Ransomware in Manufacturing 2025: Data Security and Compliance Crisis

Manufacturing has earned a distinction no industry wants: the top target for ransomware attacks four years running. The 2025 Sophos State of Ransomware in Manufacturing and Production Report reveals that half of all manufacturers fell victim to ransomware and paid an average of $1 million in ransom demands.

Key Takeaways

1. Half of Manufacturers Paid Ransom—With Millions in Data at Risk. 51% of manufacturing organizations paid ransomware demands in 2025, with average payments reaching $1 million and recovery costs adding another $1.3 million. Beyond the financial hit, 39% of victims experienced data theft alongside encryption, turning operational crises into full-blown data breaches with regulatory consequences.
2. Data Exfiltration Turns Ransomware Into a Compliance Emergency. Manufacturing faces the second-highest rate of data theft among all sectors, with attackers stealing sensitive information including intellectual property, customer records, and authentication credentials before encrypting systems. Every exfiltration event potentially triggers GDPR notifications, state privacy law requirements, and contractual obligations that persist long after operations resume.
3. Expertise Gaps and Blind Spots Leave Sensitive Data Exposed. A lack of cybersecurity expertise contributed to 42.5% of successful attacks, while unknown security gaps enabled 41.6% of breaches—meaning organizations didn't know their data protection defenses had weaknesses until attackers exploited them. These organizational failures create the conditions regulators will scrutinize when investigating how sensitive data was compromised.
4. Supply Chain Visibility Failures Multiply Data Protection Risks. 67% of manufacturers cite end-to-end visibility gaps as a top third-party risk concern, far exceeding the cross-industry average. When partners suffer breaches involving shared data, 44% of manufacturers report they lack real-time notification—leaving them unable to meet their own compliance obligations or protect affected individuals.
5. Manufacturers Are Fighting Back—and Winning More Battles. Data encryption rates dropped to 40% of attacks in 2025, the lowest in five years, while the percentage of attacks stopped before encryption doubled to 50%. Faster detection, stronger response capabilities, and improved backup practices are producing measurable results that limit both operational disruption and data exposure.

But the financial toll tells only part of the story. Every successful ransomware attack represents a potential data breach, a compliance violation, and a regulatory nightmare. With 39% of manufacturing ransomware victims experiencing data theft alongside encryption, the sector faces a dual crisis of operational disruption and sensitive data exposure that regulators, customers, and partners are watching closely.

Understanding the data privacy and compliance dimensions of ransomware—and what’s working to address them—matters for every production facility, supplier, and operations leader trying to protect both their operations and their data obligations.

The Data Manufacturers Must Protect

Manufacturing organizations handle far more sensitive data than many realize. According to industry research on data security in manufacturing, 61% of manufacturing organizations collect authentication credentials through their systems and forms. Fifty-eight percent handle financial records. Thirty-six percent process payment card data subject to PCI DSS requirements. Twenty-nine percent collect government identification numbers.

Beyond these categories, manufacturers regularly handle employee data, customer account information, and supplier and partner data. Perhaps most critically, manufacturing environments expose high-value intellectual property including designs, specifications, trade secrets, and product details that competitors and nation-states actively seek.

This data carries significant regulatory weight. Manufacturing organizations operate under a complex matrix of requirements including GDPR for European data subjects, PCI DSS for payment processing, and industry-specific regulations in automotive, electronics, aerospace, and industrial equipment sectors. Export controls and supply chain risk management initiatives add additional layers of obligation.

When ransomware attackers breach a manufacturing environment, they don’t just disrupt production. They potentially access, exfiltrate, and expose data that triggers notification requirements, regulatory investigations, and substantial penalties.

Why Attackers Target Manufacturing Data

Manufacturing operations present a uniquely attractive target for cybercriminals seeking both ransom payments and valuable data. Production lines that stop generating revenue the moment they halt create pressure to pay. But the data these organizations hold creates additional leverage.

Intellectual property theft can fund operations or be sold to competitors. Customer and supplier data enables follow-on attacks through the supply chain. Credential theft provides access to connected systems and partner networks. Financial data enables fraud. Personal information of employees and customers triggers breach notification requirements that increase pressure on victims.

