An article published in the Wall Street Journal on May 24, 2011, illustrates the economic losses Sony Corporation faces due to the impact on its supply chain from the disaster in Japan and the hacking of its PlayStation Network. Both the tsunami and earthquake hurt Sony’s financial performance, which led it to announce an expected annual loss of $3.2 billion this year. In addition, its PlayStation Network also suffered a massive cyber attack. Hackers breached over 100 million user accounts worldwide, stealing private customer information. Sony consumers were unable to utilize their PlayStation gaming systems and Sony must manage the ensuing risks associated with the intrusion. It is expected that the cyber attack will contribute to an additional operating loss for the company.
What lessons can be learned from the financial losses Sony faces? A traditional approach for property and supply chain losses would focus on the defensive management of hazard risk through insurance, which can still result in significant unaddressed exposures. However, if Sony separated its facilities or diversified its supply sources more, it could have greatly reduced its business interruption vulnerability.Better yet, a proactive approach using a comprehensive risk review or a risk management assessment could identify supply chain, cyber, financial and strategic risks and mitigate a full spectrum of hazards through insurance and other measures.
If you would like to discuss taking a proactive approach to mitigate your cyber, supply chain and other risks, feel free to contact me.
To read the full article on Sony’s economic loss, click here.
