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Knowledge Center Items How Hackers Have Manufactured a Need for Cyber Liability Insurance in Your Company

How Hackers Have Manufactured a Need for Cyber Liability Insurance in Your Company

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In the past, we’ve discussed how the manufacturing sector has evolved from simple assembly line methodology to just-in-time manufacturing that utilizes advanced robotics, barcode scanners, computer imaging, and tolerances that are measured at a hair’s width. Unfortunately, these and other agile, computer-based advances are the very things that online thieves are exploiting at an ever-increasing rate—it’s a corporate kidnapping, and a company’s operations network is the hostage. Hackers launch cyberattacks that spread like electronic vermin; malware is inserted into a company’s computer network (often through company email), stealthily creeping through a business’ network and up to no good—damaging data or holding it hostage unless thwarted by the company’s computer security measures or until the thieves extort a ransom payment from the company. Banks have long been a prime target for this type of crime. But now, with the manufacturing sector (especially just-in-time) and government joining financial companies as the top targets in the world for e-thieves, foreign spies and other nefarious types, according to a report from NTT Security, a Cyber Liability insurance policy could be a company’s saving grace.

Hackers and the methods they employ are becoming increasingly sophisticated. Thieves understand that the more computer-reliant a company is, the more vulnerable it will be if its electronic operations can be hijacked. The problem is of particular concern for manufacturers the utilize just-in-time processes, says John Peterson, technology manager at a North Carolina auto part manufacturer whose company was infected by malware in 2016. Because the criminals are aware that such companies have an extremely tight schedule (in this case, the entire supply chain held just 36 hours’ worth of inventory), an unplanned work stoppage of even a few hours would be catastrophic, costing hundreds of thousands of dollars every hour in lost revenue and wages paid to workers sitting idle. With so much on the line, the pressure on managers to get the production line cranks turning again may cause companies to simply pay the ransom to make the malware go away.

Attempting to quantify the issue, Cisco Systems Inc. conducted a 2016 survey of almost 3,000 corporate cybersecurity executives across 13 countries and learned that nearly 25 percent of manufacturing organizations surveyed had reported cyberattacks resulting in a financial loss within the last year. The FBI’s information corroborates the fact that ransom demands against U.S. organizations have increased substantially. The agency’s Internet Crime Complaint Center lodged nearly twice the number of ransomware cases (2,673) in the year ending September 2016, an increase of nearly 200 percent from 2014. And not only are thieves becoming adept at finding ways to take remote control of robots and other automated production systems, they’re boldly attempting takeovers of industrial control systems such as electrical grids and weapons programs. Such attacks have doubled in the U.S. in the last year, according to data provided by the Department of Homeland Security.

Cyber attacks perpetrated by hackers that seek to extort ransom from companies have the potential to cause expensive delays and disruptions for a variety of operations including just-in-time manufacturing operations, and the growing number and sophistication of these attacks makes it critical for firms to stay on guard 24/7. Beyond that, a first-rate Cyber insurance program is the next line of defense in the event of a data or system attack. RPS provides Cyber Liability insurance solutions for the manufacturing industry, with a variety of products that include Electronic Theft and Cyber Extortion, Network Security Liability, Business Interruption, Damage to Systems, Media/Website Liability, Notification Expense, Privacy Liability, Professional Liability, Regulatory Proceedings, Brand Protection/PR, and more. Contact us for more information.

Source: ABC News

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