While recent natural catastrophes have highlighted the risksweather poses to a company's supply chain, technology failure andcyber attacks represent an even greater threat that many companiesoverlook, a new report said.

In its “Tomorrow Never Knows: Emerging Risks” report, the GuyCarpenter said, “Few aspects of our personal or commercial livesare now technology free. And yet, most individuals and businessesonly realize the extent of this dependency when they are negativelyaffected by a technology-driven or technology-dependent event.”

This reality extends to a company's supply chain, Guy Carpentersaid. “Due to technological innovation and advances, many parts ofa company's or industry's supply chain may have becomeinterconnected and automated. Technology is indeed a criticalenabler of a supply chain's operations,” states the report.

As such, the consultancy said, a single disruption such as acyber attack “has the potential to put an entire company's supplychain at risk.”

The report outlines results from the “Business ContinuityInstitute's 2012 Supply Chain Resilience Survey,” which show thatunplanned outage of IT/telecoms was the most significant cause ofsupply-chain disruption last year, outpacing adverse weather, whichplaced second.

Outsource service provider failure was the third mostsignificant cause of supply-chain disruption. Guy Carpenter summedup this risk by noting that a disruption at a technology company ina distant land rendering cloud-based services to a company inWisconsin could ripple out into a series of events that leaves theWisconsin company without access to a key part of itsinfrastructure.

The disruption could be something as simple as a localinterruption to the power supply, Guy Carpenter said. “No longer isthere necessarily a direct physical or even indirect physicalconnection between the holder of a company's data and the company,”the report points out.

Further down the list of 2012 supply-chain disruptions, cyberattacks now outstrip fire and social unrest, according to GuyCarpenter. The report notes that cyber attacks in general are onthe rise, with 2012 breaking the record with respect to the numberof reported data-loss incidents.

“With 2,644 incidents recorded [for 2012] through mid-January2013, 2012 more than doubled the previous highest year on record(2011),” Guy Carpenter said. “Furthermore, the extent of attacks islikely to be far higher since around 20% of reported incidents didnot disclose the number of records involved.”

Taken together, Guy Carpenter said technology riskfactors—unplanned outage of IT/telecoms, outsource service providerfailure and cyber attacks— make up the majority of all supply-chaindisruptions in 2012.

As for covering these risks, the global consultancy said theinsurance industry is aware that companies are more exposed toexternal risks than ever before. Technology allows business to beconducted all over the world instantaneously, but that also meanssupply-chain failures can significantly impact a company's revenueand reputation.

Insurers and reinsurers therefore are demanding that companiesimprove their supply chain risk-management strategies beforebusiness interruption/contingent business interruption coverage isoffered.

Guy Carpenter said companies have a responsibility to reviewsuppliers' business-continuity plans and gain a betterunderstanding of their supply chains, “identifying and anticipatingpotential problems and taking measures to prevent them from causingsignificant disruption.”

Companies that do this will be able to take advantage of thebroadest and best BI/CBI coverage in the marketplace, theconsultancy's report said.