Emerging Risk: Drones

Government Drones Are Everywhere and Risk Managers Better Catch Up

The use of drones in the public sector is expanding rapidly. From heat mapping to dispersing medication to investigating noise complaints, the benefits and the risks are tangible.
By: | June 1, 2018 • 9 min read

In the wee hours of a frigid February night in the village of Ludborough, Lincolnshire, England, a motorist flipped his car on an isolated road. Dazed, he wandered away from the scene and was spotted by a passerby who alerted authorities.


Local police deployed a drone equipped with thermal imaging to aid in the search. The drone found him within minutes, unconscious and hypothermic, at the bottom of a ditch he’d stumbled into. Officials acknowledged he might have died were it not for the quick action of the search team and their drone.

In the U.S., similar scenarios are unfolding across the country. In June 2017, two hikers and their dog got lost in Colorado’s Pike National Forest. Douglas County Search and Rescue dispatched a drone above the vast expanse of treetops and found the trio in less than two hours.

A few months later, local police using a drone took less than 30 minutes to locate an 81-year-old woman who’d become lost in a cornfield in Asheboro, North Carolina.

“I imagine that if Superstorm Sandy were to happen today, they’d be using [drones] a lot more to help find people that were still out there,” said Edward Cooney, VP, account executive and joint insurance fund (JIF) underwriting manager, Conner Strong & Buckelew.

But search-and-rescue is hardly the only application for unmanned aerial vehicles (UAVs) in the public sector. According to a recent study published by Bard College’s Center for the Study of the Drone, the adoption of UAVs by public safety agencies has been accelerating rapidly ever since the introduction of inexpensive consumer drones in 2014.

As of March 2017, nearly 350 police and fire departments in 43 states are using UAVs, for everything from crime scene photography to locating suspects and stolen property to conducting safety and risk assessments during active fires and locating people trapped inside burning buildings.

Drone applications outside of law enforcement and fire safety are growing as well. Cooney, whose organization runs two large municipal entity pools, said its member towns are either using UAVs or considering their use for a broad range of applications, including:

  • mass distribution of medications in the event of emergencies;
  • identifying and tracking oil spills and other hazardous material releases;
  • geotagging sewer pipes or boilers throughout townships;
  • forestry applications, such as monitoring wildlife and the depletion or overgrowth of forests;
  • heat-mapping facilities, such as utility authorities and waste utilities to watch for hotspots that could potentially cause fires;
  • recording noise levels to investigate civilian noise complaints;
  • remote water testing in areas that are difficult to access; and
  • bridge monitoring and assessment.

Fear of Overreach

The versatility of drones, their speed, efficiency and relatively low cost is prompting calls for expanded use. Following the mass shooting in Las Vegas, a terrorism expert spoke out about the need for drones to be deployed to assist police in gathering real-time intelligence during such incidents. The president of the Los Angeles Police Commission concurred, suggesting the shooter’s location might have been pinpointed faster had a drone been deployed.

A combination of federal and local laws, however, place certain limits on expansion. Public drone operators, like their private counterparts, are subject to Part 107 of the FAA’s Small UAVs Rule. Part 107 specifies where and when drones can be operated and the maximum speed and altitude of operation, among other things. It also specifically prohibits the use of drones at night or directly above people without a Special Governmental Interest waiver from the FAA.

“I imagine that if Superstorm Sandy were to happen today, they’d be using [drones] a lot more to help find people that were still out there.” — Edward Cooney, VP, account executive and joint insurance fund (JIF) underwriting manager, Conner Strong & Buckelew

Local laws governing public drone use often reflect public and political pressures in a region. Seattle’s police drone program was scrapped in 2013 after public outcry that the program would create a “surveillance state.” For similar reasons, the LAPD had no drone program prior to 2018, even though the Los Angeles Sheriff’s Department currently operates such a program.

Most agree that, used judiciously, drones can be a valuable tool to help protect law enforcement, firefighters and the public. “Mission creep” is the biggest concern of opponents, who argue that while the technology might be employed with good intentions initially, it’s inevitable that lines will be crossed, putting civil liberties in jeopardy. It’s a very small leap, for example, from drones equipped with cameras to drones equipped with sophisticated facial recognition technology.

While the privacy debate will likely continue to stir controversy across states and municipalities, it may pale in comparison to the next frontier: the weaponization of public drones. No U.S. public safety department currently utilizes weaponized drones. A Connecticut bill that would have criminalized weaponized drones, but left an exception for law enforcement, never got past committee.

Just five states — Nevada, North Carolina, Oregon, Vermont and Wisconsin — directly ban the use of weaponized drones.

In North Dakota, a bill intended to limit police use of drones took a curious turn due to an amendment proposed by a police lobbying group. The adopted amendment enables police drones to use “less than lethal” weapons, such as tasers, bean bags, pepper spray, sound cannons and rubber bullets. No departments in North Dakota are known to be currently using UAVs equipped with nonlethal weapons.

