Businesses have grown used to operating in a sustained challenging environment in recent years. Supply chain disruption, material and labour shortages, and economic pressure have increased business costs and squeezed margins across the board. These events can act as a catalyst for the rollout of new technology as manufacturers seek a competitive advantage through automation.
It is crucial that manufacturers proactively identify and manage risks on a regular basis, so what do automation and digitalisation mean for your risk profile?
The use of Internet of Things (IoT) enabled technology, Artificial Intelligence (AI) and machine learning, additive manufacturing and 3D printing can all speed up the manufacturing process, get products onto the market faster and drive client satisfaction. But also potentially open a business to significant and largely uninsured losses. According to the World Economic Forum, manufacturing was the most targeted sector by cyberattacks in 2022.
Managing your risk
With significant investment being made into new machines and technology, adding a cyber risk management strategy in place can often be largely overlooked. The substantial costs necessary to achieve adequate levels of cybersecurity, coupled with the perceived likelihood of an attack, can deter many businesses from adding this level of protection.
This lack of preparedness not only makes it easier for cybercriminals, it also increases the likelihood that impacted companies will experience longer periods of downtime. Cyberattacks have the potential to disrupt manufacturing operations by targeting critical systems, such as production lines, inventory management, or supply chain management. Ransomware attacks, for example, can encrypt essential data and systems, rendering them inaccessible until a ransom is paid. How would your business react in the event of a cyber attack? Do you have a response plan in place for such an event, or insurance to support your business getting back to production?
Access to a fast, professional claims and incident response team can be vital to get business back up and running with minimal downtime.
Data breaches can also be extremely costly both in terms of money and reputation; according to IBM, the global coverage cost of a data breach in 2023 was $4.45m - 15% more than in 2020. Investing in cyber risk management in advance can save disruption and significant cost later on.
Keep your business moving
The greater the lean on technology, the bigger the need for a knowledgeable risk manager. With technology continuously evolving, there are key areas which you should build into your risk management programme. The bottom line is innovation can generate new risks, and that's where your insurance broker can support your business.
As specialists in manufacturing insurance and risk management, Gallagher can help your business to plan and assess the unique risks and liabilities that it could face as it becomes digitally enhanced.
Download the Gallagher Year Ahead report to find out more on what 2024 could have in store for UK businesses and steps you can take to protect the risk profile of your organisation: http://www.ajg.com/uk/yearahead
