Your Next Cyber Attack May Come from Your Most Trusted Partner

When a mid-sized exporter in Chennai lost ₹27 lakh in a recent payment redirection scam, the breach did not originate from their own systems. The fraud was carried out through a long-standing vendor whose email account had been silently compromised. A familiar invoice, sent from a familiar address, except for a minor tweak in the bank details. The payment was processed. The money vanished.

This is no longer a rare occurrence. Across India’s business landscape, especially among SMEs and mid-market firms, cybercrime is emerging not as a tech issue, but as a strategic business threat. And the threat vector that’s often overlooked? Vendors.

The New Cyber Frontline: Business Relationships

As cybersecurity budgets grow in large enterprises, cybercriminals are shifting focus. SMEs with leaner teams, modest tech infrastructure and often a high degree of trust-based operations have become prime targets. But even more concerning is the rise of third-party attacks, where suppliers, logistics providers, consultants or accounting firms become the gateway into larger ecosystems.

Unlike direct attacks on company infrastructure, these breaches are harder to detect. A malicious link sent from a known email ID. An invoice with subtle changes. A familiar face on a video call, cloned through AI. The sophistication of these attacks is rising and the consequences are material.

Supply Chain Vulnerability: A Growing Blind Spot

India’s growing digital economy has accelerated business interconnectedness. From Tally-integrated CA firms to ERP-connected raw material suppliers, SMEs today are digitally enmeshed in broader corporate networks. Each point of integration, however, also presents an entry point for attackers.

This creates a paradox. The very relationships that drive scale and efficiency can also expose a firm to systemic vulnerabilities, particularly when cybersecurity awareness among smaller partners remains limited.

In a survey of 120 SMEs conducted earlier this year, less than 35% had multi-factor authentication enabled for email systems. Even fewer conducted any form of vendor cybersecurity assessment.

When the Invoice Is Real — but the Account Isn’t

One of the most common forms of cybercrime affecting SMEs today is business email compromise (BEC). Attackers gain unauthorized access to an email account, often by phishing or credential theft and then observe email threads, waiting for the right moment to intervene.

A real invoice is intercepted, the bank details are subtly changed and the message is resent in the same thread. To the recipient, everything looks legitimate. But the funds are redirected. By the time the fraud is detected, the trail has gone cold.

What makes this type of fraud particularly damaging is that no malware may have been used and neither party may have any indication of a breach. It is, quite simply, a breach of trust executed digitally.

The Cost of Unawareness

Many SMEs continue to treat cybersecurity as a compliance formality or an IT issue. But the cost of inaction is rising. Apart from financial loss, there are growing implications around customer trust, regulatory reporting and even insurance coverage.

A lack of cyber hygiene, such as sharing passwords over messaging apps, using outdated software, or failing to verify vendor bank details offline can render a business not only vulnerable but uninsurable.

As cyber incidents increase, insurers are tightening their scrutiny of policyholders. The absence of basic controls could lead to claim rejections or premium hikes.

The Role of Cyber Insurance and Ecosystem Vigilance

To mitigate some of these risks, cyber insurance products such as United India Insurance’s Cyber Kavach are gaining relevance. These policies cover various cyber-related losses including data breaches, cyber extortion and fraudulent fund transfers. However, uptake remains limited among SMEs, often due to lack of awareness or perceived cost.

Yet, cybersecurity cannot be addressed in isolation. It requires ecosystem thinking. Large firms must consider the cyber maturity of their vendors. SMEs must build basic awareness among client-facing and finance teams. And service providers must embed security practices into everyday workflows — not just perimeter defence.

A Cultural Shift in the Making

The cyber awareness shift must be accelerated, not just through government mandates or technical training, but by reframing cybersecurity as a business imperative.

In a connected economy, the safety of a business is no longer defined by its own firewall. It is defined by the weakest digital link in its operational chain.

For Indian SMEs, this means reviewing vendor practices, investing in basic security protocols and rethinking relationships through the lens of digital risk.

Because in the age of invisible threats, protection is no longer a solitary act, it’s a shared responsibility.