Australian firms exposed as vendor cyber risk grows

Australian organisations are expanding their supplier networks faster than they can secure them, leaving many exposed to supply chain cyber threats, a new study from cyber firm BlueVoyant has found.

The report said Australian third party risk management programs sit among the least mature in the world. It said 99% of local respondents suffered negative impacts from a supply chain breach over the past year.

BlueVoyant's sixth annual State of Supply Chain Defence study examined how large organisations manage cyber risk in their vendor ecosystems. An independent research firm surveyed 1,800 C-suite leaders worldwide, including 100 in Australia, across multiple industries.

Lagging maturity

The research found only 30% of Australian organisations surveyed have established or optimised third party risk management programs. This rate is slightly above the wider Asia-Pacific average of 32%. It trails the levels reported in the US and Canada by a clear margin.

The figures place Australia among the lowest-ranked regions for program maturity. The report linked this with a high incidence of damaging supply chain incidents.

Local organisations reported rapid growth in the number of suppliers, partners and service providers. Many said their internal risk and security functions have not kept pace.

Supplier breaches widespread

Almost every Australian respondent said their organisation had experienced negative impacts from a supply chain breach in the previous 12 months. These impacts included operational disruption, financial loss and reputational harm.

The study did not identify individual incidents. It highlighted the broad exposure that arises when security processes lag ecosystem growth.

Relationship-led response

Australian organisations stand out for their reliance on direct engagement with suppliers when issues emerge. The study found 52% of local respondents work directly with third parties on remediation. The global figure was 42%.

The report described this relationship-based stance as a relative strength. It also warned that growing supplier ecosystems may increase the risk of unseen vulnerabilities when oversight remains informal.

BlueVoyant said many organisations still depend on manual processes or ad hoc contacts with vendors. It said these methods often sit outside formal enterprise risk and security workflows.

William Oh, Head of Asia Pacific at BlueVoyant, said Australian organisations show strong engagement with vendors when problems arise.

"Australia's relationship-first approach and engagement with vendors to remediate issues is commendable. However, without tighter integration into enterprise risk systems, blind spots will grow as vendor ecosystems expand," said William Oh, Head of Asia Pacific at BlueVoyant.

Spend and outsourcing

The study found 89% of Australian respondents had increased spending on third party risk management in the past year. This was the lowest reported increase among the regions surveyed.

Many organisations are also handing parts of their programs to external providers. The report said 44% of Australian respondents outsource strategic functions such as reporting.

The data suggests mixed investment signals. Organisations are spending more and seeking external support, but progress on program maturity remains limited.

Internal barriers

Internal coordination emerged as a significant obstacle. Respondents cited the need for closer collaboration between risk, legal, procurement, IT and security teams.

They also pointed to resistance to organisational change. The study said these two factors were tied as the top barriers to stronger third party risk controls.

Many organisations maintain separate processes for vendor selection, contract management and cyber risk assessment. This division can slow decisions and create gaps in oversight.

Compliance over risk

The report said only 12% of Australian respondents selected risk reduction as the primary driver for their third party risk efforts. More common motivators were cyber insurance requirements, contractual obligations and board mandates.

This emphasis places compliance ahead of proactive risk management. The study suggested this may limit investment in deeper monitoring and continuous oversight.

Many organisations focus on meeting external demands such as policy frameworks and insurance criteria. They often prioritise audit readiness over detailed analysis of supplier security posture.

Vendor growth outpaces security

The research found 95% of Australian organisations surveyed plan to expand their third-party ecosystems in the next year. The report said this growth is set against current limits in their ability to validate, monitor and remediate vendor-related risks.

The combination of rapid expansion, lower program maturity and compliance-driven priorities indicates a widening exposure. It also points to increased pressure on internal teams and outsourced providers.

Oh said meaningful advances in third party risk management will require changes in how organisations integrate these programs.

"The real progress will come from not simply adding more tools but embedding TPRM into enterprise risk workflows and increasing executive engagement not. Integrated systems and a genuine commitment to risk reduction over box-ticking will determine who stays resilient and who gets left behind," said Oh.

The report said BlueVoyant expects organisations in Australia and elsewhere to reassess their third party risk strategies as vendor networks grow and regulatory scrutiny intensifies.