Pirates without Borders: the Propagation of Cyberattacks through Firms’ Supply Chains

44 Pages Posted: 31 Jul 2020 Last revised: 29 Jul 2021

See all articles by Matteo Crosignani

Matteo Crosignani

Federal Reserve Banks - Federal Reserve Bank of New York

Marco Macchiavelli

Board of Governors of the Federal Reserve System

André F. Silva

Board of Governors of the Federal Reserve System

Date Written: May 27, 2021

Abstract

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

Crosignani, Matteo and Macchiavelli, Marco and Silva, André F., Pirates without Borders: the Propagation of Cyberattacks through Firms’ Supply Chains (May 27, 2021). FRB of New York Staff Report No. 937, Rev. July 2021, Available at SSRN: https://ssrn.com/abstract=3664772 or http://dx.doi.org/10.2139/ssrn.3664772

Matteo Crosignani (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Marco Macchiavelli

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

André F. Silva

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
174
Abstract Views
740
rank
213,435
PlumX Metrics