Pirates without Borders: the Propagation of Cyberattacks through Firms’ Supply Chains
44 Pages Posted: 31 Jul 2020 Last revised: 29 Jul 2021
Date Written: May 27, 2021
We document the supply chain effects of the most damaging cyberattack in history. The disruptions propagated from the directly hit firms to their customers, causing a four-fold amplification of the initial drop in profits. These losses were larger for affected customers with fewer alternative suppliers. Internal liquidity buffers and increased borrowing, mainly through bank credit lines, helped firms navigate the shock. The cyberattack also led to persisting adjustments to the supply chain network, with affected customers more likely to create new relationships with alternative suppliers and terminate those with the directly hit firms.
Keywords: cyberattacks, supply chains, bank credit
JEL Classification: L14, E23, G21, G32
Suggested Citation: Suggested Citation