HONORABLE
MENTION

The emerging threat of cyber risk

THE MOVE TO DIGITAL BROADENS VULNERABILITY

Cybercrime set to be
WORLD'S THIRD
LARGEST ECONOMY
by 2025.

Cybersecurity risk is not present in the composite data view due to a lack of available data to drive a consistent view for inclusion. However, it cannot be omitted entirely. According to the World Economic Forum global financial losses from cyberattacks will reach $10.5 trillion by 2025, making cybercrime the world’s third largest economy after the US and China.

From a country perspective, no geography is immune to attacks – in absolute terms, companies in the US were targeted the most in 2024*, followed by other advanced economy countries such as Germany, the UK, Japan, and Canada.
_{*Everstream Analytics Report}

Businesses will experience about 70%-80% of cybercrime by value, with IBM estimating that the average cost of a breach is in excess of $4m. There appears to be a direct correlation between more digitally mature sectors and vulnerability to cybersecurity attacks. Moreover, while advanced-economy countries are often home to the more digitally mature supply chains, which may be targeted more frequently, developing economies suffer from less mature cyber defences, presenting the potential for a greater impact risk even if frequency is less.

While cybersecurity is not included in the composite view, here are some key sector-level insights and associated implications for sourcing professionals from the two most impacted sectors.

FINANCIAL SERVICES | Banks, insurers, and payment processors have long been on the front lines of cyber warfare, acting as prime targets for monetary gain and fraud. For sourcing professionals, procurement in financial services involves a lot of technology outsourcing which can introduce risk at various points, where if one element is compromised, it could halt a bank’s operations.

While the flipside is that financial services often lead the charge in cybersecurity, the key mitigation is to ensure the institution’s due diligence is extended to its vendors and partners and that cyber security monitoring is deployed where necessary.
MANUFACTURING | The rapidly evolving digital nature of manufacturing through automation and robotics is increasing its vulnerability to cyberattacks, particularly within the complex, multi-tier supply chains in the sector, where a weak link in a small supplier can become an entry point to a much larger company. Ransomware is particularly rampant, surging by 87% in the industrial sector in 2023, as attackers know that halting production can cost millions per day, so manufacturers are pressured to pay ransoms to restore operations.

Manufacturing powerhouses such as Germany, Japan, and China are especially at risk of extortion, while many East Asia manufacturers are vulnerable to theft of valuable IP. Sourcing professionals sit at the intersection of cyber risk in manufacturing, managing relationships with hundreds of suppliers for parts, components, or raw materials. Incorporating cyber resilience criteria cannot stop at a tick box – rigorous audit and testing are required.

Cybersecurity has become a fundamental dimension of global sourcing risk and must be considered a criterion in the majority of sourcing activity. The current data and trends show an uptick in attacks across the board, but with the right management and mitigation, solutions are available to counter the impact.

The move to digital
INCREASES
EXPOSURE
to cyber risk.