The math is simple: Manufacturers feel operational disruptions immediately in their revenue, and data exposure creates long-term regulatory, legal, and reputational consequences. Attackers understand that threatening both operational continuity and data privacy maximizes their leverage.

Sophos surveyed 332 IT and cybersecurity leaders from manufacturing organizations across 17 countries whose companies experienced ransomware attacks in the past year. The findings reveal troubling data security gaps alongside meaningful progress in threat response.

Data Breach Reality in Manufacturing

The Sophos research found that 39% of manufacturing organizations that had data encrypted also experienced data exfiltration—the second-highest rate reported by any sector surveyed. This means attackers didn’t just lock up data; they stole copies they could leak, sell, or use for additional extortion.

Related industry research paints an even broader picture of data security challenges. Eighty-five percent of manufacturing organizations report at least one form-related security incident in the past two years. Forty-two percent report a confirmed data breach via form submissions—systems that collect the sensitive customer, employee, and supplier information manufacturers are obligated to protect.

The percentage of manufacturing organizations held to ransom without encryption (pure extortion attacks) surged to 10% of attacks, up from just 3% in 2024. These attacks focus entirely on data theft rather than operational disruption. Attackers steal sensitive information and threaten public release unless payments are made—turning data protection failures into direct financial demands.

For compliance officers and data protection leaders, these numbers represent regulatory exposure. Every instance of data exfiltration potentially triggers GDPR breach notifications, state privacy law requirements, contractual notification obligations to customers and partners, and regulatory scrutiny of security practices.

Compliance and Data Sovereignty Pressures

Manufacturing organizations face growing regulatory and contractual pressure around data handling. Industry research shows that 80% of manufacturing respondents rate data sovereignty as critical or very important—reflecting both regulatory requirements and customer demands around where data resides and how it moves across borders.

ISO 27001 adoption runs strong in manufacturing, providing a framework for information security management. SOC2 Type II adoption varies more widely, creating inconsistency in how organizations demonstrate security controls to customers and partners. PCI DSS compliance remains mandatory for organizations processing payment cards, adding another compliance dimension to security programs.

Zero trust security adoption remains lower in manufacturing than in other sectors, despite its effectiveness in limiting lateral movement during breaches. The gap between security best practices and actual implementation creates both security risk and compliance vulnerability.

Notably, manufacturing faces growing exposure to export controls and supply chain risk management initiatives. Defense contractors, aerospace suppliers, and organizations handling controlled technical data face additional requirements around data protection that ransomware attacks can violate.

How Data Gets Exposed

Exploited vulnerabilities became the leading technical root cause of manufacturing ransomware attacks in 2025, responsible for 32% of incidents. This marks a shift from previous years when malicious emails and compromised credentials dominated.

For data security, vulnerability exploitation carries particular significance. Manufacturing environments often include industrial control systems, operational technology, and legacy equipment running outdated software. These systems frequently connect to networks containing sensitive business data. A vulnerability in an operational system can provide a pathway to databases holding customer information, intellectual property, and financial records.

Malicious emails still account for 23% of attacks, down from 29% in 2024. Email attacks often target employees with access to sensitive data or credentials that unlock data stores. Compromised credentials contributed to 20% of incidents—each one representing unauthorized access to systems and data the credentials protected.

The Organizational Weaknesses Behind Data Breaches

Technical attack vectors only explain part of why manufacturers suffer data breaches. The Sophos research explored organizational factors for the first time, revealing that victims typically face multiple interconnected challenges that affect both operational security and data protection.

A lack of expertise tops the list, named by 42.5% of victims. Manufacturing organizations struggle to attract and retain cybersecurity talent with data protection knowledge. The specialized expertise required to secure both industrial environments and sensitive data makes recruiting even harder.

Unknown security gaps contributed to 41.6% of attacks. Organizations didn’t know their data protection defenses had weaknesses until attackers found them. This blind spot suggests inadequate data flow mapping, insufficient risk assessments, and gaps in continuous monitoring of data access and movement.

A lack of protection played a role in 41% of incidents. These organizations acknowledged they didn’t have the necessary cybersecurity products and services in place—including DLP, encryption, access controls, and monitoring tools that would both prevent breaches and demonstrate compliance with data protection requirements.

