In the digital-first era there’s an app for everything, tailored to your specific use case and business needs. Third-party software offers an easy way to access the customized digital services and products that you need for business success, without investing in specialist expertise or acquiring extra resources. 

But those apps can come with a hidden price. Third-party software can be riddled with weaknesses which increase the risk of supply chain attacks. It’s difficult to secure a software supply chain that contains third-party software, because there are so many opportunities for malicious actors to find and exploit vulnerabilities. 

You’re also reliant on the integrity and trustworthiness of the software vendors. It can be hard to verify that software suppliers follow security best practices, meet your security expectations, and comply with security regulations. 

Gaining visibility and confidence in this murky environment is challenging, but SBOM (Software Bill of Materials) analysis plays a critical role. It reveals the components of each piece of software, so that you can identify vulnerabilities, licenses, and dependencies, mitigate risks, and ensure security and compliance. In this article, we’ll explain what’s involved in SBOM analysis, discuss how it assists with third-party risk management, and share best practices for implementing it.

Understanding Third-Party Risk Management

Third-party risk management (TPRM) involves identifying, assessing, and taking action to mitigate the risks associated with vendors, service providers, and of course, third-party software. As members of your supply chain, their security vulnerabilities become your security vulnerabilities. The risks shoot up for third-party software, because it’s an integral part of your digital landscape but outside of your control. 

Today’s software is usually a combination of open-source (OSS) components, APIs, existing libraries and plug-ins, and cloud infrastructure. That means myriad opportunities for compromised code, unpatched vulnerabilities, misconfigurations, outdated software components, and other risks to creep in. Threat actors target OSS systems to insert malicious code, and/or carry out AI data poisoning attacks where they deliberately corrupt training data for externally developed AI models. 

As demand for third-party software increases, the threat landscape becomes more ominous. Companies need effective apps for everything from data analytics to marketing tools, to maintain their competitive edge. Ironically, third-party cybersecurity software can be a serious source of risk. 

The problem isn’t confined to IT; third-party software resides across the organization, including operational technology (OT) and industrial systems. It’s vital to shed light into the opaque world of third-party software, and SBOM analysis is a key method for doing so.

What is SBOM Analysis?

SBOM analysis refers to the process of examining the results of your SBOM, or Software Bill of Materials. This is a detailed inventory that lists all the components of third-party software, including open-source software and libraries, plug-ins, licenses, APIs, and cloud infrastructure. It also covers known vulnerabilities, and version history so that you can see when and how changes were made. 

By carefully exploring the SBOM, you can identify security threats that might be lurking unnoticed in the software, and spot weaknesses, errors, and security gaps that could be exploited by malicious actors. 

SBOM analysis helps you to find hidden risks and dependencies that might otherwise go overlooked, which could soften your security posture and expose you to cyber attacks. By leveraging this methodology, you can ensure compliance with regulations and your security standards and improve supply chain transparency.

The Intersection of SBOM Analysis and TPRM

SBOM analysis should be seen as an integral element of any effective third-party risk management strategy. It delivers important advantages that make TPRM more robust and comprehensive, and boosts your risk management practices in the following ways:

  • Enhanced vendor transparency 
  • Improved uncovering of hidden risks
  • Faster incident response 
  • Stronger regulatory compliance

SBOM analysis should be seen as an integral element of any effective third-party risk management strategy. It delivers important advantages that make TPRM more robust and comprehensive, and boosts your risk management practices in the following ways:

  • Enhanced vendor transparency 
  • Improved uncovering of hidden risks
  • Faster incident response 
  • Stronger regulatory compliance 

Enhancing Vendor Transparency

One of the main objectives for successful TPRM is visibility into your third parties’ security practices and regulatory compliance so that you can assess their risk profile. A Software Bill of Materials does exactly that for the components used in third-party software applications. 

It obligates vendors to disclose detailed information about all software components, including open-source and proprietary dependencies, versions, and potential vulnerabilities. This empowers your security team to evaluate third-party security from a position of greater knowledge. An SBOM gives you a clear understanding of what’s been used, and holds vendors accountable for the security of their software supply chain. 

By examining the SBOM, you can check if vendors are keeping up with security best practices like regular patching and automated configuration scanning, and uncover potential licensing risks. This equips you to make informed decisions about which vendors to trust, and choose when and how to strengthen contractual security requirements. 

