The U.S., U.K., and E.U. have imposed strict sanctions on Russia in response to its invasion of Ukraine. Though these trade restrictions and port bans are meant to pressure Russia, the rest of the world is feeling the impacts, too.
Below, we’ll cover some of the burdens these sanctions are placing on different realms, from cybersecurity to the supply chain.
Increased Threat of Russian Cyberattacks
Below, we’ll cover some of the burdens these sanctions are placing on different realms, from cybersecurity to the supply chain.
Increased Threat of Russian Cyberattacks
It’s no surprise that Russia is a powerhouse when it comes to cyberattacks. In the weeks leading up to Russia’s invasion of Ukraine, the country launched more than 237 cyberattacks aimed at Ukrainian businesses and organizations. Since the invasion, it’s now believed Russia has deployed hundreds of cyberattacks associated with missiles and ground attacks in Ukraine.
It seems Russia has been keeping its cyberattacks isolated to Ukraine—for now, that is. With the continued sanctions on Russia, U.S. cybersecurity officials expect Russia to retaliate and target U.S. energy companies and financial institutions. While the extent of this threat is unknown, President Biden has urged critical infrastructure owners and operators to strengthen their cyber defenses, as an attack could take down anything from U.S. power grids and water systems to food production and banks.
Changes to Shipping Insurance Policies and Contracts
These sanctions have also caused complications for shipping companies and insurers who have trade contacts with Russia. Depending on their specific contracts, some insurers may be legally bound to continue trade with Russia until renewal. Meanwhile, some insurance companies are denying claims under war policies and sanctions, while others are invoking their right to Notice of Cancelation (NOC) specific to War, Strikes, Riots, and Civil Commotion (SRCC) risks.
Additionally, both Finland and Sweden had not been militarily aligned for many years, but decided to apply to join NATO after Russia invaded Ukraine in February. Both countries felt vulnerable to potential attack. The NATO Shipping Centre (NSC) is the link between NATO and the merchant shipping community. Members and non-members of NATO are ultimately affected by the NSC as they serve as the primary point of contact for the exchange of merchant shipping information between NATO's military authorities and the international shipping community.
Continued Supply Chain Disruptions
The sanctions on Russia have no doubt continued to disrupt the already unstable supply chain. Many countries around the world rely on important imports from Russia, such as oil, grain, and fertilizers. Without access to these resources, we can expect major supply shortages, which, in turn, will cause prices to surge. In some areas, this could even lead to humanitarian crises and political unrest.
Not to mention, as shipping companies are no longer traveling along Russian roads, landing at Russian airports, or stopping at Russian ports, it’s creating a logistical nightmare for the freight, air, and marine cargo sectors. The industry is facing limited cargo space and price hikes on energy and oil, while desperately trying to reroute around Russia. Of course, these setbacks are only further delaying shipments and contributing to the breakdown of the supply chain.
Imposing sanctions is meant to punish Russia, but unfortunately, there is a trickle-down effect. Because we are a part of an interconnected global economy, the impact of these sanctions is far-reaching.
The above is intended for information purposes only. Coverage provided under any Falvey Cargo Underwriting product is a determination of fact to be made on a case-by-case basis. Nothing contained herein shall impact Falvey Cargo Underwriting’s rights under any policy and applicable law