Supply Chain Data Risks

Manufacturing’s interconnected supply chains create significant data security exposure. Industry research reveals that 67% of manufacturing organizations cite end-to-end visibility gaps as a top third-party risk management concern—significantly higher than the 46% average across all industries.

This visibility gap has direct data protection implications. When manufacturers share data with suppliers, partners, and logistics providers, they often lose sight of how that data is handled, stored, and protected. Under GDPR and many other frameworks, the original data controller retains responsibility for data protection even when data moves to processors and sub-processors.

Forty-four percent of manufacturers report concerns about lack of real-time breach notification from partners—one of the highest figures across sectors. When a supplier suffers a breach involving shared data, manufacturers often learn about it too late to meet their own notification obligations or protect affected individuals.

Thirty-three percent worry about partner AI risk and machine learning tools exposing exchanged data. As automation and intelligence tools proliferate through manufacturing supply chains, data handling practices at partner organizations become direct compliance concerns. Data shared for legitimate supply chain purposes may be ingested into AI systems with unclear data retention and protection practices.

Twenty-six percent cite partner compliance gaps as a priority concern. When partners fail to meet regulatory requirements, manufacturers who shared data with those partners face their own compliance exposure.

Recovery and Data Integrity Concerns

Only 91% of manufacturing organizations that had data encrypted successfully recovered it—the lowest rate of any sector in the survey. For data protection, this statistic carries troubling implications beyond operational impact.

Unrecovered data may include records organizations are legally required to retain. Customer information, financial records, employment data, and transaction histories may be subject to retention requirements under various regulations. Permanent data loss can itself constitute a compliance violation.

Even when data is recovered, questions about integrity arise. Was data modified before encryption? Were backup systems compromised? Can recovered data be trusted for regulatory reporting and compliance purposes? These questions complicate the post-incident environment.

Backup usage remained consistent at 58% of incidents where organizations used backups to restore encrypted data. However, backup practices must address data protection requirements—including encryption of backup media, access controls, and retention policies that match regulatory obligations.

The Ransom Payment Compliance Dimension

The decision to pay ransoms involves complex calculations that increasingly include compliance considerations. Fifty-one percent of manufacturing organizations paid a ransom in 2025, down from 62% the previous year.

Average ransom demands dropped 20% over the past year, from $1.5 million to $1.2 million. Actual average payments fell from $1.2 million to $1 million. But these payments carry their own compliance risks.

Depending on the attacker, ransom payments may violate sanctions regulations. The U.S. Treasury’s Office of Foreign Assets Control (OFAC) has issued guidance warning that ransom payments to sanctioned entities or jurisdictions can result in civil penalties. Organizations must conduct due diligence before making payments—difficult when dealing with anonymous criminal actors.

Additionally, ransom payments do not eliminate breach notification obligations. Data that was exfiltrated before encryption remains exposed regardless of whether decryption keys are obtained. Payment may recover operational access to data, but it cannot undo data theft or the compliance obligations that theft triggers.

Recovery Costs Beyond the Ransom

The average cost to recover from ransomware attacks was $1.3 million for manufacturing organizations, excluding any ransom payments. This figure covers downtime, personnel time, device replacement, network remediation, and lost business opportunity.

What it may not fully capture are the compliance-related costs that follow significant incidents: legal counsel for breach response, forensic investigation to determine data exposure scope, notification costs for affected individuals, credit monitoring services, regulatory engagement and potential penalties, and increased audit scrutiny.

Recovery speed has improved substantially—58% of manufacturing organizations recovered within a week in 2025, up from 44% in 2024. Faster recovery limits operational impact but doesn’t accelerate compliance timelines. Breach notifications, regulatory filings, and customer communications follow their own schedules regardless of operational recovery.

Third-Party Risk Management Failures

The data security challenges in manufacturing extend beyond direct attacks. Manufacturing’s broad and distributed attack surface spans suppliers, operations, and legacy systems in ways that create vulnerabilities at every connection point.

Industry research highlights that manufacturers face high exposure to attacks on form infrastructure—including supplier portals, warranty registration systems, RMA forms, and embedded forms on legacy portals. Each of these systems collects data that falls under protection requirements.

Legacy infrastructure and decentralized ownership of data collection systems emerge as core risks. Manufacturing organizations often lack centralized visibility into what data is collected where, how it flows through the organization and to partners, and what protections apply at each stage.