Identifying Hidden Risks

Many applications rely on open-source or other third-party components, which might be outdated, unpatched, or improperly maintained. By mandating full disclosure of all software components, an SBOM identifies hidden risks within that may otherwise go unnoticed until they’re exploited by malicious actors. 

An SBOM reveals vulnerable elements and components that could have been compromised, so your security teams can take proactive measures to mitigate or resolve the threat before it’s exploited. Without this, you might not be able to detect dependencies before they are utilized for serious incidents. 

For example, an SBOM could reveal an outdated cryptographic library with known security flaws, increasing the risk of data breaches, or unpatched open-source components such as logging frameworks which expose you to remote code execution attacks. When you’re forewarned, you can push vendors to apply updates, implement controls, or reconsider their source for OSS. 

Supporting Incident Response

Rapid, effective incident response is a key pillar in TPRM, and it too is strengthened by SBOM analysis. When new vulnerabilities are announced, you might not know whether your third-party software is affected by them, because you’re not sure about all the software components. An SBOM gives you a comprehensive inventory of all dependencies, so you can quickly check your exposure to the new vulnerability. 

For example, if a critical zero-day vulnerability is found in a widely used open-source library, you can check your SBOM to see where it appears in your supply chain. Then you can target patching and mitigation efforts to minimize your exposure to potential attacks. Otherwise you’d need to rely on manual auditing, which can leave you vulnerable to attacks for a relatively long time. 

Improving Compliance

Finally, compliance with regulatory frameworks is a vital element in third-party risk management. Many regulations, such as DORA, require you to maintain visibility into your software supply chain, which is difficult without a SBOM that lists all your software components, origins, licenses, and dependencies.

You need a detailed inventory in order to assess security risks for third-party software and verify that software providers are using suitable data protection practices. For example, GDPR requires you to assess data privacy risks that relate to third-party software, and SOC 2 and ISO 27001 mandate strong security controls and risk management practices for all your software, including third-party applications. 

SBOM analysis enables you to confirm that vendors adhere to secure development practices, use updated libraries, and patch vulnerabilities promptly, reducing the risk of data breaches or fines and penalties from regulatory non-compliance. 

Key Benefits of SBOM Analysis in Third-Party Risk Management

You’re probably already getting a sense of the many benefits of SBOM analysis, particularly with regards to third-party risk management. It’s not just the visibility that you gain from having a full list of software components; it’s the improved insight you get into your third parties. The benefits include: 

  • Stronger cybersecurity 
  • Proactive risk mitigation
  • Better decision-making
  • Smoother compliance audits

Enhanced Security

First and foremost, gaining better insight into your third-party software, and the vendors who provide and service it, strengthens your cybersecurity and reduces the risks of supply chain attacks. 

Many threat actors exploit vulnerabilities in third-party software to compromise your organization. If you use SBOM analysis to identify and close up outdated, unpatched, or vulnerable components, you’ll minimize your attack surface and be less susceptible to cyber attacks. 

Malicious actors also tend to choose easy targets, so if your software is well maintained, they’ll be less inclined to even try to attack. This helps decrease the risks of business disruptions, data breaches, and reputational damage that results from successful attacks. 

Proactive Risk Mitigation

Software components frequently receive updates, and new vulnerabilities are discovered all the time. You can use SBOM analysis to continuously monitor every element of your software for emerging risks and weaknesses, and then proactively mitigate them by applying patches, updates, or increasing your security measures. 

You can integrate your SBOM with automated vulnerability scanning tools which constantly assess third-party software against threat intelligence databases. This way, you’ll be able to address new risks like zero-day vulnerabilities or critical security flaws as soon as they arise, preventing them from escalating into serious incidents. 

Improved Decision-Making

Your SBOM doesn’t only give you visibility into your third-party software components. It also increases your knowledge about your vendors’ security measures, dedication to compliance best practices, and risk exposure. This refines your ability to decide whether to continue, renegotiate, or terminate contracts.

For example, if an SBOM reveals that a vendor uses outdated, unpatched, or high-risk components without a clear remediation plan, you’ll be able to adjust contractual obligations about security, or choose not to renew the partnership. SBOM analysis also enables you to compare vendors according to their commitment to security and software hygiene, so you can prioritize working with the most secure and transparent partners. 

