Manufacturing Cyberattacks

Manufacturing companies may not sell directly to consumers, but that doesn’t mean they’re not at risk of a cyberattack. In fact, they are becoming a more common target and manufacturing cyberattacks sometimes can be traced back to customers and vendors in their supply chain who have been hit. Here are some ideas on what can be done to get ahead of cybercriminals.

Exposing Vulnerabilities

Cybercriminals may target manufacturers because, in many cases, they’re more vulnerable than other types of businesses. For one thing, the manufacturing supply chain is complex, with an intricate network of suppliers, logistics firms, distributors, retailers, and others often connected by the Internet. Members may have access to each other’s systems, so a vulnerability in one link of the supply chain can expose the entire chain to cyber risks.

Also, as the digital revolution continues, manufacturers increasingly rely on Internet-connected devices on the shop floor that can be monitored and operated remotely. At the same time, the manufacturing industry has been slower than other industries to upgrade IT infrastructures and develop robust security practices designed to prevent, detect and mitigate cybercrime.

Hacking the System

Manufacturers’ systems generally don’t store customers’ credit card numbers and other sensitive data that criminals can use to perpetrate identity theft and similar crimes. Instead, cyberattacks against manufacturers are designed to disrupt operations and extort money.

For example, a hacker that gains access to Internet-connected devices could shut down operations or cause you to produce defective products. Or the criminal could introduce ransomware into your systems, blocking access until a ransom is paid.

Another technique is to steal valuable intellectual property stored on a manufacturer’s system and sell it on the black market. Examples include patents, designs, manufacturing processes, research and development documents, customer lists, contracts, bidding information, business plans, marketing plans, and proprietary software.

Manufacturers also aren’t immune to ordinary fraud. For example, a cybercriminal may send a phony email from an actual vendor, updating its payment information and asking the manufacturer to send all future payments to a bank account the criminal controls.

Minimizing Risks

To avoid potentially devastating cyberattacks, conduct a risk assessment to take inventory of your hardware, software and data and identify any vulnerabilities. It’s critical to examine all the ways employees, vendors and other partners can access your network. Then implement policies, procedures and controls designed to prevent unauthorized access.

Equally important is to create an incident response plan to mitigate the damages in the event of a breach. Finally, have a solid backup plan that enables you to resume operations if a hacker destroys or blocks access to data.

Adding Cyber Insurance

One way to protect your business is with cyber insurance. General liability policies normally exclude cyber claims. Insurance carriers are limiting coverage to specific ransomware claims, excluding coverage for specific known vulnerabilities, and requiring applicants to provide more details about their data security control efforts before extending coverage, according to the 2022 Cyber Insurance Market Conditions Report published by insurance consulting firm Gallagher.

Manufacturers may want to consider switching some property insurance coverage over to cyber insurance. After all, in today’s digital world, cyberattack claims may be as likely — or even more likely — than fire, tornado or other natural disaster claims.

Educating Your Team

Ransomware and malware take advantage of sloppy security. To avoid falling prey to a manufacturing cyberattack, educate your staff on cybersecurity best practices and potential vulnerabilities. Every employee is a link in your cybersecurity chain. Ignoring the risks isn’t an option in today’s interconnected marketplace.

We Can Help

Our Manufacturing and Cybersecurity Teams can work with you to identify your vulnerabilities and can provide options to keep your manufacturing business running smoothly.  Contact us to discuss.


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DISCLAIMER: This blog is provided for informational purposes only and is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant. Presentation of the information in this article does not create nor constitute an accountant-client relationship. While we use reasonable efforts to furnish accurate and up-to-date information, the evolving landscape surrounding these topics is supported by regulations or guidance that are subject to change.

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