Security Blockchain, therefore, is not a silver bullet for supplier authenticity.


Without rigorous off-chain identity checks and continuous validation, even the most transparent systems can be deceived.


From ghosts to zombies Not all phantom activity originates from outside the organisation. Many companies harbour dormant or inactive supplier accounts, for example the remnants of old relationships, discontinued projects or defunct entities. Tese ‘zombie vendors’ oſten remain in systems long aſter they should have been deactivated. Cybercriminals know this and actively target legacy vendor


accounts. By hijacking these digital identities, attackers can issue new orders, redirect payments or distribute malicious content under a legitimate name. Te challenge is that traditional audits rarely catch these anomalies


because they are periodic and reactive. By the time an audit is conducted, the damage may already be done. Te solution lies in continuous assurance: a proactive model of


supplier governance that constantly validates identities, flags irregular activity and removes redundant access before it can be exploited.


‘Always on’ continuous assurance and countermeasures Continuous assurance represents a shiſt from one-time verification to ongoing vigilance. It combines data analytics, behavioural monitoring and real-time alerts to ensure supplier legitimacy throughout the lifecycle of a relationship. Key practices include: • Enhanced supplier verification: Cross-checking identities against business registries, sanctions lists and digital footprint analysis.


• Lifecycle management: Regularly reviewing supplier activity to identify inactivity, anomalies or changes in ownership.


• Automated anomaly detection: Harnessing AI for good, to highlight deviations in ordering patterns, payment timing or communication behaviours.


• Human review loops: Integrating expert oversight into every step, ensuring context and intuition are not lost.


Tis model doesn’t replace audits, rather, it evolves them and build on them. Instead of providing retrospective assurance, it builds live assurance into everyday procurement operations. In addition to a continuous assurance mindset and model, teams


should take steps to integrate technological countermeasures and cybersecurity too. As generative AI evolves, so too will the sophistication of phantom


suppliers. Synthetic documentation, AI-written proposals and even deepfake video calls can be used to create convincingly authentic vendors. Imagine a scenario where a supplier onboarding team receives


a video verification call from a ‘company director, complete with matching ID and credentials, only for the entire interaction to be AI-generated. Tis is no longer science fiction. Criminal groups are already experimenting with synthetic identities and deepfakes to bypass due diligence checks. Defending against this next generation of phantom suppliers will


therefore require equally advanced countermeasures: • AI models trained to detect falsified documentation and behavioural inconsistencies


www.pcr-online.biz


• Cross-verification of supplier data across multiple independent registries


• Zero-trust architectures that treat every supplier interaction as potentially compromised until verified.


The missing link: collaboration Phantom suppliers thrive in organisational silos. Procurement focuses on efficiency, finance on budgets, cybersecurity on networks. Rarely do these teams share data or align on shared threat intelligence. To close the trust gap, collaboration must become standard practice.


Procurement teams need to treat supplier risk as an extension of cybersecurity risk. Cybersecurity professionals, in turn, must consider supply chain data as part of their threat landscape. Cybersecurity is business security. When finance, IT and procurement work together, red flags emerge


sooner: mismatched invoices, unverified bank details, suspicious supplier domains. Shared visibility creates resilience.


A new frontline for cybersecurity Te story of digital procurement has so far been one of acceleration: faster onboarding, automated approvals, seamless transactions. But as the technology matures, the narrative must evolve from efficiency to resilience. True digital maturity means understanding that speed and security


are not mutually exclusive. Organisations must slow down at the right moments: to verify, to question, to validate identity. Phantom suppliers reveal the uncomfortable truth that trust cannot


be automated. It must be designed, tested and continuously reinforced. At LRQA, we work with global organisations to embed this


philosophy, building resilience through continuous assurance, data integrity and governance frameworks that make trust measurable. Procurement is not a back-office function, it’s a new frontline


defence in the battle for digital trust. Te integrity of your suppliers determines the security of your systems, your data and your reputation. Te emergence of phantom suppliers is a governance and risk issue that touches every part of an organisation. To stay ahead, businesses must: • Recognise identity as infrastructure: Treat supplier verification with the same rigour as user authentication.


• Adopt continuous assurance: Move from static audits to dynamic monitoring.


• Invest in culture: Empower teams to question anomalies and challenge automation when something doesn’t feel right.


• Collaborate across functions: Align procurement, finance, IT and cybersecurity teams around shared objectives of trust and transparency.


Assessment models, such as ISO 27001 and SOC 2 Type 2 can offer a strong contribution towards addressing the risks of phantom suppliers, whilst also providing assurance to an organisation’s clients that supplier risk is being effectively managed. Phantom suppliers will continue to exploit digital complexity


and automation gaps. But by combining technology with human intelligence, and embedding trust at the core of procurement, organisations can turn the tables. In an era where identity is the new battleground, resilience begins with knowing who you’re really doing business with.


January/February 2026 | 45


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52