This fragmentation makes both security and compliance difficult. You cannot protect data you don’t know you have, and you cannot demonstrate compliance for data flows you haven’t mapped.

Building Data-Centric Defenses

The Sophos research points toward four focus areas that align security investment with data protection requirements.

Prevention remains the most successful defense. Organizations that stop attacks from succeeding avoid both operational disruption and data exposure. This requires addressing vulnerability management, email security, credential protection, and closing the security gaps the research identifies. From a data protection perspective, preventing unauthorized access is always preferable to detecting and responding to breaches after data is exposed.

Protection through strong foundational security must include data-centric controls. Encryption of sensitive data at rest and in transit limits exposure even when perimeter defenses fail. Access controls based on least-privilege principles reduce the data attackers can reach with compromised credentials. Data loss prevention tools can detect and block exfiltration attempts.

Detection and response capabilities determine how quickly organizations can interrupt attacks and limit data exposure. Around-the-clock threat monitoring should include data access monitoring—detecting unusual queries, bulk downloads, or access from unexpected locations that may indicate data theft in progress.

Planning and preparation must address data breach response alongside operational recovery. Incident response plans should include steps for determining data exposure scope, triggering notification procedures, preserving forensic evidence, and engaging legal counsel. Organizations should know their notification obligations before an incident—not scramble to determine them during a crisis.

Questions for Compliance and Security Leaders

Do we know what sensitive data we hold and where it resides? The visibility gaps the research identifies make both security and compliance impossible. Data classification and classification should be foundational activities.

Can we detect data exfiltration, not just encryption? Many security tools focus on detecting ransomware execution. Detecting data theft in progress—before attackers have what they want—requires monitoring data movement patterns and access anomalies.

What are our notification obligations? Different data types, different jurisdictions, and different contractual relationships create varying notification requirements. Organizations should have clear playbooks for common scenarios before incidents occur.

How do we manage data security across our supply chain? Third-party risk management requires contractual controls, security assessments, and ongoing monitoring of partner practices. The high concern levels around supply chain visibility suggest current approaches are inadequate.

Are our backup and recovery processes compliant? Backups should be encrypted, access-controlled, and retained according to applicable requirements. Recovery testing should validate both operational functionality and data integrity.

Regulatory Scrutiny Will Increase

Manufacturing’s position as the top ransomware target draws regulatory attention. When an industry sector experiences persistent, widespread security failures, regulators eventually respond with enforcement priorities and enhanced requirements.

The SEC’s cybersecurity disclosure rules affect publicly traded manufacturers. State data privacy laws continue proliferating, each with their own requirements. Industry-specific regulators in automotive, aerospace, and defense supply chains are tightening security expectations. International data protection authorities actively investigate cross-border data exposure.

Organizations that demonstrate proactive security investment and mature data protection practices will fare better in this environment than those that treat compliance as a checkbox exercise. The research findings about organizational root causes—expertise gaps, unknown security weaknesses, protection shortfalls—describe exactly the conditions regulators will question when incidents occur.

What Comes Next

Manufacturing will remain a top ransomware target for the foreseeable future. The combination of operational sensitivity and valuable data that makes the sector attractive to attackers won’t change. Supply chain complexity will increase. Data protection requirements will expand.

The encouraging signs in the 2025 data suggest that security investments produce measurable results. Lower encryption rates, faster recovery times, and declining ransom payment rates all indicate progress on operational resilience.

The data security and compliance dimensions require additional focus. High rates of data exfiltration, supply chain visibility gaps, and persistent organizational weaknesses create ongoing exposure that operational recovery doesn’t address.

For manufacturing leaders, the research offers both a warning and a roadmap. Ransomware attacks are not just operational disruptions—they are data breaches that trigger legal obligations, regulatory scrutiny, and lasting reputational consequences. Organizations that invest in data-centric security, compliance-aware incident response, and supply chain risk management will be better positioned to meet both their operational and their data protection obligations.

The cost of those investments, measured against the average $2.3 million combined expense of ransom payments and recovery—plus the unquantified costs of regulatory penalties, customer loss, and reputational damage—makes the business case clear. Data security and compliance are no longer ancillary concerns for manufacturing. They are central to operational resilience and business survival.