in the financial sector of the U.K. 

Regardless of the specific framework in question, however, organizations face a number of challenges when seeking to adhere to multiple regulatory frameworks for global supply chain compliance, including: 

  • Managing various compliance requirements. While many regulations have overlapping security requirements, they often target specific industries, geographic regions (e.g., DORA for the EU), or broader objectives such as operational resilience and data protection. They may also have different reporting requirements, standards of encryption, and methods of enforcement. Organizations may struggle to prioritize controls that satisfy multiple regulations, for example. 
  • The evolving regulatory landscape. These frameworks evolve in response to advancements in technologies like artificial intelligence (AI) and the Internet of Things (IoT), prompting governments to demand greater transparency and accountability from suppliers. 
  • An increased risk of third-party non-compliance. As organizations increasingly rely on third parties for critical services, it increases the attack surface and potential for security incidents, operational disruptions, and data breaches that are results of non-compliance and are then reported to regulatory bodies, with the organization incurring hefty monetary penalties. 
  • An increasingly complex supply chain. The modern global supply chain includes third, fourth, fifth, and even n-th parties, demanding a greater degree of visibility and ability to categorize and prioritize risks according to their level of threat. 
  • Balancing compliance with business efficiency. Due to the reasons listed, meeting compliance with multiple frameworks while ensuring supply chain resilience and minimizing business operations is especially challenging. Operational disruption with any supplier or vendor can end up wreaking havoc along the entire supply chain. 

Understanding Third-Party Risk in Regulatory Compliance

All organizations striving to achieve regulatory compliance, regardless of the regulation’s scope or focus, face the significant challenge of third-party risk. Cybercriminals are well aware that enterprise-level organizations, such as multinational financial institutions, often invest heavily in advanced cybersecurity measures. However, their third-party suppliers may lack the same level of protection. This makes these suppliers a prime target for attackers, who exploit vulnerabilities within complex supply chains. These types of security breaches can result in operational disruptions, revenue losses, diminished customer trust, and far-reaching reputational damage. 

An additional challenge organizations face, in regards to third-party risk, is the increasing outsourcing of services, many of them critical, to fourth parties. Organizations typically do not have direct control over their fourth parties, relying on their third parties to conduct risk assessments, continuously monitor threats, and mitigate risks effectively. The consequences of third-party risk, such as failure to comply with global frameworks, can lead to legal actions, financial penalties, and increased regulatory audits and oversight in the future.

Best Practices for Global Supply Chain Compliance

The growing challenge of third-party risk together with those of compliance with multiple regulatory frameworks in the global supply chain may seem daunting, but security, IT, and third-party risk management teams can apply various best practices to overcome them. Many risk management platforms and tools exist that help organizations implement these best practices effectively. 

Conduct Comprehensive Vendor Due Diligence

Before onboarding new third-party vendors, organizations should assess the cybersecurity and regulatory risks posed to them by these third parties through vendor due diligence. This includes reviewing their cybersecurity policies such as security controls, data protection and privacy policies, encryption standards, and disaster recovery. It may also include examining compliance certificates, and audits along with other relevant documents in addition to ensuring the vendor is adhering to both local and international law. Due diligence is crucial for proactively assessing the risks associated with onboarding new vendors, enabling organizations to either select an alternative vendor with lower risk or implement measures to mitigate the identified risks before proceeding with onboarding.

Establish Clear Global Supply Chain Compliance Standards

Security and IT teams need to clearly identify which regulatory frameworks they are striving to adhere to and develop guidelines for third-party vendors to address specific risks and challenges faced by the company. While these different frameworks often have overlapping requirements, the different requirements might also contradict. For example, compliance with GDPR requires data minimization, or collecting only necessary data from consumers. In contrast, compliance with CCPA requires organizations to maintain more extensive records (e.g., browsing history, purchase history, etc) so that it can use these records to complete consumer access and deletion requests.   

To manage these contradictions, organizations can focus their efforts on compliance with internationally recognized frameworks, such as ISO standards or OECD guidelines, that provide standardized approaches to compliance. In addition, they should adopt a risk-based approach that prioritizes their compliance efforts according to the level of potential risk of non-compliance and its impact on the organization. 

Implement Continuous Monitoring

In today’s modern supply chain where the regulatory and threat landscape, internal company policies regarding compliance and cybersecurity, and IT infrastructure are often in flux, continuous monitoring is essential. Technology solutions such as compliance management and third-party risk management platforms help companies track vendor compliance and adapt to evolving regulations so that they can deliver an

proactive and early response to any risks of non-compliance posed by third parties. 

Collaborate with Global Vendors

In addition to establishing clear global supply chain compliance standards across your organization, third parties, suppliers, and vendors, you’ll need to foster open communication for addressing compliance issues in real-time. This could be accomplished through regular vendor risk assessments, compliance audits, and due diligence processes that help the parties meet to discuss challenges, risks, or incidents they have encountered and their ideas for mitigating or solving these challenges. In addition, providing training and resources for meeting specific regulations and frameworks increases collaboration and improves the vendor’s ability to adhere to compliance. 

