Managing Concentration Risk with Cyber Tzar: Building a Resilient Supply Chain
As the financial sector prepares for the implementation of the Digital Operational Resilience Act (DORA), the importance of addressing supply chain vulnerabilities has become more urgent than ever. At Cyber Tzar, we believe that tackling concentration risk is a critical aspect of ensuring your business can withstand disruptions and align with new regulatory expectations. But what exactly is concentration risk, and how do we calculate it to strengthen your organisation’s resilience?
What Is Concentration Risk?
Concentration risk arises when a business depends heavily on a small number of suppliers or partners for key services, making it vulnerable to disruptions if one or more of these suppliers face issues such as cyberattacks, operational failures, or regulatory non-compliance. Under DORA, financial institutions must manage this risk effectively, ensuring their operations can continue even when disruptions occur.
With DORA’s stringent requirements around third-party risk management, identifying and managing concentration risk is no longer just a best practice—it’s a regulatory necessity.
How Cyber Tzar Calculates Concentration Risk
At Cyber Tzar, we approach concentration risk using a structured, data-driven methodology. Here’s how we calculate and help manage this risk for your business:
- Mapping Supplier Dependencies
- Our first step is to create a detailed map of your supply chain, identifying critical suppliers whose services are essential to your operations. This involves understanding which suppliers provide core functions and where redundancies may—or may not—exist. We work closely with your team to assess the weight of each supplier in your operational structure.
- Risk Scoring Based on Supplier Profiles
- Once we have a clear map of your supply chain, we use our advanced risk profiling tools to assign risk scores to each supplier. These scores are based on several factors:
- Cybersecurity posture
- Historical incident data
- Compliance with industry standards (such as ISO and DORA)
- Financial health
- Geopolitical and regulatory risks
- Suppliers with a high concentration of critical services are flagged for deeper analysis, as they pose a greater potential risk to your organisation.
- Once we have a clear map of your supply chain, we use our advanced risk profiling tools to assign risk scores to each supplier. These scores are based on several factors:
- Scenario Analysis and Stress Testing
- With supplier risk scores in hand, we simulate potential disruption scenarios to assess how various failures within your supply chain would impact your operations. By running stress tests on your supply chain, we can determine where your business is most vulnerable and where diversification of suppliers is necessary.
- Regulatory Compliance Alignment (with DORA)
- DORA will require organisations to monitor and manage third-party risks consistently, ensuring resilience against disruptions. At Cyber Tzar, we help you implement best practices for third-party risk management, ensuring that your approach to concentration risk aligns with DORA’s requirements. This includes regularly updating risk assessments and conducting periodic audits of your suppliers’ compliance levels.
- Automated Monitoring and Early Warning Systems
- To prevent concentration risk from becoming a significant problem, Cyber Tzar’s tools continuously monitor the performance, security posture, and financial health of your key suppliers. If a significant issue arises—such as a cyber incident or regulatory violation—our platform provides early warning alerts, allowing your team to take proactive steps to mitigate the risk before it impacts your operations.
Supplier Engagement: Immediate Support Without the Wait
At Cyber Tzar, we understand that traditional supplier engagement processes often face hurdles, especially when it comes to waiting for lengthy questionnaires or forms to be completed. To eliminate this barrier, we conduct vulnerability assessments upfront, providing suppliers with immediate insights they can act on right away.
By delivering actionable data from the start, we empower suppliers to begin remediation without delays. This proactive approach not only accelerates their improvement process but also enhances the overall resilience of your supply chain. Instead of cumbersome paperwork, suppliers have clear guidance from the outset, helping them to quickly address vulnerabilities and strengthen their security posture.
This seamless process ensures that both your business and your suppliers can focus on building a more resilient, DORA-compliant supply chain—faster and more effectively.
Supporting Supplier Improvement: A Collaborative Approach
At Cyber Tzar, we focus on identifying risks within your supply chain and work closely with your suppliers to help them improve their resilience. Rather than simply flagging issues, we provide your suppliers with a “Top Ten” prioritised remediation list, offering clear, actionable steps to strengthen their cybersecurity posture and operational stability.
This collaborative approach ensures that your suppliers meet regulatory requirements and contribute to a more resilient supply chain overall. By guiding them through prioritised improvements, we help raise the standard across the board—because, as the saying goes, a rising tide raises all boats.
At Cyber Tzar, we believe in building stronger, more secure ecosystems for everyone, ensuring you and your suppliers thrive in an increasingly complex risk environment.
Enhancing Resilience Through Diversification
Our solution doesn’t just identify concentration risk; it offers actionable insights for diversifying your supplier base. Diversification is a crucial strategy to minimise concentration risk—by spreading essential services across multiple suppliers, your business can reduce the impact of any single supplier’s failure.
Cyber Tzar’s platform helps you evaluate potential alternative suppliers based on risk scores and regulatory compliance, ensuring that you build a resilient, DORA-compliant supply chain.
Take Control of Your Concentration Risk Today
At Cyber Tzar, we’re committed to helping businesses navigate the complexities of third-party risk management, ensuring compliance with DORA, and building robust supply chains that can withstand disruptions. By leveraging our advanced tools and expertise, you can proactively mitigate concentration risk, safeguard your operations, and meet the high standards of regulatory resilience.
Act now to protect your supply chain from potential disruptions. With Cyber Tzar’s expertise, you can not only meet regulatory requirements but also build a more resilient, future-proof operation. Get in touch with us today and take the first step towards stronger risk management and regulatory compliance.
