The recent cyberattack on Jaguar Land Rover (JLR), which began on August 31st, demonstrates the vulnerabilities of modern manufacturing and its supply chains to cyber threats. Production was halted for nearly a month, costing an estimated £50 million per week and affecting approximately 33,000 staff.
The attack, claimed by “Scattered Lapsus$ Hunters,” also disrupted the IT infrastructure which connects JLR to its suppliers, demonstrating the broader risk to the supply chain. JLR had been negotiating a cyber insurance policy through broker Lockton but had not finalised it, leaving the company without direct protection when the attack struck
Whilst this is an example from the manufacturing sector, the scenario of a cyber attack on a business which then has consequences for businesses in the supply chain is not uncommon.
How can Cyber Insurance help?
Cyber insurance helps businesses recover from cyber incidents by covering costs linked to data breaches, ransomware, and business interruption. A comprehensive cyber insurance policy could have provided:
• Business interruption cover to offset weekly losses
• Extra expense cover for incident response, forensic investigation, and system restoration
• Crisis management support, including PR and communications expertise
• Cyber extortion cover if ransomware demands were involved
• Third-party liability cover against potential supplier and customer claims
Beyond direct costs, the knock-on impact across the supply chain is substantial. JLR’s production supports around 104,000 jobs in suppliers, and up to 250,000 people may be affected across the wider network. Some suppliers paused production or laid off staff due to halted orders, creating a cashflow crisis, particularly for smaller businesses.
How could Trade Credit Insurance help?
Trade Credit Insurance becomes crucial in these scenarios. This insurance protects businesses against customers failing to pay due to insolvency or prolonged operational disruption. Key features include:
• Inadequate debt protection – for unpaid invoices
• Works in progress cover – protecting partially completed orders
• Advanced payment cover – recovering deposits made to suppliers
• Pre-delivery cover – for goods manufactured but not yet delivered
• Credit management services – ongoing monitoring of customer financial health
• Collection services – professional debt recovery support
These incidents highlight that cyber and supply chain risks aren’t confined to one industry. Every business that depends on digital systems or third-party suppliers faces similar exposure. Suppliers with trade credit cover may use claims to maintain operations, safeguard cash flow, and protect jobs during a prolonged shutdown.
The risks extend beyond automotive manufacturing:
• Healthcare: Pharmaceutical distributors’ cyberattacks could halt medication deliveries.
• Retail: Marks & Spencer faced losses of around £300 million and months of disruption, affecting suppliers and logistics
• Food and agriculture: Cyberattacks on processors could disrupt farmers, packagers, and logistics companies.
• Technology: Cloud or software provider attacks may lead clients to face unpaid invoices.
• Construction: Major firm shutdowns could halt projects, putting subcontractors and suppliers at financial risk.
The interconnectedness of modern business and its supply chain means cyber events create systemic risks that traditional risk management cannot fully address. With over 700,000 UK businesses in significant or critical financial distress, the potential impact of cyber disruptions is high.
What does this mean for your insurance programme?
The FCA encourages firms to understand their operational resilience obligations, as insurance is part of a wider risk management strategy. In summary, combining cyber insurance with trade credit insurance provides a more robust protection strategy:
• Cyber insurance covers direct attack costs and business interruption
• Trade credit insurance protects against the secondary effects when customers or suppliers are impacted
• Together, they maintain cash flow, preserve supplier relationships, and support continuity across the supply chain
The cost of going without cover, as JLR discovered, can be exponentially higher than the insurance premium. The JLR and M&S incidents highlight how deeply a cyber event can affect supply chains. Reviewing your insurance programme now ensures your business is protected from both direct cyber risks and the financial impact of customer or supplier disruption.
Thanks to Computing Magazine, Insurance Business UK, Acronis Blog, The Insurer, Insurance Journal, Autoblog, ITV News, Bloomberg and Begbies Traynor for additional info.
