SINGAPORE – A Frost & Sullivan study commissioned by Microsoft found that a cyber attack can cost a large manufacturing organization in the Asia Pacific an average of US$10.7 million in an economic loss with customer churn being the largest economic consequence of a cyber breach, resulting in US$8.1 million of indirect cost.
For mid-sized manufacturing organization, the average economic loss was US$38,000. Furthermore, cybersecurity incidents have also led to job losses across different functions in more than three out of five (63%) manufacturing organizations
While the impact of data vulnerabilities and breaches can be costly and damaging to the manufacturing organizations, its supply chain and consumers, the study uncovered that half (51%) of the manufacturing organizations in Asia Pacific had either experienced a security incident or were not sure if they had had a security incident as they had not performed proper forensics or data breach assessment.
The study further revealed that instead of accelerating the digital transformation to bolster their cybersecurity strategy to defend against future cyber attacks, almost three in five (59%) manufacturing organizations across Asia Pacific had delayed the progress of digital transformation projects due to the fear of cyber attacks. Delaying digital transformation not only limits the capabilities of manufacturing organizations to defend against increasingly sophisticated cyber threats but also prevents them from leveraging advanced technologies, such as artificial intelligence (AI), cloud, and the Internet of Things (IoT), to dramatically increase productivity, empower their workforce and deliver new service lines.
These findings are part of “Understanding the Cybersecurity Threat Landscape in Asia Pacific: Securing the Modern Enterprise in a Digital World” study launched in May 2018. The findings aim to provide business and IT decision makers in the manufacturing sector with insights on the economic cost of cyber attacks and to help to identify any gaps in their cybersecurity strategies.
The initial study surveyed a total of 1,300 business and IT decision makers ranging from mid-sized organizations (250 to 499 employees) to large-sized organizations (>than 500 employees), of which 18% belong to the manufacturing industry.
In calculating the cost of cyber attacks, Frost & Sullivan created an economic loss model based on the insights shared by the respondents. This model factors in two kinds of losses which could result from a cybersecurity breach:
- Direct: Financial losses associated with a cybersecurity incident including loss of productivity, fines, remediation cost, etc; and
- Indirect: The opportunity cost to the organization such as customer churn due to reputational damage.