Vendor Fraud Risk Assessment

A $340K invoice just saved one of our clients from losing $2M. Here's the fraud pattern every finance team needs to know: 👇 THE SETUP: Client receives invoice from their "regular supplier" • Logo, format, contact details = perfect match • Amount: $340K for quarterly order • Everything looks normal THE RED FLAGS: Our system caught 3 micro-deviations: ❗ Bank account changed (buried in fine print) ❗ Email domain: supplier.net instead of supplier.com ❗ Invoice number jumped 1,000+ from last sequence THE TRUTH: Sophisticated phishing ring compromised their email 6 months ago. They were patient. Monitoring. Waiting for the big order. If that $340K went through? Next targets: $480K, $890K, $2.1M orders already in pipeline. Total exposure: $3.8M WHY THIS MATTERS: Federal Bureau of Investigation (FBI) reports Business Email Compromise cost businesses $2.9B in 2024. 2025 is tracking 40% higher. Your regular supplier verifications won't catch this. They're too sophisticated. 5 DEFENSES THAT ACTUALLY WORK: 1. Phone verification for ANY bank change (Use the number from your original contract, not the email) 2. $10K threshold for dual approval (No exceptions. Ever.) 3. Vendor change request protocol (Form submission + manager sign-off, even for "small" changes) 4. Train AP on domain spoofing (supplier.com vs supplier.net vs supplier-inc.com) 5. Payment confirmation callbacks (Call vendor to confirm receipt within 24 hours) Cost to implement: $0 Time to implement: 2 hours Potential savings: Everything This is what we built Precoro to catch. After analyzing 10,000+ supplier onboarding processes, we found 73% of BEC fraud follows this exact pattern: • Compromise → Monitor → Wait → Strike when amounts are highest Most companies don't see it until the money's gone. 💬 Question for finance/procurement teams: Have you had a "close call" with a suspicious invoice or payment request? What made you catch it? 🔥 Follow for weekly fraud case breakdowns - I share real patterns from the trenches every Monday. #FraudPrevention #Cybersecurity #BusinessSecurity #ProcurementFraud #FinancialControls SAP Oracle NetSuite Philip Ideson Bertrand Maltaverne Daniel Barnes

Your Procurement Cycle is a Minefield of Risks. Are You Walking Blind? Procurement Excellence | 17 JAN 2026 - Procurement always navigates hidden risks that can derail projects, inflate costs, and tarnish reputations. Ignoring them? That’s the real risk. Here are 7 CRITICAL risks lurking in your procurement cycle + how to defuse them: #1. Performance Risk ↳Suppliers underdelivering on quality/timelines. ↳Fix: Clear KPIs. Penalty clauses. Regular performance reviews. #2.Specification Risk ↳Vague requirements lead to wrong deliverables. ↳Fix:Collaborate with stakeholders upfront & freeze specs before sourcing. #3. Supplier Financial Risk ↳Bankrupt suppliers = halted operations. ↳Fix:Run credit checks, diversify suppliers, demand financial disclosures. #4. Reputation Risk (ESG) ↳Child labor or pollution in supply chain = brand crisis. ↳Fix: Supplier ESG screenings. Audits. Sustainability clauses. #5. Price Volatility Risk ↳Market swings crush budgets. ↳Fix: Fixed-price contracts. Hedging strategies. Cost-indexed clauses. #6. Fraud & Corruption Risk ↳Kickbacks, fake invoicing, collusion. ↳Fix: Segregate duties. Whistleblower policies. AI-powered anomaly detection. #7. Contract Leakage Risk ↳Unused discounts, auto-renewals, scope creep. ↳Fix:Centralized contract repository. Milestone alerts. Spend analytics. #Bonus I: Over-Reliance Risk ↳One supplier holds 80% of your spend. ↳Fix: Strategic supplier diversification. #Bonus II: Cybersecurity Risk ↳Suppliers accessing your systems >>data breaches. ↳Fix:Vendor security assessments. Zero-trust architecture. #Bonus III: Supply Disruption Risk ↳Natural disasters, geopolitics or supplier failures. ↳Fix: Dual sourcing, Safety stock & Real-time supply chain monitoring. Risk Mitigation Playbook: ✅ Proactive: Map risks at EVERY stage ✅ Use AI for predictive analytics, blockchain for traceability. ✅ Train & empower teams to spot red flags early. ✅ Collaborate & partner with Legal, Finance, Operations. Risk-aware procurement NOT about avoiding suppliers Procurement can’t own risk alone! Build resilient, ethical & agile supply chains that drive sustainable value. What risks keep YOU up at night? ♻️ Share to help someone in your network. ➕️ Follow Frederick for more content like this. #ProcurementExcellence #RiskManagement #Leadership

