Risk managers might be overlooking a critical threat: the impact of technology failures on supply chain general operations, according to a new report from Marsh risk Management Research, Cyber Risks Extend Beyond Data and Privacy Exposures.

Such outages and failures have the potential to cause significant loss of income, increase operating expenses, and damage an organization’s reputation and need to be properly managed, the report says.

If unplanned, IT outages are the most debilitating source of supply chain disruption, affecting 52 percent of the companies responding to the Business Continuity Institute’s Supply Chain Resilience 2012 report. IT outages even outpaced severe weather, transportation disruptions and product contamination.

Marsh suggests the following steps to prepare for an IT disturbance and to mitigate potential business impact:

  • Determine the criticality of various IT systems to ongoing operations and whether alternatives are available or enhanced protection is possible.
  • Develop and test business continuity and crisis management plans that specifically address IT outages.
  • Evaluate claims preparation and management plans.