Streamlined Compliance Audits

Last but not least, an SBOM is a useful tool for compliance audits. Many regulations, including GDPR and SOC2, require you to confirm that all your software complies with their security standards. SBOM gives you the transparent, structured inventory you need for all your software components, including their origins, licenses, and known vulnerabilities. This makes it quick and easy to generate reports that prove that your software is compliant. 

When you have an up-to-date SBOM, you’re also able to respond more efficiently to audit requests from customers or internal stakeholders. Instead of manually hunting down software dependencies and patch histories, you can simply check your SBOM data for clear evidence of security controls, vulnerability management, and risk assessments. 

Best Practices for Using SBOM Analysis in TPRM

Once you’re convinced of the benefits of SBOM analysis for third-party risk management and you’ve decided you want to take advantage of them for your organization, you want to know the best way to go about implementing it. 

Best practices for SBOM in TPRM revolve around standardization, integration, and automation. You want to place your most critical third-party software at the head of the line, and communicate clearly and frequently with your vendors and software providers. 

Standardize SBOM Requirements

Build SBOMs into your TPRM program, so that every third-party software vendor and supplier has to complete one as part of the procurement processes. By making an SBOM a contractual requirement, you’ll be able to proactively assess vendor security before integrating third-party software into your business environment. 

It’s best to establish clear, fixed SBOM guidelines to ensure consistency in your evaluations. Specify which format vendors should use, like SPDX or CycloneDX, and how often they need to submit an SBOM, so that you can verify that your third-party software is compliant and secure. 

Automate SBOM Analysis

SBOM analysis is more efficient, accurate, and frequent when you automate it using an advanced TPRM solution. Third-party software is usually complex and contains a lot of different components, making it challenging to analyze SBOM lists manually. 

Automated tools can also compare SBOM data against vulnerability databases like NVD or OSV to detect security issues and address them in real time. They can update SBOM data dynamically, as new vulnerabilities are announced and new patches are released. This way, you can stay one step ahead of emerging threats and increase your cyber resilience. 

Prioritize Critical Vendors

Although you should request an SBOM from every third-party software vendor and investigate each one carefully, it’s smart to prioritize software that has the highest level of risk. This might mean software that’s essential for your business operations, handles sensitive data, and/or has access to critical systems. 

These vendors should receive more rigorous SBOM analysis and be assessed more frequently, so that any vulnerabilities are caught before they can be exploited to significantly impact security, compliance, or business continuity. By focusing resources on critical vendors first, you can maximize security impact, reduce third-party risk exposure, and enhance overall supply chain resilience.

Integrate SBOM Analysis into TPRM Tools

SBOM analysis is effective alone, but it’s more powerful when you embed it into your TPRM solution. This delivers a unified risk view, streamlines risk assessment processes, and assesses third-party software vulnerabilities within the broader context of your supply chain and vendor landscape. 

Make sure that your TPRM platform is able to ingest and analyze SBOM data. Then you can use the platform to correlate SBOM findings with broader vendor performance metrics, compliance data, and contract terms, to make more informed decisions about vendor relationships and strengthen your supply chain. 

Maintain Regular Communication

Clear and frequent communication with your vendors and service providers is vital for any TPRM strategy. Your SBOM analysis might reveal vulnerabilities or security gaps in third-party software, but the only way to mitigate them is by collaborating with the vendors. 

You need to work closely together to prioritize issues for urgent attention, agree on timelines for addressing vulnerabilities, and monitor the progress of remediation efforts. Regular communication also helps to ensure that remediation efforts are aligned, and both parties are committed to security and compliance. 

SBOM Analysis and Third-Party Risk Management

SBOM analysis brings important advantages for cybersecurity and compliance. By uncovering vulnerabilities, misconfigurations, outdated licenses and patches, and compromised dependencies through all the components of third-party software, SBOM analysis helps you to identify, manage, and mitigate them before they can be exploited by threat actors. 

This makes SBOM analysis an important element in broader third-party risk management strategies. With SBOM analysis, you can proactively detect and remediate risks while they are still emerging, avoid unpleasant surprises, and speed up incident response. The results of SBOM analysis bring visibility into vendor security and compliance and help you to make more informed, data-driven decisions about vendor relationships. 

It’s crucial to automate and standardize SBOM analysis, and integrate it into your TPRM strategy and risk management platforms. As supply chains continue to grow more complex and extensive, SBOM analysis will only become more vital for maintaining trust and resilience in the digital ecosystem. 

Ready to improve SBOM analysis and maximize the benefits for TPRM? Contact Panorays to learn more.

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