London, U.K. —The risks of critical equipment failure and a cyber attack on industrial control systems are major concerns for 94% and 84% of Fortune 500-size companies, respectively.
That’s according to a new survey of 200 business leaders with companywide responsibility for overseeing equipment operations or equipment risk, commissioned by FM Global, one of the world’s largest commercial property insurers. All respondents were from companies with more than US$1 billion in revenue, and three-quarters were from companies with over US$5 billion.
Equipment failure risks have increased over the past five years in the judgment of 43% of respondents, compared with only 29% who said those risks have decreased in that time.
The stakes of equipment failure are high: 75% of respondents said they expect it would take months, at least, for their companies to recover financially from the failure of critical equipment, with 14% of them predicting recovery would take years.
Respondents expect a range of negative impacts in the event of a critical equipment failure:
- 54% expect a decline in revenue/earnings
- 51% expect increased scrutiny from the investment community
- 50% expect the introduction of regulatory compliance problems
- 48% expect the degradation of brand/reputation
- 46% expect an inability to fulfill orders, leading to a decline in market share
- 39% expect a decline in share price
- 29% expect layoffs and/or loss of key employees
“The possibility of equipment failure is weighing heavily on the minds of business leaders, and it should,” said Malcolm Roberts, executive vice president, FM Global. “A robust economy, turnover in the technical workforce and an increasingly potent cyber criminal community means every company should be scrutinising its potential vulnerabilities now.”
FM Global helps companies manage risks related to critical equipment, including boilers and other major machinery, as well as the risk of cyber attack on industrial control systems, through an engineering approach to loss prevention.
The research, commissioned by FM Global and conducted by Engine Group, a leading market research firm, is based on responses received in September 2019 from 200 business leaders with organization-wide responsibility for equipment operations or equipment risk at North America-based companies over US$1 billion in revenue—the vast majority of which are from Fortune 500 organizations across a wide variety of industries.
About FM Global
Established nearly two centuries ago, FM Global is a mutual insurance company whose capital, scientific research capability and engineering expertise are solely dedicated to property risk management and the resilience of its client-owners. These owners, who share the belief that the majority of property loss is preventable, represent many of the world’s largest organisations, including one of every three Fortune 1000 companies. They work with FM Global to better understand the hazards that can impact their business continuity in order to make cost-effective risk management decisions, combining property loss prevention with insurance protection.