Why Software Supply Chain Security Has Become a Top Priority
Problem
Modern software constantly changes as new features are added, bugs are fixed, and vulnerabilities are patched. Most people don’t realize that modern software isn’t built from scratch—it’s assembled from many smaller software components, often developed by third parties, i.e. utilizing open-source software. These third-party open-source components are now featured in roughly 97% of software products, boosting innovation but also increasing complexity and risk. Unfortunately, third-party components often receive limited security oversight, making them vulnerable to rapid exploitation when issues emerge, particularly within widely used applications.
To counteract this lack of oversight, visibility and a deep understanding of software supply chain security are paramount. A Software Bill of Materials (SBOM) acts like a detailed ingredient list, enabling organizations to track, monitor, and secure each piece effectively.
The threat from software that carries vulnerabilities is real. It can lead to data breaches, operational disruptions, and even threats to human safety in critical sectors like healthcare, energy, and industrial automation. Comprehensive software monitoring is now a vital security requirement.
The widespread adoption of open-source software has accelerated innovation and reduced time to market for digital products, simultaneously increasing exposure to risks in this software, such as vulnerabilities and supply chain adversarial attacks. A single compromised component can endanger numerous products, highlighting the shift of the attack and their strategic approach of finding one vulnerability in a popular open-source software package and impacting the complete market. This emphasizes the growing importance of SBOMs in cybersecurity practices.
Cybersecurity Attacks on Software
Several major cyber incidents in recent years have highlighted the risks associated with insecure third-party software components:
- SolarWinds (2020): Attackers infiltrated SolarWinds’ software build process, distributing malicious updates to thousands of customers, including government agencies and Fortune 500 companies.
- Log4Shell (2021): A critical vulnerability in the popular Log4j library, enabling attackers to remotely execute code on millions of devices worldwide. Although not initially a targeted attack, it was and continues to be widely exploited in the wild.
- XZ Backdoor Incident (2023): Attackers gained trust by contributing to the open-source compression tool XZ community over a period of two years, after which they inserted malicious code into the software, nearly compromising widely used Linux distributions—a global crisis narrowly averted.
These incidents demonstrate how vulnerabilities and compromised dependencies can bypass traditional security measures, significantly impacting operations, reputations, and national security.
Regulation
Software is increasingly being regulated globally through mandatory SBOM requirements. Governments and industry bodies are responding with new rules aimed at increasing transparency in software systems. SBOMs have emerged as a foundational requirement in many of these frameworks. An SBOM provides a detailed inventory of every component in a software product, including its origin, license, and known vulnerabilities.
Notable regulatory developments include:
- S. FDA authority (2023) to require SBOMs for cybersecurity approval of medical devices.
- EU Cyber Resilience Act mandates SBOMs for products with digital elements.
- PCI DSS 4.0, effective in 2025, introduces SBOM requirements for custom software used in payment systems.
- ETSI EN 303 645, a European IoT security standard, pushes SBOMs to support vulnerability management and timely issue response.
- Automotive AUTO-ISAC promotes SBOM adoption to improve supply chain visibility, vulnerability management, and regulatory compliance across connected vehicle systems.
- BSI TR-03813, a German guideline outlining use of SBOMs for software transparency and risk assessment in connected devices.
Organizations can meet these new mandates and increase the resilience of their products by documenting and analyzing software components and reducing exposure to known vulnerabilities.
Operational and Strategic Benefits of SBOMs
Beyond compliance, SBOMs provide clear operational value. They enable security and procurement teams to:
- Identify and address vulnerabilities more quickly.
- Evaluate software suppliers based on the quality and safety of their components.
- Maintain real-time visibility over deployed software assets.
SBOMs allow for rapid triage during an incident, identifying which systems are affected and which are not. This improves response time for risk remediation and mitigation.
Industry Context: The Rise of Supply Chain Security
The demand for SBOM solutions is growing across industries. Organizations managing critical infrastructure, such as power grids and telecom companies, incorporate SBOMs into their procurement and monitoring practices. Enterprises are beginning to assess software not just on features or cost but also on supply chain integrity and security.
As this sector evolves, vendors are developing platforms that help organizations create, manage, and use SBOMs in scalable ways by leveraging automation. Sophic Capital client Cybeats Technologies Corp. [CSE:CYBT, OTCQB:CYBCF] is building infrastructure that aligns software transparency with operational needs. Their platforms are designed to integrate into enterprise environments and provide continuous visibility across software lifecycles.
Looking Ahead
In 2024 alone, over 40,000 vulnerabilities were reported to the National Vulnerability Database, reflecting the growing fragility of digital infrastructure. SBOMs are no longer optional and are quickly becoming a non-negotiable element of modern cybersecurity strategy. They are part of a broader shift toward proactive cybersecurity and transparent risk management.
Coming up…
In Sophic Capital’s next report we’ll detail Sophic Capital client Cybeats Technologies Corp. [CSE:CYBT, OTCQB:CYBCF], a global leader in software supply chain security. We’ll look at Cybeats’ SBOM solutions and its competitive environment.
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Disclosures
Cybeats Technologies Corp. [CSE:CYBT, OTCQB:CYBCF] has contracted Sophic Capital for capital markets advisory and investor relations services.
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