BDO’s annual RiskFactor Report for the first time cites that manufacturers’ top 10 concerns about “operational infrastructure risk, including information systems and implementation of new systems and maintenance.” The “2016 BDO Manufacturing RiskFactor Report” issued in June 21, 2016 introduced the subject with this headline “Manufacturers Scamper to Shore Up Security” and these comments:

Manufacturing was the second-most targeted industry for cyber attacks in 2015, according to IBM. While the industry may have flown under the radar as high-profile attacks against the retail, financial services and healthcare industries made headlines, manufacturers’ information, intellectual property and products have become prime targets for cyber criminals.

The Top 25 Risk Factors cited in 10-Ks that BDO reviewed listed that “Breaches of technology security, privacy, theft, computer crime” is now #9 and the list of all 25 (“t” indicates a tie in the risk factor ranking”:

#1 U.S. and foreign supplier/vendor concerns and distribution disruptions

#2 Federal, state and/or local regulations

#3 Labor concerns/underfunded pensions

#3t Competition & consolidation in manufacturing

#3t Commodity/raw material prices

#6 General economic conditions

#7 Environmental regulations, laws and liability

#8 Threats to international operations and sales

#9 Breaches of technology security, privacy, theft, computer crime

#9t Currency risk, including exchange, fluctuation

#9t Inability to manage, complete and integrate current or future M&A, joint ventures, divestitures or other transactions

#12 Ability to maintain operational infrastructure, including information systems, implementation of new systems

#12t Business Interruption (natural disasters, war, conflicts and terrorist attacks)

#12t Failure to properly execute corporate strategy

#15 Access to capital or liquidity

#15t Less demand for products

#17 Ability to develop and market quality products that meet customer needs/innovation

#18 Legal proceedings, litigation

#18t Restrictive international trade policies

#18t Product quality or contamination issues, recalls

#21 Attract/retain/motivate key personnel and management

#22 Customer/vendor/partner’s ability to finance, access to capital

#23 Anti-corruption/anti-bribery laws and regulations, including FCPA

#23t Intellectual property or trademark infringement

#23t Insurance costs and potential losses due to uninsured liabilities

#26 Fluctuation in fuel/energy/oil/transportation costs

#26t Accounting standards, including internal controls and financial reporting

Interesting news, but hardly a surprise!