Prepare for Regulatory Changes

Staying up-to-date on global regulatory shifts and educating security, IT, and other relevant teams throughout your organization is one of the best ways to prepare in advance for them. Another strategy is to ensure visibility into your supply chain, including third, fourth, and n-th party vendors and third parties.

This allows your security and IT teams to identify potential issues and address them proactively. As a result, you’ll avoid the risks of non-compliance such as fines, reputational harm, and operational disruptions when regulations change.

Create Contingency Plans

Contingency plans should be put in place to ensure business continuity in the event of compliance failures. These plans should include reducing supplier dependencies and diversifying the supply chain along with developing an outlined plan that includes the tasks of different managers throughout the organization for how to address the penalties, reporting, and how the event should be communicated to relevant external stakeholders. By having a plan in place, you can reduce the business impact and avoid unnecessary confusion.   

Risk Management Platforms for Tracking Multi-Regulatory Compliance

Ensuring compliance with multiple regulatory frameworks along the supply chain, including third-, fourth-, and n-th party vendors, can be extremely challenging. Many risk management platforms integrate with existing technologies such as vendor management tools, incident management, and SIEM tools. They work together to gather data, automate tasks, and work more effectively to track third-party adherence to these different frameworks. 

These tasks include: 

  • Automated compliance checks to continually assess vendor compliance with different frameworks across geographic regions and industries.  
  • Real-time risk alerts to help security teams continuously and proactively manage non-compliance and foster collaboration with relevant stakeholders. 
  • Customizable global supply chain compliance reports that are scalable and can be sent at regular intervals to both internal and external stakeholders.   
  • Streamline vendor onboarding for a more effective and positive customer experience from day one. 

Automated Compliance Checks

With a combination of both AI and automated tools, organizations can use compliance automation to continuously evaluate suppliers’ adherence to regulations and frameworks using risk scoring and vendor assessments. This includes delivering easily customizable templates for specific regions, industries, and frameworks on a regular basis and assigning related tasks to relevant roles within both the organization and third party.  

Real-Time Risk Alerts

Due to the dynamic nature of the regulatory landscape and evolving cybersecurity threats, it is critical that risk management platforms continuously monitor adherence to all relevant frameworks. The platform should also alert relevant stakeholders for non-compliance or security breaches at any point in the supply chain. Advanced risk management platforms may use AI to gather data about past breaches and predict future ones, suggesting remediation measures in advance to act proactively against the threat. 

Customizable Global Supply Chain Compliance Reports

Risk assessment platforms gather data throughout different vendors in the supply chain, including audit reports, supplier certifications (e.g. HIPAA, ISO 27001), risk assessments, internal security controls, and processes that are essential to evaluate compliance of different suppliers, vendors, and third parties. By centralizing the data automatically into a single point and enabling customization of reports to different suppliers and vendors, the platform can deliver reports accurately, efficiently, and at scale to multiple parties simultaneously.  

Streamlined Vendor Onboarding

Due to their ability to deliver automated compliance checks, real-time alerts, and customized compliance reports, risk assessment platforms enable companies to easily onboard new suppliers and vendors. This is critical in a digital age in which multiple SaaS solutions exist for the same service, and organizations switch their SaaS vendors often. Efficient and seamless onboarding also enables organizations to provide an excellent customer experience and build a strong foundation for the relationship from the very beginning of their business engagement.

Global Supply Chain Compliance Solutions

The rapid expansion of third-party vendors and reliance on outsourcing has made third-party risk management an essential element of global regulatory compliance. Due to the dynamic nature of supply chains, the regulatory landscape, cybersecurity threats, and each organization’s internal IT infrastructure and internal policies, a proactive approach to TPRM is the best way for these organizations to adapt to and maintain multi-framework compliance. 

With continuous threat detection that includes attack surface monitoring and real-time alerts, the Panorays third-party cyber risk management platform pinpoints threat indications at the earliest point in time while taking into consideration the unique business context of each relationship. With this approach, it enables companies to adapt their defenses, minimize risk, and proactively prevent the next breach from affecting their business.

It does this by: 

  • Mapping the supply chain to gain visibility into third, fourth, and n-th parties and detect risk according to the level of criticality.
  • Risk DNA assesses the cybersecurity posture of each of your third parties by taking into account the level of business criticality, external and internal assessments, and your company’s risk appetite. 
  • Customized third-party cybersecurity questionnaires and templates for different regulations that verify compliance by grading vendor responses to identify any missing policies.
  • Eliminating friction between evaluator and supplier, allowing organizations to take immediate prevention action through automated remediation steps. 

Want to learn more about how your organization can effectively adhere to multiple regulatory frameworks to ensure global supply chain compliance? Get a demo today!  

Global Supply Chain Compliance FAQs