Third-Party Risk: The Hidden Cybersecurity Battlefield in Modern Supply Chains In our interconnected digital ecosystem, your security posture is only as strong as your weakest vendor. Modern enterprises rely on 100s of third-party vendors, creating an exponentially expanding attack surface. Supply chain attacks have become the preferred vector for sophisticated threat actors. Instead of targeting well-defended enterprises directly, attackers exploit vulnerabilities in trusted vendors to simultaneously breach hundreds of downstream organizations. Game-Changing Examples SolarWinds (2020): Compromised software updates affected 18,000+ customers including Fortune 500 companies and government agencies, demonstrating how a single vendor breach cascades across entire sectors. MOVEit (2023): A single vulnerability led to data breaches affecting over 600 organizations globally, showcasing the massive scale of modern supply chain impacts. Why Third-Party Risk Monitoring is Critical Continuous Visibility: Traditional annual assessments are insufficient. Organizations need real-time monitoring of vendor security posture, breach notifications, and compliance status changes. Risk Amplification: When attackers target managed service providers or software vendors, the impact multiplies across all their clients. One compromised vendor can expose thousands of organizations simultaneously. Regulatory Liability: With GDPR, CCPA, and emerging supply chain regulations, organizations face increasing liability for third-party security failures. Proactive monitoring demonstrates due diligence. Building Effective Defense Continuous Assessment: Implement real-time vendor risk scoring across your entire ecosystem Zero Trust Extension: Apply least-privilege access controls to all third-party connections Incident Response Integration: Ensure your IR plans account for vendor breaches with clear communication protocols Contractual Protection: Update vendor agreements with security requirements and liability provisions The Bottom Line Organizations can no longer treat vendor risk as procurement afterthought. The question isn't whether your supply chain will be targeted — it's whether you'll detect and respond effectively when it happens. The strongest security programs extend beyond organizational boundaries to create defensible ecosystems, not just defensible enterprises. #ThirdPartyRisk #TRPM #SupplyChainAttack #CyberSecurity

Master Third-Party Risk Management (TPRM) in 12 Steps 🛡️ Your organization’s security is only as strong as its weakest vendor. Onboarding a third-party tool without thorough risk assessment is like locking your front door while handing out key copies to strangers. Here is a practical, 12-step framework to evaluate vendors, mitigate risk, and make smarter business decisions: Phase 1: Identification & Categorization Vendor Onboarding Capture critical vendor metadata from day one (business owner, contract value, service scope). Vendor Criticality Assessment Determine their operational impact. Do they access internal networks or process customer data? Categorize critical vendors early. Data Classification Map out what sensitivity level of data they handle: Public, Internal, Confidential, or Restricted. Phase 2: Risk & Controls Evaluation Inherent Risk Assessment Evaluate raw risk exposure across Data Privacy, Cyber Security, Compliance, and Operations before factoring in existing security controls. Security Questionnaire Send tailored security questions covering key domains: Information Security (ISMS), Access Management (MFA), Network Security, Patching, and Incident Response. Evidence Collection Never rely strictly on "Yes" answers—always demand proof. Collect SOC 2 Type II reports, ISO 27001 certificates, penetration test summaries, and BCP/DR plans. Phase 3: Deep Dive & Scoring Document Review Validate that claimed controls match provided evidence (e.g., verifying MFA implementation via identity provider dashboard screenshots). Risk Identification Highlight specific security gaps or missing controls (e.g., lack of MFA or missing Disaster Recovery testing). Risk Rating Assign an objective score based on total residual risk to place vendors into clear bands: Low, Medium, High, or Critical. Phase 4: Decision & Governance Remediation Plan Outline mandatory corrective actions, owners, and strict SLA timelines (e.g., require MFA setup within 30 days). Risk Acceptance If a vendor cannot remediate immediately, require formal sign-off from the Business Owner, InfoSec Lead, and Risk Committee. Final Recommendation Deliver a clear mandate: Approved, Approved with Conditions, or Rejected. Key Takeaways for Security Leaders: Verify, don't trust: Always demand tangible evidence. Automate where possible: Leverage TPRM platforms (like ServiceNow, MetricStream, or Aravo) to handle questionnaires and risk scoring automatically. Continuous Monitoring: TPRM doesn't stop at onboarding. Regular reviews, re-assessments, and real-time monitoring are essential for continuous compliance. What framework or tools does your team rely on for Third-Party Risk Management? Share your thoughts below! 👇 #Cybersecurity #TPRM #RiskManagement #GovernanceRiskCompliance #InformationSecurity #VendorRisk