Coverage for Drone Risks

Public sector risk managers can best serve their entities by ensuring all pieces are in place for an effective drone program that serves the interests of its employees and citizens.


Agencies getting it right are the ones that approach it with the same amount of care as if they were buying a helicopter, said James Van Meter, drone expert and aviation practice leader with Allianz Global Corporate & Specialty. A drone employed in the interest of public safety “can provide great benefits, but it requires specialized training and licensing.

“There’s a lot of expertise involved in actually using this equipment to obtain the data or the images that you’re trying to obtain,” he said. “It requires special training, a special skillset and experience with it.”

Agencies should establish standard procedures for how to set the equipment up, how to check it, how to verify it’s safe before launch, how to operate it properly and safely over the areas it will be flown.

“Having the aviator mindset, as we like to call it, really makes all the difference,” said Van Meter.

Appropriate coverage is vital to protect the agency and the municipality. Van Meter said drone operators in the public sector typically buy hull and liability coverage and, in some cases, privacy coverage as well.

“Some risk managers view [privacy risk] differently, because privacy in the law enforcement context is very clearly covered and defined by the Fourth Amendment,” Van Meter explained.

“It’s a lot different for me, as a private citizen, if I’m capturing images that potentially could be violating someone’s privacy versus a law enforcement agency flying their helicopter over someone’s backyard to see what’s growing back there,” he said.

In fact, two cases in the late 1980s specifically addressed whether police were in violation of the Fourth Amendment when—without a warrant— they used drones to identify marijuana plants being grown on private property. The courts found in favor of the police in both cases. In one of the cases, the court concluded a warrant wasn’t necessary when capturing images easily visible to the naked eye from 1,000 ft.

However, current imaging systems are more advanced than they were 30 years ago, so the naked-eye holding might not stand today. In addition, U.S. courts have not clearly defined where private property ends and public airspace begins, so a drone flying at 500 ft. might net a different verdict.

Cyber Concerns

As with any other connected device, cyber security is a concern. The two key cyber concerns related to drones fall into different buckets with regard to coverage.

A breach of the data obtained by a drone would require the same type of coverage as any other breach, said Van Meter. If a drone captures sensitive data on a suspect, a crime scene or people who’ve been injured or killed, a bad actor could conceivably hack the agency’s database and post those images on the internet.

That scenario would fall outside of an aviation policy but should be covered by the agency’s cyber policy. A cyberattack with physical damage to the drone is a different matter, said Van Meter.

“An attack on the drone itself, what’s called spoofing, is where someone hostilely is trying to either jam the signal so that the drone crashes, or potentially take over control of the drone,” he said. “Both of those scenarios would be covered under war coverage on our policy, because that is [considered] a hostile takeover or hijacking of the aircraft.”

War coverage also applies to non-cyberattacks, such as when a suspect shoots at a drone and causes damage.

James Van Meter, drone expert and aviation practice leader, Allianz Global Corporate & Specialty

The increase in public sector uptake of drones has been explosive. According to the Bard College study, usage by police, sheriffs, fire departments and other municipal agencies grew by 518 percent within the two years prior to the study’s release.

Risk vs. Reward

Most of the risks posed by drones are not new, noted Cooney. Bodily injury and property damage are risks public entities already manage. Privacy invasion claims also are a well-understood risk, particularly for public entities that employ video cameras or body cams.

Still, transparency is a solid mitigation strategy for agencies or municipalities operating UAVs, said Mark Aitken, senior policy advisor with Akin Gump and a former director of government relations at the Association for Unmanned Vehicle Systems International.

“Someone sees a drone, and they’re in their backyard sunbathing — they think their picture’s being taken,” said Aitken.

Education and outreach efforts are needed to help citizens understand what purpose the UAVs are actually serving, he said.

“If they were to hold [some kind of] workshop and say, ‘Hey, you might see these things around — here’s what we’re using them for,’ I think that that can go a long way. It takes the guessing game out of the equation where people automatically assume [that it’s] not being used in the right manner.”


The FAA’s website hosts a wealth of information and guidelines. Each entity must then “consider what are their own tolerances and thresholds for perhaps going above and beyond what the FAA has put in place,” Aitken said.

Well-designed policies and procedures — developed in-house or with the help of a safety management organization — help organizations ensure a level of professionalism with their drone operations and pilots.

“While there are certain risks inherent in the use of drones,” said Cooney, “it’s important to understand all of the risks that it could be offsetting. We’re trying to balance that risk and reward. That’s why we went into offering coverage for all of our members, because we think that there’s a lot of benefit from a safety perspective that they can offer.”

Added Van Meter: “It just makes so much sense to equip law enforcement officers with this technology. It can help … save innocent people, but also protect law enforcement officers and firefighters.

“The more knowledge they have of what they’re about to walk into, the more knowledge they have about the situation that they’re encountering, the better decisions they can make and the better they can act to protect themselves and the general public.” &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Cyber Resilience

No, Seriously. You Need a Comprehensive Cyber Incident Response Plan Before It’s Too Late.

