4 Key Impacts of Cybersecurity Threats
Cybersecurity is one of the key challenges facing global companies today, with the media frequently featuring stories about business outages caused by targeted cyber-attacks. In fact, Dun & Bradstreet’s country insight analysts have identified the possibility of a systemic disruption to the global economy due to a cyber event as the top risk in our latest Global Risk Matrix. Firms are regularly advised to take preventative action to avert such attacks and are also usually able to overcome attacks in the short term – albeit at a cost to the bottom line. However, businesses must also be aware that they can get caught in the fallout from politically-motivated cyber-attacks that are not aimed specifically at them.
Cyber-Attack on Qatar’s News Agency
In May, Qatar’s state-run news agency was allegedly hacked. Several Western agencies have suggested that this attack was carried out by Qatar’s neighbour – and fellow Gulf Co-operation Council (GCC) member – the United Arab Emirates (UAE). The UAE has denied being behind the attack.
As a result of the alleged hacking activity, the news agency website contained controversial comments on regionally-sensitive issues such as Iran, Hamas, Israel and the US, all attributed to Qatar’s ruler, Emir Sheikh Tamim bin Hamad Al-Thani. The comments, which were denied by the Emir, provoked a storm of protest across the Arab world. The political fallout, which has involved countries from across the globe, has impacted the Qatari business environment; several Arab countries – including Saudi Arabia, the UAE, Bahrain and Egypt – have imposed an economic boycott on Qatar, including a formal closure of Saudi’s land border with Qatar and cutting air and sea links. Informal action has also been taken against several banks, which might conceivably be extended to companies in the non-financial sector.
The Global Impact of Cyber-Attacks
The business environment has been undermined not just regionally but also globally. There are a number of ways in which businesses have been inadvertently impacted by this political spat, including:
- Supply-chain Realignment
The Qatar boycott has prompted a realignment of supply chains in the Persian Gulf, with Qatar opening up new maritime links through Oman, India and Iran, as well as air links through Turkey and Iran, thus creating new opportunities for companies in these countries. However, on the downside, companies in the UAE and Saudi Arabia that were heavily involved in cross-border trade with Qatar have found their business drying up, with negative consequences for firms in their own supply chains. The realignment is also raising costs for companies involved in importing to/exporting from Qatar, owing to increased supply-chain length and complexity.
- Rising Financial Issues
The dispute has also hit the financial sector, with the UAE reportedly informally preventing banks with large Qatari shareholdings (such as Credit Suisse, Barclays and Deutsche Bank) from winning government and federal mandates. This will affect the banks’ ability to engage with regional bond issues (both sovereign and corporate), IPOs and privatisations – all of which are expected to take off as oil-dependent governments are hit by ‘lower-for-longer’ oil revenues.
Furthermore, Arab banks are withdrawing funds from Qatari banks, reducing local liquidity, which will inevitably see lending conditions become tougher for businesses in the Emirate. This is liable to reduce the availability of trade finance, working capital and investment capital, and will also see the government delay payments to contractors. These developments will all increase the risks of doing cross-border business with Qatari companies.
- Loss of skills and tourism
The boycott is also affecting flows of people. Firstly, companies in the blockading countries have experienced a sudden skills-loss as Qataris have returned home, raising personnel costs and damaging company efficiency. Secondly, the tourist sector in Qatar has seen hotel occupancy dropping sharply as a result of Saudis and Emiratees no longer being able to visit the country. Similarly, Qatari tourism to the boycotting countries (which is usually at the high end) has been curtailed. Consequently, companies in the regional tourist sector will see trading conditions become more difficult.
- Long-term Energy Considerations
Although the tensions have not hit LNG exports from Qatar, the threat to the world’s leading LNG exporter is liable to see energy-importing governments consider their energy supply options. This will inevitably lead to a realignment of supply chains in the energy sector and prompt further uncertainty for business involved in it.
Conclusion: Cybersecurity Goes Beyond the Company
When businesses implement a cybersecurity plan, managers who focus only on their own systems are neglecting a key threat: they also need to stay alert to how politically-inspired actions between countries can affect supply chains and the business-operating environment. In this context, continual monitoring of political risks can play an insightful role in mitigating cybersecurity risks.