How to Implement a Robust VACCP (Vulnerability Assessment and Critical Control Points) Plan Ensuring food safety is not just about preventing contamination—it’s also about protecting against food fraud. Economically Motivated Adulteration (EMA) continues to be a global concern, affecting raw material integrity, product authenticity, and consumer trust. To systematically address this risk, VACCP (Vulnerability Assessment and Critical Control Points) is an essential tool for food businesses. This structured approach helps identify, assess, and mitigate risks associated with food fraud. Steps to Carry Out a VACCP 1. Identify High-Risk Raw Materials (RMs) Focus on ingredients that are historically prone to adulteration, economically attractive for fraud, or sourced from high-risk regions. Common examples include milk powder (melamine), honey (sugar syrup), olive oil (dilution), black pepper (papaya seed adulteration), seafood (formalin preservation), and organic spices (pesticide residues). 2. Assess the Vulnerability of Each RM Use a structured risk assessment matrix with key questions (FSSC 22000 Guidelines): -> Is there a strong economic incentive for fraud? -> Are there known fraud cases for this material, supplier, or region? -> How difficult is it to detect fraud (lack of routine testing)? -> Is there unsecured access to raw materials in the supply chain? -> Is the supplier relationship short-term or spot-buying? -> Does the supplier lack independent fraud certifications? -> Is the supply chain complex (multiple intermediaries, high-risk regions)? Assign scores (1–5) to each question and calculate the Vulnerability Score. 3. Categorize Risk Levels and Define Actions Low Risk (7-14) → No immediate action required. Moderate Risk (15-21) → Track the supply chain more closely. High Risk (22-28) → Increase testing for adulteration. Extreme Risk (29-35) → Implement increased audits, fraud assessment using the SSAFE tool, or find an alternate supplier. 4. Take Targeted Mitigation Actions -> Supplier Engagement & Audits: Conduct regular supplier audits to verify compliance. -> Testing Protocols: Implement targeted analytical tests (e.g., isotope testing for honey, DNA testing for spices, GC-MS for oil adulteration). Strengthen Contracts: Include strict clauses on authenticity, fraud prevention, and traceability requirements. -> Enhance Traceability: Use blockchain or digital traceability systems where feasible. -> Develop Alternative Supplier Strategies: Reduce dependency on high-risk suppliers. 5. Annual Review & Continuous Monitoring A VACCP plan should be reviewed annually or whenever new fraud risks emerge. Ensure corrective actions are in place for suppliers with increasing vulnerability scores. Attached: Example VACCP Risk Matrix & Assessment Food fraud is evolving, and so should our risk mitigation strategies. A strong VACCP approach helps build trust, ensure compliance, and protect consumers.

