Events to Watch: MNCs should fear becoming collateral damage to cyber warrior efforts

In our recently released report FSG’s Events to Watch for 2018 we profiled the downside and upside scenarios that may imperil the strategic initiatives and revenue targets of multinationals. Over the next few weeks, we will be sharing a series of blog posts that highlight some of the major global events, and the potential impact on MNCs.

Part 1 – Prepare for Trump-driven trade conflict in 2018

Part 2 – Geopolitical risks to the oil supply picture in 2018

Part 3 – Escalating conflict with North Korea would disrupt 2018 plans for MNCs

Part 4 – Europe remains a source of upside and downside risk for 2018

This is one scenario that has become a major concern for corporate boards. Thus far, cyber attacks have typically been narrowly targeted, but multinationals have good reason to be concerned over more broad-based and coordinated attacks.

Cyber Warriors Target Business: Actors, such as North Korea, Russia, and Iran involved in local social or political conflicts seek alternative ways to assert their position or damage their opposition. Companies with weak global cybersecurity architecture become convenient targets for indirect action via cyber attacks. While the focus thus far has been largely on financial institutions, in this case it would be expanded to other industries, with the intent to do significant economic damage.

The short-term impact for multinationals would be the following:

  • Security costs increase – Anticipation and remediation of cyber attacks is time-consuming and process-intensive, increasing security and even personnel costs
  • Reputation and branding at risk – Companies’ immediate reaction to cyber attacks, or lack thereof, as well as communication to customers, can have a swift and damaging impact on hard-earned local brand image. Damage is both costly and time-consuming to repair
  • Opportunity for differentiation – Companies with highly localized emerging-markets teams should anticipate any targeting of their organization or industry, gaining competitive advantage against multinationals with more centralized market monitoring

Likelihood: 25%. With only a few important exceptions (such as companies targeted by Russian hackers in Ukraine) companies have not been seen as convenient targets for punitive actions. But with growing tensions in the Korean peninsula and the Middle East, prospects for damaging cyber attacks remain high, though unlikely to be uniform.

How to prepare: Train your local teams to understand and monitor relevant local political and social challenges. Engage in local outreach to understand how key issues impact your customers, local suppliers, or channel partners. Evaluate whether your company is a viable threat to local political or social activity, particularly for companies with government customers. If so, take precautions to communicate and to protect against possible targeting of your systems. Consider investing in cutting-edge security safeguards. Finally, at the corporate level, set clear plans for managing conflicts. On which issues will your company have a clear stance? In which areas will you stay out of the limelight?

For more information

In our Events to Watch for 2018 report we provide in-depth scenarios, expected impact on business performance and operations, as well as recommended frameworks for contingency planning and effective market monitoring.

Not a current client? You can purchase a copy on FSG’s online store here.

We also invite you to register and join our Events to Watch for 2018 webinar, presented by FSG’s Director for Global Economics, Antonio Martinez, and Global Head of Research, Joel Whitaker. Please register for the viewing time of your choice:

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