In today's hyperconnected world, cyber risk is no longer a peripheral concern - it's a central business issue for the vast majority of businesses. In 2024, 75% of software supply chains experienced attacks1, with global economic losses projected to soar to USD $138 billion (GBP £108 billion) by 2031.2 As cyber threats become more sophisticated and supply chain vulnerabilities grow, legal teams are playing a critical role in shaping organisational resilience.
Adapting supply chain contracts to reflect the growing complexity and severity of cyber threats is one area where legal teams can protect their organisation.
This article highlights practical ways to strengthen cyber clauses beyond simple policy compliance and explores what contract drafters should prioritise: governance, transparency, incident response and technical measures.
Cyber resilience should be considered from the outset, not added in once terms are agreed. Involving legal teams early in the procurement process gives organisations the opportunity to shape expectations before contracts are finalised, making sure protections are practical, clear and aligned with how suppliers operate. This early engagement helps avoid the need to retrofit clauses and supports more joined-up risk management.
Before the contract: lay the groundwork early
Effective resilience planning should begin before the contract is signed. Legal teams should work with stakeholders to assess:
- Which laws and frameworks apply, depending on the sector and service.
- Where the solution sits within the business ecosystem.
- How connected it is to other systems - connectivity often poses greater risk than criticality.
- The supplier's awareness of its own supply chain, including indirect dependencies.
- Who owns responsibility for different layers of technology, especially in cloud contexts.
Legal teams need to help their organisation understand and define its risk appetite. That will influence governance structures implemented within a company, resources for purchase of cyber risk management tools and products, recruitment of personnel with the right skill set, sophistication of contract templates, and the level of cyber-specific scrutiny applied to new suppliers.
It's much more than just the security policy
Traditional contract language requires a supplier to comply with their, or the client's, security policy. However, that is rarely enough. A policy contains specific technical controls that are applied and are fixed and non-negotiable in any kind of one-to-many service provision. They address only one aspect of cyber security. Clauses need to go much further to cover cyber risk management, across governance, processes, reporting and standards.
Focus areas for cyber clauses
- Audit clauses: Include rights to request information, conduct security reviews, remediate any gaps found. Cyber questionnaires can support lighter-touch due diligence for smaller suppliers.
- Subcontracting and supply chain mapping: Require full supply chain transparency and ensure key obligations, such as notification duties and policy alignment, are passed through to subcontractors.
- Governance structures: Include mechanisms for regular engagement. Formalise reporting cycles, name contact points, and ensure contracts create space for discussing threat trends and joint improvement areas.
- Virus protection and alert management: Move away from references to "good industry practice" to make use of codes of practice. Be clear on who should respond to virus notifications.
- Testing and software updates: Mandate timely deployment of updates and security patches. Prohibit use of unsupported software. Both issues have contributed to enforcement action by the Information Commissioner's Office (ICO) in recent years.
- Incident response and near miss reporting: Set firm expectations for how suppliers should detect, respond to and report security incidents. Include clear timelines and broaden definitions to cover near misses, reflecting the growing focus on proactive detection.
- Access controls and core principles: Mandate access control principles such as the rule of least privilege and segregation of duties.
- Refer to frameworks: Clarify which standards the supplier is expected to meet or certify to e.g. ISO 27001, Cyber Essentials, Cyber Essentials Plus, National Institute of Standards and Technology (NIST) frameworks, or the Cyber Assessment Framework. Where organisations work from different frameworks, map the frameworks onto each other to ensure that both customer and supplier have a common understanding.
- Personnel and vetting: Define minimum security standards for supplier personnel e.g. Baseline Personnel Security Standard (BPSS), which is mandatory for many government contracts. Train all personnel regularly. Be alert to modern techniques to recruit informants.
Well-drafted cyber clauses do more than manage risk - they help set the tone for how organisations and suppliers collaborate. When expectations around incident response, accountability and governance are clearly defined and practical to implement, suppliers are more likely to engage constructively. This clarity supports stronger relationships and helps build trust over time.
How legal teams can strengthen cyber risk management through contracts
To strengthen cyber resilience through contracts, businesses should:
- Map their supply chain all the way down the chain and assess third-party risks.
- Decide where legal governance stops and operational accountability starts.
- Align contract terms to the risk level of each asset and supplier relationship.
- Draft clauses with the full lifecycle in mind, including monitoring and offboarding.
- Treat suppliers as strategic partners in cyber defence, not just vendors.
Footnotes
2 Software Supply Chain Attacks To Cost The World $60 Billion By 2025
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