With the current adoption, consumption, and use of open-source software, failing to conduct a comprehensive and systematic process of evaluating and managing its use can expose organizations to a number of serious risks. These risks can range from legal and compliance issues, to regulatory concerns, as well as security vulnerabilities. Below are some of the primary risks associated with neglecting management of open-source.
1. Legal/ Licensing
Using open-source without a proper understanding of its licensing terms can lead to unintentional violations of those licenses. This can potentially result in legal action, financial penalties, and damage to the organization’s reputation.
Failure to manage and comply with open-source licenses can impact legal risk for organizations in the market, especially if it is a subject to regulatory requirements. Right now, many industries have specific regulations regarding software development and data protection. Thus, failing to adhere to these regulations due to insufficient open-source compliance can result in legal consequences and financial penalties.
2. M&A – Open-Source Due Diligence Audit
Open-source management is not a process that is only contained within an organization. One of the strategic tools employed by organizations to enhance market competitiveness, foster innovation and capitalize on synergies for growth is mergers and acquisitions (M&A). M&A open-source due diligence should always rely on a comprehensive scan and audit in order to assess the target company’s use of open-source software. This will uncover any potential licensing issues, compliance concerns and security risks that could negatively impact the transaction. The acquiring entity might inadvertently inherit licensing conflicts, security vulnerabilities, or even violate intellectual property rights, which could result in costly legal battles, damage to reputation, and operational disruptions.
Need a scan for compliance or M&A Due Diligence? Contact us to see if you are eligible for a free, high-level scan that can help you get started. Need more than that? We offer a full scanning and audit service that quickly scans your code base, manages inventory, determines license compliance needs, and generates a software bill of materials (SBOM).
3. Regulatory Requirements
International regulations impacting open source, such as the U.S. FDA’s Cybersecurity in Medical Devices, or the upcoming EU Cyber Resilience Act – to name just two.
Failing to thoroughly assess the compliance of a target company’s software with up-to-date global regulations can result in severe consequences. Starting from data privacy laws to export controls, the lack of insight into the open-source usage might lead to unintentional legal violations and fines. Without a comprehensive understanding of the regulatory landscape, there is a risk of jeopardizing companies’ global operations, facing challenges in market entry, and damaging relationships with international stakeholders.
4. Security Vulnerabilities
Open-source projects may have vulnerabilities that are later discovered and patched. Without active open-source management, organizations may use outdated and vulnerable versions of software, exposing them to security threats.
At the same time, neglecting in-depth reviews of open-source usage may lead to the unintentional inclusion of malicious code, which can compromise the integrity and security of your software.
5. Reputation
Inadequate management of open-source can result in using software components with a history of security issues. Organizations are still using vulnerable versions of OpenSSL nine years after the widely-publicized disclosure. This can damage the organization’s reputation and affect the hard-earned trust among customers, partners, and other stakeholders. During the past decade, many organizations have experienced security incidents related to open-source vulnerabilities that led to data breaches causing significant harm to an organization’s reputation, operational disruptions and serious financial consequences to their clients, owners and shareholders.
6. Wasted Resources
Without an open-source strategy, organizations may invest resources in integrating open-source components that do not align with their long-term goals, that are not well-maintained or that are coming from untrusted sources. This can lead to wasted time, effort, and resources as well as increased maintenance and remediation costs related to discovering and fixing issues later in the development cycle, rather than addressing them proactively at the time they are introduced.
Not sure if this is something your organization can take on? Our OSPO-as-a-Service provides an outsourced, ready-to-implement solution tailored to meet your organization’s open source compliance needs.
Closing Thoughts
Management of open-source is more than just having a policy for use of open source. Beyond words on a page, it must translate to a process that developers follow. If you don’t already have a robust process, this should be established as soon as possible – proactively, not reactively. Failing to have it in place exposes organizations to legal, security, reputational, financial and operational risks that can have devastating consequences. By embracing a thorough and ongoing approach to open-source management, organizations can utilize the benefits of open source while keeping potential risks under control.