£300 million in profit. Gone because a supplier got phished. That’s what happened to a major British retailer known for its food halls and mid-range fashion over Easter weekend in 2025. A trusted third-party vendor was compromised. - No ransomware. - No malware. - No headline-grabbing zero-day. Just a simple social engineering attack that brought down the company’s entire online clothing and homeware operations during a peak retail period. This wasn’t an IT failure. It was a failure of resilience. ✅ On paper: - ISO 27001 certified - Vendor SLAs signed - Security audits passed - Dashboards all green ❌ In practice: - Third-party had backend access with no geofencing or conditional access - No phishing simulations extended to vendors - No MFA enforced at the supplier level - Incident response plan didn’t cover vendor compromise scenarios - Comms team caught unprepared customer backlash spread quickly Brand trust took a measurable hit. They didn’t just lose sales. They lost customer confidence. And investor credibility. 💣 The damage: - £300M in lost profits - £750M drop in market cap - Public trust shaken - Supplier relationships under audit - Internal review exposed systemic third-party blind spots ❓CISO, ask yourself: - How quickly can you revoke supplier access in a crisis? - Does your incident response plan extend beyond your own systems? - Are your highest-risk vendors the least visible in your dashboards? Who owns digital trust across your supply chain? If you’re not sure that’s the breach waiting to happen. ⚠️ The real threat wasn’t malicious code. It was misplaced confidence. In contracts. In checklists. In “we’ve got that covered.” ✅ What we’ve since helped others do: ↳ Map and monitor access paths across all vendors ↳ Tier suppliers by blast radius, not just spend ↳ Embed red team testing in supplier relationships ↳ Extend phishing training and MFA requirements beyond org walls ↳ Build a multi-team incident comms matrix ↳ Reframe third-party risk ownership: Procurement ↔️ Security ↔️ Ops 📊 New KPIs for the board: ↳ % of critical suppliers with enforced MFA + audit logging ↳ Mean time to revoke third-party access during incident ↳ % of vendor-originated breaches detected internally 🧠 Bottom line: In 2025, you don’t just secure your company. You secure your ecosystem. And if your vendors hold the keys, your customers are trusting someone they’ve never met. 📩 DM me if your IR plan doesn’t include your suppliers. What’s the riskiest third-party in your business today and who’s actually watching them?

Most breaches don’t start inside your system. They start with someone you trusted. In 2026, vendor risk isn’t procurement’s problem. It’s architecture risk. Because every integration extends your attack surface. 𝐇𝐞𝐫𝐞’𝐬 𝐡𝐨𝐰 𝐦𝐚𝐭𝐮𝐫𝐞 𝐭𝐞𝐚𝐦𝐬 𝐚𝐬𝐬𝐞𝐬𝐬 𝐭𝐡𝐢𝐫𝐝-𝐩𝐚𝐫𝐭𝐲 𝐫𝐢𝐬𝐤: → Risk Context Mapping ↳ What data they touch and how deep they integrate → Security Control Validation ↳ MFA, encryption, logging, continuous monitoring → Access & Identity Risk ↳ Least privilege across APIs and service accounts → Dependency & Supply Chain Risk ↳ Fourth-party exposure and shared infrastructure → Incident Readiness ↳ SLAs, breach disclosure timelines, response maturity → Compliance vs Reality Gap ↳ Policies claimed vs controls actually enforced → Data Protection & Privacy ↳ Encryption, residency, lifecycle management → Integration Security ↳ API posture, webhook validation, auth mechanisms → Business Continuity Risk ↳ Backup posture, failover readiness → Exit & Offboarding Risk ↳ Data portability and access revocation → Continuous Risk Monitoring ↳ Risk doesn’t stay static after onboarding → Commercial & Legal Controls ↳ Liability, indemnity, and audit rights The hidden problem: Vendors are treated like features. But they behave like extensions of your system. The shift: From “vendor due diligence” To “continuous third-party risk management” Because attackers don’t break your perimeter. They walk in through someone else’s. P.S. What’s the hardest part of managing vendor risk in your org today: visibility, control validation, or continuous monitoring? Follow Dinesh Anbumani for more insights

