Insurance provider Hiscox released its annual Cyber Readiness Report earlier this year, revealing that more than half of surveyed manufacturing companies in the UK have experienced a cyberattack in the last 12 months.
Cyberattacks are on the rise for manufacturers
With 56% of the manufacturing sector reporting one or more cyberattack, it was surpassed by just two other sectors, Pharma and Healthcare, and TMT. Manufacturing firms were subject to more cyberattacks than the Property, Travel and Leisure, and Professional Services sectors combined.
Between 2021 and 2020, and 2020 and 2019, 44% of firms surveyed reported at least one cyberattack. The data from this year, which ranks manufacturing as the third most highly targeted sector, indicates an increase in attacks over the last few years.
What are the consequences of a cyberattack?
The median financial cost of cyberattacks in the last 12 months for the manufacturing industry is US$30,590. This is 21.5% lower than the UK average ($38,997.50), yet still represents a significant cost that smaller firms may not be able to afford.
The damage doesn’t end there. Cyberattacks can have a lasting impact on businesses, affecting reputation, customer relationships, business relationships and solvency.
Below are just some of the effects of a cyberattack which businesses witnessed in 2022:
- Increased cost of notifying customers
- Received a substantial fine
- Impact on brand and reputation
- Loss of customers
- Greater difficulty attracting customers
- Loss of business partners
- Solvency was threatened
What can manufacturing firms do to protect themselves?
65% of surveyed manufacturing firms currently have a cyber insurance policy. Ensuring that you have an up-to-date policy in place can help you to recover quickly if the worst should happen. Getting the right cyber insurance can help your business manage the cost of disruption, equipment fees and legal fees, amongst other financial consequences.
The Cyber Readiness Report revealed that 85% of the surveyed manufacturing firms had a role dedicated to cyber security. This was the third highest across the sectors, falling just behind TMT (92%), Pharma and Healthcare (88%) and Financial Services (88%). Having a dedicated cyber security role can substantially reduce exposure to cyberattacks, as 46% of businesses, from across all sectors, attributed a decrease in attacks to the appointment of key cyber security roles.
Despite this, less than 20% of the manufacturing firms’ IT budget was dedicated to cybersecurity – and yet, this is an increase on last year. In fact, the budget for cybersecurity has increased across all sectors since last year, with a UK average of 22% being allocated in 2022 (compared to 20% in 2021).
Currently, just 43% of manufacturing firms are going to prioritise reviewing internal cyber security policies and procedures over the next 12 months. This figure is below the UK average (46%).
Pete Treloar, PSC Underwriting Manager at Hiscox, said, “Manufacturing firms in the UK should look to implement preventative measures and remain vigilant. Having the right procedures in place, and the necessary expertise on hand, can significantly reduce vulnerability – and help to protect your business from malicious cyberattacks.”
Read the Cyber Readiness Report for more insight into the state of cyber security for the manufacturing sector, and the UK as a whole.