The Overlooked Manufacturing Risks Threatening Your Bottom Line

Manufacturing risks come with the territory when you run a production business – but not all of them are obvious. While you’re busy juggling deadlines, budgets and quality control, certain threats can quietly creep in behind the scenes. By the time you notice them, they’ve already started cutting into your bottom line. 

Some of these risks are built into your processes. Others hide in your workforce, your supply chain or even in outside forces you can’t control. The good news? Every single one can be managed if you spot them early and have a plan in place – because protecting your business from these threats is the first step to unlocking its full value. 

Take our Manufacturing Resiliency Assessment to see where you score out of a possible 1,000 points. It takes less than 5 minutes and can show you where you’re most vulnerable. 

Now that you know where you may need to focus your risk management efforts, let’s get to six of the most overlooked manufacturing risks we see and how to get ahead of them before they become costly problems.

1. Manufacturing Risks from Supply Chain Disruptions

When one link breaks, the whole chain is broken. A single component delay can halt production, force expensive workarounds and strain customer relationships. 

Supply chain disruptions aren’t new, but global instability, transportation breakdowns and material shortages have made them one of today’s most volatile manufacturing risks. The problem? Many companies don’t uncover their real vulnerabilities until it’s too late. 

What to do about it: 

• Map your supply chain beyond first-tier vendors to reveal hidden dependencies. 

• Identify and test relationships with alternate suppliers before you need them. 

• Keep a calculated safety stock of critical components. 

• Use real-time shipment tracking to address delays before they stall production. 

2. Manufacturing Risks Caused by Workforce Turnover and Skills Gaps

Your people are your production engine – and when a skilled employee leaves, you lose more than just their shift hours. Institutional knowledge, training investments and productivity walk out the door with them. 

In 2024, over 80% of manufacturers reported that turnover disrupted their production – proof that this isn’t just an occasional headache, it’s one of the most persistent manufacturing risks businesses face today. 

The companies that handle it best are the ones that treat talent retention and development as core parts of their risk strategy, not just HR’s responsibility. 

What to do about it: 

• Cross-train employees so operations aren’t dependent on one person. 

• Pair new hires with mentors to shorten learning curves. 

• Review compensation and benefits regularly to stay competitive. 

• Build succession plans for critical technical and leadership roles. 
  

 3. Manufacturing Risks Linked to Safety Compliance Lapses

Proper safety programs aren’t just about avoiding fines – they’re about protecting your people, keeping operations efficient and maintaining your reputation. 

One lapse can trigger injuries, higher premiums, production stoppages and damaged customer relationships. Yet too often, safety is treated as a checklist item rather than a core defense against manufacturing risks. 

What to do about it: 

• Conduct proactive safety audits that go beyond OSHA requirements. 

• Make safety training continuous, not a one-time event. 

• Create a culture where employees can report hazards without fear. 

• Track safety performance and hold teams accountable. 

Learn more about how a strong workplace safety program can lower your workers’ compensation premiums and strengthen your business. 

4. Manufacturing Risks from Cybersecurity Weaknesses in Operational Technology

Cyberattacks are one of the fastest-growing manufacturing risks. In fact, manufacturing saw more cyberattacks than any other industry in 2024, making up about 26% of all reported incidents. 

It’s not hard to see why. With production environments more connected than ever, each integration or networked machine is a potential entry point for cybercriminals.  

And it’s not just email hacks or stolen data at stake. Now, ransomware can shut down production completely – which means your operational technology (OT) could be a prime target. That’s why staying ahead of current and emerging risks is crucial. 

What to do about it: 

• Separate operational and administrative networks to limit access points. 

• Require multi-factor authentication for all system access. 

• Keep OT software and firmware up to date. 

• Develop and test a joint IT/OT incident response plan. 

5. Manufacturing Risks Created by Inadequate Business Continuity Planning

Fire. Flood. Equipment failure. Sudden supplier collapse. These manufacturing risks can halt operations in an instant. 

Without a solid continuity plan, one unexpected event can stop production and send customers looking elsewhere. In manufacturing, speed matters; businesses that recover quickly often gain an edge over those that don’t. 

What to do about it: 

• Identify your most critical operations and create backup processes. 

• Build relationships with alternate vendors and service providers. 

• Store essential documents and data securely offsite or in the cloud. 

• Update and test your continuity plan every year. 

6. Manufacturing Risks Associated with Lack of Succession and Exit Planning

Right now, roughly one-third of business owners have no long-term succession plan or are unsure what will happen to the business when they exit. 

This is one of the most serious manufacturing risks for your livelihood. If your business is your retirement plan, a chaotic transition can lower valuations, disrupt operations or even lead to closure.  

A clear plan protects your financial future, your employees and your customers. 

What to do about it: 

• Get a formal valuation to understand your business’s current worth. 

• Identify and prepare successors well before transition. 

• Explore financing structures to make internal buyouts possible. 

• Involve tax and legal advisors early to minimize liabilities. 

Need help finding a starting place? Check out our four exit planning questions that every business owner should answer.  

Protecting Your Manufacturing Business Starts with Knowing Your Risks 

Everyone in the industry faces manufacturing risks – but if you want to get the most out of your business, you have to start by minimizing the threats that could erode what you’ve built.  

That’s where we come in. At Ellerbrock-Norris, we help manufacturers uncover vulnerabilities, protect their people, safeguard operations and strengthen value. 

Start now with our quick Manufacturing Risk Assessment. In just a few minutes, you’ll have a clearer picture of where you’re strong, where you’re vulnerable and what you should tackle first.  

Don’t wait for the next disruption to test your resilience – take the quiz, then schedule your free risk assessment to start protecting your purpose.