Four high-stakes manufacturing risks and who really owns them
When there’s no clear line of accountability, teams scramble to respond to risk while insurers face uncertainty about coverage. Effective manufacturing risk management is essential to understanding where these common high-stakes risks are and how they spread. Knowing this is the first step to building resilience.
1. Cybersecurity breaches
Once seen strictly as an IT problem, cyberattacks now often disrupt production. A ransomware event doesn’t just lock files—it can bring robotic machinery to a halt, interrupt vendor communications, and expose sensitive customer data. In one example, a precision parts manufacturer had its network encrypted for three days. This delayed shipments, caused missed service agreements, and forced finance to negotiate emergency payments with the attacker.
Risk touchpoints:
- IT and security: Threat response and prevention
- Operations: System downtime and halted production
- Finance: Business interruption costs and ransom decisions
- Legal: Regulatory disclosures and contract breaches
- HR: Employee communication and compliance training
Without clear visibility and coordination across these functions, cyber coverage often doesn’t match the real risks, leaving businesses under protected.
2. Workforce instability
The effects of turnover, absenteeism, and labor shortages go far beyond the HR department. Gaps on the factory floor can lead to more mistakes, higher overtime costs, and stretched safety protocols. In one case, an electronics manufacturer rushed onboarding to fill a night shift, only to see a spike in minor injuries and a workers’ compensation claim tied to inadequate training.
Risk touchpoints:
- HR: Recruiting, onboarding, and retention strategies
- Operations: Quality, throughput, and safety culture
- Finance: Overtime costs and staffing budgets
- Risk management: Claims and insurance exposure
Workforce challenges become enterprise risk when they aren’t paired with cross-functional planning, benefits strategy, and retention support.
3. Compliance violations
From environmental issues to safety rules and data privacy, compliance risk isn’t just a concern for one department. A missed regulation in one part of the business can lead to enterprise-wide fines, lawsuits, or reputational fallout. For instance, a manufacturer unknowingly used a restricted solvent due to a lapse in supplier vetting, resulting in a six-figure EPA violation.
Risk touchpoints:
- Compliance and legal: Oversight, documentation, and audits
- Procurement: Supplier risk management
- Operations: Process controls and proper use
- Finance: Penalties and remediation costs
- HR: Policy enforcement and training
Regulatory risk often adds up over time, not from one mistake but from a series of misaligned decisions. Managing it needs teamwork and shared accountability across the business.
4. Supply chain disruptions
Procurement delays don’t just affect purchasing. They ripple through production schedules, customer deliveries, and even insurance coverage. In one case, a manufacturer’s key component supplier failed to deliver on time, stopping operations and causing a missed contractual deadline. The financial loss extended far beyond the cost of the parts.
Risk touchpoints:
- Procurement: Vendor vetting and backup planning
- Operations: Production scheduling and inventory control
- Finance: Lost revenue and inflated costs
- Sales and customer service: Customer relationship management
- Legal and risk: Contract fulfillment and business interruption claims
While some disruptions can’t be avoided, those without backup plans and clear ways to communicate about risks tend to feel the impact longer and more strongly.
Rethinking risk ownership in manufacturing
Risk isn’t one department’s job anymore. Embracing comprehensive manufacturing risk management is crucial for addressing the most urgent challenges—from workforce planning and compliance to cybersecurity and supply chain strategy. For a deeper look, download our recent report: Manufacturing Risk Report: A Guide to the Critical Five.