☢️Manage Third-Party AI Risks Before They Become Your Problem☢️ AI systems are rarely built in isolation as they rely on pre-trained models, third-party datasets, APIs, and open-source libraries. Each of these dependencies introduces risks: security vulnerabilities, regulatory liabilities, and bias issues that can cascade into business and compliance failures. You must move beyond blind trust in AI vendors and implement practical, enforceable supply chain security controls based on #ISO42001 (#AIMS). ➡️Key Risks in the AI Supply Chain AI supply chains introduce hidden vulnerabilities: 🔸Pre-trained models – Were they trained on biased, copyrighted, or harmful data? 🔸Third-party datasets – Are they legally obtained and free from bias? 🔸API-based AI services – Are they secure, explainable, and auditable? 🔸Open-source dependencies – Are there backdoors or adversarial risks? 💡A flawed vendor AI system could expose organizations to GDPR fines, AI Act nonconformity, security exploits, or biased decision-making lawsuits. ➡️How to Secure Your AI Supply Chain 1. Vendor Due Diligence – Set Clear Requirements 🔹Require a model card – Vendors must document data sources, known biases, and model limitations. 🔹Use an AI risk assessment questionnaire – Evaluate vendors against ISO42001 & #ISO23894 risk criteria. 🔹Ensure regulatory compliance clauses in contracts – Include legal indemnities for compliance failures. 💡Why This Works: Many vendors haven’t certified against ISO42001 yet, but structured risk assessments provide visibility into potential AI liabilities. 2️. Continuous AI Supply Chain Monitoring – Track & Audit 🔹Use version-controlled model registries – Track model updates, dataset changes, and version history. 🔹Conduct quarterly vendor model audits – Monitor for bias drift, adversarial vulnerabilities, and performance degradation. 🔹Partner with AI security firms for adversarial testing – Identify risks before attackers do. (Gemma Galdon Clavell, PhD , Eticas.ai) 💡Why This Works: AI models evolve over time, meaning risks must be continuously reassessed, not just evaluated at procurement. 3️. Contractual Safeguards – Define Accountability 🔹Set AI performance SLAs – Establish measurable benchmarks for accuracy, fairness, and uptime. 🔹Mandate vendor incident response obligations – Ensure vendors are responsible for failures affecting your business. 🔹Require pre-deployment model risk assessments – Vendors must document model risks before integration. 💡Why This Works: AI failures are inevitable. Clear contracts prevent blame-shifting and liability confusion. ➡️ Move from Idealism to Realism AI supply chain risks won’t disappear, but they can be managed. The best approach? 🔸Risk awareness over blind trust 🔸Ongoing monitoring, not just one-time assessments 🔸Strong contracts to distribute liability, not absorb it If you don’t control your AI supply chain risks, you’re inheriting someone else’s. Please don’t forget that.

Many big companies evaluate fraud prevention vendors the wrong way. When running a proof of concept (POC), simulating the production environment with high fidelity is crucial for obtaining meaningful results. This involves: - Sharing fraud labels to enable vendors to fine-tune thresholds and models according to your specific use cases. - Allowing customization per use case, including different models, rules, and risk tolerances. - Acknowledging that fraud manifestations vary across companies, industries, and attack surfaces. If you skip this step and rely on a vendor’s default settings, you’re not testing performance—you’re testing luck. One vendor’s defaults might happen to align with your business, but that’s not a real signal of long-term success. A strong vendor evaluation should include two phases: 1- Tuning Phase – Share fraud labels so vendors can adapt their models to your context like in a real deployment. 2- Blind Test Phase – Hold out a segment with no feedback and compare predictions to your internal fraud labels. You should also expect deep adaptability from any fraud prevention partner. Fraud varies dramatically across use cases, industries, and geographies. Risk tolerance is not one-size-fits-all, and neither are compliance requirements. Vendors should offer tools and models that can be tailored accordingly—not static black boxes. And if a vendor tells you they don’t need fraud labels or don’t need to customize their solution for your POC? That’s a red flag. It likely means: -They’re not willing to do the work to adapt their solution to your needs. -They won’t do it in production either (or they’ll charge extra for it). -They’re probably not robust enough to support a large, complex business. Remember, real-world fraud prevention operates as a continuous feedback loop. Your evaluation process should mirror this iterative approach to ensure optimal vendor selection. Otherwise, you’re not choosing the best vendor—you’re choosing the luckiest one.

The "BLAST RADIUS" Myth (Your Vendors Are More Than Data Buckets): When assessing third-party risk, many enterprise leaders often focus on a comforting illusion: “If this vendor gets breached, they only hold a small slice of our non-critical data.” This is a dangerous misunderstanding of modern supply chain architecture. Sophisticated threat actors rarely care about your vendor’s isolated data silo. They care about your vendor's network entitlements. In an interconnected ecosystem, vendors are no longer just external data repositories - they are direct, trusted, and often unmonitored infrastructure bridges leading right into your core environment. Think about it: when an upstream partner is compromised, attackers don't break down your firewall; they inherit legitimate VPN connections, API tokens, and administrative access rights. To your defensive monitoring tools, the malicious intrusion looks exactly like a business-as-usual operations session. True security governance means actively shrinking this external blast radius. Here's how you can do that: > Enforce dynamic, zero-trust network segmentation. > Transition from static questionnaires to continuous session monitoring. > Implement automated, just-in-time credential lifecycles. Stop auditing what your vendors store and start controlling what they can access. FYI: The classic trap is relying on a vendor's annual SOC 2 report. A static audit from six months ago won’t tell you if their remote management tool was hijacked last night. #AuguryIT #cysec