Supply chain finance and cyber risk: an illustrative case study

Organizations and supply chains are increasingly exposed to cyber breaches and risk, which may detrimentally affect data security, firm performance and supply chain financial flows. The purpose of this chapter is to provide an illustrative case of how cyber risk, and specif- ically cryptolocker attacks, represents a challenge for firms managing supply chain financial processes in terms of cash flows, credit risk and its associated financial implications. A case study of Paul Hartmann SpA (Italian division) provides insight as to how their firm views and manages cyber risk and its effects on supply chain finance (SCF). Findings from the case study describe how cyber risk can negatively affect the cash-to-cash cycle (accounts payable, inventory, accounts receivable), obscures supply chain cash flow visibility, and creates disruptions to both product and financial flows. Further, this chapter describes how cyber risk can detrimentally influence credit ratings, liquidity, and can potentially lead to insolvency if not managed.