Execs Fear Rise in Supply Chain Cyber Attacks

Even though many have had to cope firsthand with disruptions caused by recent natural disasters such as Iceland's volcanic eruption or the earthquake and tsunami in Japan, executives now see cyber attacks rather than physical attacks as potentially the most damaging to their supply chains, according to new report from PwC.

The report, Volume 4 of the Transport & Logistics' 2030 series Securing the Supply Chain, is a joint project between PwC and the Supply Chain Management Institute (SMI) at EBS Business School in Germany. It warns that cyber attacks are now so sophisticated that any business, or even country, could be at risk. (The German internet, for example, is attacked every two seconds, PwC says.)

On average, the 80 science, government and business executives polled agreed that there is a 56 percent probability of a rise in attacks in some form. Overall, those surveyed said they were even more concerned about hacker attacks affecting their supply chains than they were about actual physical attacks.

In addition, survey respondents said there was a 70 percent probability of logistics companies having to perform obligatory security checks on their whole supply chain, and they said there was a 60 percent probability that modern technology would offer businesses better protection.

As Klaus-Dieter Ruske, partner and Global Transportation and Logistics Industry Leader at PwC, explains, assaults on certain, highly-frequented chokepoints' could be particularly problematic. (Examples of global shipping chokepoints, defined as geographic bottlenecks with only one narrow transport link across a valley or bridge, are the Strait of Homuz, the Suez Canal and the Panama Canal.)

"The supply relationships between producers, suppliers and consumers have become more complex and more accident-sensitive in the last few years. Today 90 per cent of the worldwide trading volume is concentrating on about 39 gateway regions. If only a single one of these hubs fails, the economic consequences could be enormous after just a short period of time, and affect most economies around the globe," Klaus-Dieter Ruske said. "As a consequence of the increasing threat, the transportation and logistics companies' expenditures on security will broadly rise. Thus, capital investment on security, also on security of IT systems, will be one of the most important cost drivers of the logistics industry."

Freight screening, as well as risk' profiling of employees, and using trusted shipping operators, will also help businesses stay ahead of the hackers, the report concludes.

Plus, companies must now analyze every possible scenario of danger and develop contingency plans to protect their business from supply chain disruptions, Klaus-Dieter Ruske said.

The study, Transportation & Logistics 2030 Volume 4 Securing the supply chain, is available at www.pwc.com/tl2030.