IT Outages, Cyber Attacks and New Regulations: BCI’s Latest Supply Chain Resilience Report

AdobeStock / Andreas Gruhl

IT and telecommunications outages; cyber attacks; and loss of skilled employees are the top three causes of supply chain disruption, according to the Business Continuity Institute (BCI)’s ninth annual Supply Chain Resilience Report, released this month in partnership with Zurich Insurance Group.

Based on responses from 408 professionals across 64 countries, the report found that a majority do not have full visbility of their supply chains and have experienced at least one disruption. Nearly half of these disruptions occurred at a Tier 1 supplier.

Going back to the question of the main causes for supply chain disruption, unplanned IT or telecommunications outages rank at the top by a significant margin, accounting for 48% of disruptions. The aforementioned top three causes of disruption are expected to remain highly relevant in the next 12 months. However, companies should also keep an eye on new laws or regulations, which are expected to act as a source of disruption in the next five years.

These disruptions come with a lengthy list of serious consequences, from customer complaints to brand reputation damage to falling share prices. The most frequently cited consequence was loss of productivity, noted by 55% of respondents. Also high on the list were increased cost of working, loss of revenue and stakeholder concern.

Looking Ahead

When asked about the top potential disruptions for the next 12 months, the respondents expressed the most concern over cyber attacks and data breaches (60%) and IT and telecommunications outages (59%). Terrorism and incidents related to product quality and health and safety also ranked among the top 10, even though they have not been major causes of actual disruptions in the past.

The picture looks somewhat different when the timeline is shifted from the next 12 months to the next five years. Cyber attacks and data breaches still rank first, with 48% of respondents expecting it to be a big supply chain risk. But following in second place is new laws and regulations (40%). This may be reflective of Europe’s General Data Protection Regulation (GDPR), which will kick in next year.

Boosting Resilience

For a supply chain that is more resilient to all the risks mentioned above, management buy-in is key.

BCI’s report had some good news on this front. Respondents reported a general increase in top management’s commitment to dealing with supply chain risk, with 41% saying that commitment was high. This was a higher percentage than in 2016, when only 27% thought that their organization’s top management was highly commited to risk mitigation.

There is still room to improve, however. More than a quarter of respondents said that their top management has low or no commitment to risk mitigation, about the same percentage as the last two years.

Which Risks are Most Relevant to You?

For companies of all sizes, unplanned IT or telecommunications outages is the leading cause of disruption. Below are the top causes of disruption for a few regions, countries and industries.

Regions

  • The top causes of disruption for Europe are unplanned IT or telecommunications outages; loss of talent/skills; cyber attacks and data breaches; outsourcer failure; and adverse weather.
  • For North America, it’s unplanned IT or telecommunications outages; cyber attacks and data breaches; adverse weather; outsourcer failure; and loss of talent/skills.
  • For Asia, the top causes are unplanned IT or telecommunications outages; loss of talent/skills; transport network disruptions; new laws or regulations; and product quality incidents.
  • In sub-Saharan Africa, the top causes are unplanned IT or telecommunications outages; loss of talent/skills; currency exchange rate volatility; outsourcer failure; and energy scarcity.

Countries

  • For the U.S. in particular, the top causes of disruption are unplanned IT or telecommunications outages; cyber attacks and data breaches; adverse weather; outsourcer failure; and loss of talent/skills.
  • In the U.K., it’s unplanned IT or telecommunications outages; outsourcer failure; insolvency in the supply chain; loss of talent/skills; and cyber attacks and data breaches.
  • In India, it’s unplanned IT or telecommunications outages; loss of talent/skills; transport network disruptions; new laws or regulations; and outsourcer failure.

Industries

  • For manufacturing companies, the top causes of disruption are outsourcer failure; product quality incidents; transport network disruptions; loss of talent/skills; and insolvency in the supply chain.
  • For financial and insurance services, the top causes are unplanned IT or telecommunications outages; cyber attacks and data breaches; loss of talent/skills; outsourcer failure; and adverse weather.
  • For IT and communications, the top causes are unplanned IT or telecommunications outages; cyber attacks and data breaches; loss of talent/skills; outsourcer failure; and new laws and regulations.

Check out the full report here.

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