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Russia's invasion of Ukraine evoked unified reactions from NATO and its allies, with member countries imposing sanctions on Russia as retaliation. Given that Russia has been linked to some of the most severe third-party cyber-attacks, including those on SolarWinds, Colonial Pipeline, and JBS Foods, the U.S. Such minor issues indicate that your third-party is exposed to war.
Federal Bureau of Investigation (FBI) and Cybersecurity and Infrastructure Security Agency (CISA) have warned businesses and governments to look for potential ransomware attacks in Russia in retaliation for the imposition of these sanctions.
The Ukraine conflict is causing global trade and investment disruptions, affecting European automakers, Georgia and the Maldives hoteliers, and global food and fuel consumers. However, the world's developing nations are the most vulnerable because they spend much of their income on necessities. As a result, these disruptions affect every country, region, and industry.
While dealing with the problem, you must determine whether the Ukrainian conflict has impacted your third-party supplier. Here is a checklist of things to look for to determine whether the vendor is affected:
Supply chains are being tested again, this time by the extraordinary events in Ukraine. Supply chain disruptions are no longer treated as one-time events, with organizations scrambling to minimize the disruption to their business and keep goods, funds, and information flowing across the supply chain.
The conflict in Ukraine emphasizes the need for most organizations to have more resilient supply chains in place.
So, if you depend on a third party surrounding Ukraine, you might face a shortage of goods or services for some time. If the war continues, it means looking for a plan B to maintain a steady supply. However, if your vendor is far from the war nation, your business will only get a minor effect.
If you depend on a specific supplier, where do they get the labor from? If the company is in Ukraine, most workers come from the same country. According to a new International Labour Organization brief, an estimated 4.8 million jobs have been lost in Ukraine since the beginning of Russian aggression (ILO).
According to the study, job losses would rise to seven million if hostilities escalated. However, if the fighting stopped immediately, rapid recovery with the return of 3.4 million jobs would be possible. According to the brief, the impact of the Ukraine crisis on the world of work: Initial assessments would reduce job losses to 8.9 percent.
The Ukrainian crisis has caused labor disruptions in neighboring countries, particularly Hungary, Moldova, Poland, Romania, and Slovakia. By doing this, it means the surrounding companies also have a shortage of workers, thereby causing a shortage in the supply chain.
Moreover, if the fighting continues, Ukrainian refugees will be forced to stay in exile for longer periods, putting additional strain on the labor markets and social protection systems of these neighboring countries and increasing unemployment in many of them. Thousands of people, who were suppliers, have died, hence a reduction in the supply of goods. This has deteriorated businesses across the world.
Running a business entails numerous risks. Some of these potential hazards can destroy a business, while others can cause serious damage that is costly and time-consuming to repair. Yet, regardless of the risks inherent in doing business, CEOs and risk management officers have to anticipate and plan for them, regardless of the size of their company. In addition, they must ensure the supply chain remains stable regardless of negative external factors.
If and when a risk materializes, a well-prepared business can reduce the impact on earnings, lost time and productivity, and negative customer impact. Therefore, identifying risks is important in strategic business planning for startups and established businesses.
If the number of employees and stakeholders keeps declining, the third-party company is at risk of toppling. Since many transport routes have been blocked, many organizations might have reduced services and systems, harming the business.
In addition, employees face a high level of safety risk. If a company's systems or services have been shut down regularly, it means the third party is exposed to war and hence won't work for an unknown time.
While the situation in Ukraine develops and sanctions against Russia are imposed, organizations worldwide will assess the impact on their operations. Because IT is a critical component of all organizations' day-to-day operations, CIOs and I.T. leaders have been at the forefront, ensuring that it is business as usual while accounting for some exceptional circumstances.
The impact of the recovery plan varies depending on the organization's size, geographic reach, and nature. For example, a barbershop chain in the United States is less likely to be impacted than a multinational bank or retailer throughout Europe. However, the warning of cyber threats increases means that all organizations are potentially vulnerable.
Organizations that have developed a strategic plan to recover from war indicate their strength to stand even during tough moments. Moreover, it shows that vendors will still perform their duties despite the effects of war. On the other hand, some organizations have no document of continuity, which shows that operations will cease if the war proceeds for some time.
This five-pillar framework can help inform cross-enterprise decisions about business continuity as leaders seek to understand immediate and potential future risks to their business, assess impacts across the organization, and develop contingency plans. It covers fundamental aspects of business, starting with the most important consideration, an organization's people. The pillars include:
Food and raw materials prices were already rising before the outbreak of the COVID-19 pandemic, with supply chain disruption and energy price increases. However, since Russia invaded Ukraine, prices for commodities such as wheat have skyrocketed.
Certain products' rising costs are having a negative impact on businesses that rely on them. For example, Ukraine, known as the "breadbasket of Europe," accounts for roughly 20% of barley usage in beer. As a result of the conflict in Ukraine, the price of goods such as beer is rising. Such increases would undoubtedly affect small businesses that rely on beer, such as bars and restaurants.
With many industries facing product shortages, the pandemic's panic-buying behavior could repeat itself. As a result, businesses and individuals may stockpile goods. Farmers, for example, who have seen fertilizer prices rise by up to 300 percent since early 2021, which look set to rise even further due to the Russia-Ukraine war, are threatening to buy in bulk.
In addition, the blocks in the transport sector have hindered the supply of goods, which disrupts every activity of the third party.
In response to Russia's attack, U.S. agriculture companies with operations in Ukraine have been forced to close offices and facilities.
Logistics is one of the most significant challenges for many U.S. agricultural businesses trading with Russia and Ukraine. Importers and exporters have difficulty settling payments if their trading partners use sanctioned Russian banks.
In recent years, Ukraine has grown in popularity as a destination for software development outsourcing. According to reports, Ukrainian software developers have been hailed as the ideal development destination. As a result, more North American businesses have chosen Ukraine to expand their development capability.
On the other hand, the Russian invasion of Ukraine has disrupted basic public services such as telecommunications. Not only have such critical services been severely disrupted, but many software professionals have fled Ukraine for neighboring countries.
As a result, small businesses in the United States that rely on outsourced software engineers in Ukraine may have problems. In addition, the cost of this talent is expected to rise, making such vacancies more difficult to fill.
Thanks for reading. We hope you get some important insights to help you notice if your third party is exposed to war.
