Tim Gallagher
Senior Vice President, Business Insurance Market Leader
Manufacturers face risks that can cause business interruptions, like supply chain disruptions, automation problems, cyberattacks, and weather-related issues that can affect operations, locations, access, and more. The COVID-19 pandemic caused unexpected shutdowns for different reasons. Cybersecurity has become more complex over time. Weather patterns are also changing, with more severe and frequent events.
When manufacturers shut down, the effects spread through the economy. Transportation delays can slow product distribution, raw materials may need to be stockpiled, and retail shelves might be empty, waiting for products. Manufacturing impacts the global supply chain, and an interruption—no matter the cause—can be disruptive. What happens thousands of miles away can affect a production line within days. Unfortunately, relying only on regional resilience isn’t enough. Planning for disruptions needs a global view.
How long your operation is down and how serious the consequences are depend largely on how well you’ve prepared and how you manage the situation.
Manufacturing is vulnerable to various causes of shutdowns.
Supply chain disruptions
According to the Marsh McLennan Agency Manufacturing Risk Report, 80% of organizations in 2024 reported supply chain disruptions, with most experiencing between one and ten over the year. This is a 38% increase from the previous year. General manufacturing was among the top five industries most affected.
Automation and artificial intelligence
A failed software update, corrupted firmware, or glitches in advanced systems—including those using artificial intelligence—can cause downtime. Today’s factories rely on complex, interconnected systems, where one failure can stop the entire production line. Managing this may mean buying custom equipment, updating proprietary code, or working with specialized service providers.
Cyberattacks
As factories become more automated and connected, they also become more vulnerable to cyber threats. A single breach can stop operations by locking data or freezing physical systems that depend on it. According to PwC, cyberattacks on manufacturers increased by 300% in recent years. Even a temporary system lockout in highly automated environments can shut down entire production lines.
The average cost of a successful cyberattack on an industrial organization has risen to $4.73 million. Why are manufacturers targeted?
- Downtime makes ransom payments more likely.
- Many still run on outdated systems with weak cybersecurity.
- The interconnected systems raise the stakes for manufacturers, their partners, and customers.
Weather-related problems
Weather events can damage buildings, cause supply chain delays, create safety hazards for workers, and cause power outages. As the weather becomes more unpredictable and severe, manufacturers need to prepare for possible shutdowns. Fires, floods, tornadoes, high winds, and hail can halt production for months. According to the TWI Institute, unplanned downtime from weather can cost an average company $260,000 per hour.
Insurance is only part of what you need for protection.
Insurance can help cover many costs from business interruptions, but it’s just one part of a broader risk plan. You should also:
- Manage your supply chain for resilience, including diversifying suppliers and managing inventory.
- Identify risks early and develop ways to reduce them.
- Create and practice a business continuity plan so it’s ready when needed.
Create a business continuity plan—and practice it.
A good plan can help reduce downtime, protect assets, maintain reputation, stay compliant, and prepare for future disruptions.
What makes a useful plan?
- Conduct a thorough risk assessment, including potential impacts.
- Identify possible threats.
- Develop response and recovery strategies, including IT.
- Set up clear communication plans.
- Manage supply chain issues.
- Keep employees safe during crises.
Basically, it’s about solving problems before they happen. Be prepared. And practice your plan regularly so everyone knows their roles and is ready to act. While no plan can prevent all disruptions, being prepared can significantly mitigate their impact. Too many companies find themselves unprepared when a crisis hits because they haven’t tested their plans.
Does this sound overwhelming? It doesn’t have to be—especially if you work with the right risk partner.
Talk with Marsh McLennan Agency.
Our manufacturing team understands your industry and challenges, especially when dealing with disruptions. We have the tools and resources to help you identify risks, find the right coverage, and prepare for what’s next.
Many businesses don’t have the right coverage for short-term or long-term shutdowns. Coverage isn’t one-size-fits-all. Working with a knowledgeable broker can help you understand your options and find policies that match your needs and risks.
To learn more, contact your local MMA representative.
