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IoT physical risk to factories

We’re at an inflection point where the potential for cyber threats arising from the prolific use of digital systems to control physical processes will bring IT and OT risks closer together, says a new report: The Emerging Cyber Threat to Industrial Control Systems. It considers potential scenarios which visualise a range of cyber-attacks doing physical damage to industry and factories.

The report looks at how physical risks have become a concern for industry, as shown by recent high-profile breaches. As bridges are increasingly being built between information technology (IT) and operational technology (OT), and as threats become automated and sophisticated, it is paramount that (re)insurers carefully consider where major losses may occur, say insurance market Lloyd’s, cyber risk analytics firm CyberCube and the risk and reinsurance firm Guy Carpenter. They detail three scenarios which represent the most plausible routes by which a cyber-attack against industrial control systems (ICS) could generate major insured losses. The report considers four key industries dependent on ICS (Manufacturing, Shipping, Energy, and Transportation) and assesses precedent and potential impact on each.

The report’s three potential routes of attack – most likely, it says, from a nation state or nation-state affiliated hackers – are:

• A targeted supply chain malware attack, in which malicious actors breach a device manufacturer and compromise that manufacturer’s products before distribution

• A targeted attack, in which attackers exploit a vulnerability in widely used Internet of Things (IoT) devices found in industrial settings

• The infiltration of industrial IT networks to cross the OT “air-gap”.

In one scenario, malware is introduced into the industrial site via malicious software updates and/or installation of new (infected) devices. A logic bomb in the malware delays the activation with specified conditions that can be programmed for maximal impact. Other scenarios could, for example, lead to attackers gaining control of water pumps or temperature regulation systems.

For a ten-minute video on the 34-page report, visit Youtube.

Kirsten Mitchell-Wallace, Lloyd’s Head of Portfolio Risk Management, said: “The Lloyd’s market is advanced when it comes to insuring cyber risks and it is therefore vital Lloyd’s syndicates underwriting this class of business have the ability to analyse their portfolios against the most sophisticated and technologically advanced risk scenarios. We know that the risk of ICS-based cyber-physical events is increasing. Because of this, we’ve partnered with CyberCube and Guy Carpenter to create these illustrative scenario pathways based on highly realistic threats and modes of attack.”

Pascal Millaire, CyberCube’s CEO, said: “Working alongside Lloyd’s and Guy Carpenter to design these scenarios was an important development for the insurance market in this increasingly important new risk. The potential for a major ICS attack is all too real today given several real-world examples of such attacks. As we roll out hundreds of billions of additional IoT devices, it will become even more important in the future and could eventually become a systemic risk for the global economy.”

And Jamie Pocock, Guy Carpenter’s Head of GC Cyber Analytics – International said: “A major ICS attack could impact a broad range of industrial businesses and classes of insurance. As these attacks cross the divide between information technology and operational technology, they could conceivably involve significant property damage and loss of human life. The key is continued research, surveillance, and risk selection to help improve underwriting standards and portfolio management.”


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