Awareness of cyber risk is increasing, but some companies may be neglecting to prepare adequate response plans that could save them millions. 
By: | June 1, 2018 • 7 min read

To minimize the financial and reputational damage from a cyber attack, it is absolutely critical that businesses have a cyber incident response plan.

“Sadly, not all yet do,” said David Legassick, head of life sciences, tech and cyber, CNA Hardy.


In the event of a breach, a company must be able to quickly identify and contain the problem, assess the level of impact, communicate internally and externally, recover where possible any lost data or functionality needed to resume business operations and act quickly to manage potential reputational risk.

This can only be achieved with help from the right external experts and the design and practice of a well-honed internal response.

The first step a company must take, said Legassick, is to understand its cyber exposures through asset identification, classification, risk assessment and protection measures, both technological and human.

According to Raf Sanchez, international breach response manager, Beazley, cyber-response plans should be flexible and applicable to a wide range of incidents, “not just a list of consecutive steps.”

They also should bring together key stakeholders and specify end goals.

Jason J. Hogg, CEO, Aon Cyber Solutions

With bad actors becoming increasingly sophisticated and often acting in groups, attack vectors can hit companies from multiple angles simultaneously, meaning a holistic approach is essential, agreed Jason J. Hogg, CEO, Aon Cyber Solutions.

“Collaboration is key — you have to take silos down and work in a cross-functional manner.”

This means assembling a response team including individuals from IT, legal, operations, risk management, HR, finance and the board — each of whom must be well drilled in their responsibilities in the event of a breach.

“You can’t pick your players on the day of the game,” said Hogg. “Response times are critical, so speed and timing are of the essence. You should also have a very clear communication plan to keep the CEO and board of directors informed of recommended courses of action and timing expectations.”

People on the incident response team must have sufficient technical skills and access to critical third parties to be able to make decisions and move to contain incidents fast. Knowledge of the company’s data and network topology is also key, said Legassick.

“Perhaps most important of all,” he added, “is to capture in detail how, when, where and why an incident occurred so there is a feedback loop that ensures each threat makes the cyber defense stronger.”

Cyber insurance can play a key role by providing a range of experts such as forensic analysts to help manage a cyber breach quickly and effectively (as well as PR and legal help). However, the learning process should begin before a breach occurs.

Practice Makes Perfect

“Any incident response plan is only as strong as the practice that goes into it,” explained Mike Peters, vice president, IT, RIMS — who also conducts stress testing through his firm Sentinel Cyber Defense Advisors.


Unless companies have an ethical hacker or certified information security officer on board who can conduct sophisticated simulated attacks, Peters recommended they hire third-party experts to test their networks for weaknesses, remediate these issues and retest again for vulnerabilities that haven’t been patched or have newly appeared.

“You need to plan for every type of threat that’s out there,” he added.

Hogg agreed that bringing third parties in to conduct tests brings “fresh thinking, best practice and cross-pollination of learnings from testing plans across a multitude of industries and enterprises.”

“Collaboration is key — you have to take silos down and work in a cross-functional manner.” — Jason J. Hogg, CEO, Aon Cyber Solutions

Legassick added that companies should test their plans at least annually, updating procedures whenever there is a significant change in business activity, technology or location.

“As companies expand, cyber security is not always front of mind, but new operations and territories all expose a company to new risks.”

For smaller companies that might not have the resources or the expertise to develop an internal cyber response plan from whole cloth, some carriers offer their own cyber risk resources online.

Evan Fenaroli, an underwriting product manager with the Philadelphia Insurance Companies (PHLY), said his company hosts an eRiskHub, which gives PHLY clients a place to start looking for cyber event response answers.

That includes access to a pool of attorneys who can guide company executives in creating a plan.

“It’s something at the highest level that needs to be a priority,” Fenaroli said. For those just getting started, Fenaroli provided a checklist for consideration:

  • Purchase cyber insurance, read the policy and understand its notice requirements.
  • Work with an attorney to develop a cyber event response plan that you can customize to your business.
  • Identify stakeholders within the company who will own the plan and its execution.
  • Find outside forensics experts that the company can call in an emergency.
  • Identify a public relations expert who can be called in the case of an event that could be leaked to the press or otherwise become newsworthy.

“When all of these things fall into place, the outcome is far better in that there isn’t a panic,” said Fenaroli, who, like others, recommends the plan be tested at least annually.

Cyber’s Physical Threat

With the digital and physical worlds converging due to the rise of the Internet of Things, Hogg reminded companies: “You can’t just test in the virtual world — testing physical end-point security is critical too.”


How that testing is communicated to underwriters should also be a key focus, said Rich DePiero, head of cyber, North America, Swiss Re Corporate Solutions.

Don’t just report on what went well; it’s far more believable for an underwriter to hear what didn’t go well, he said.

“If I hear a client say it is perfect and then I look at some of the results of the responses to breaches last year, there is a disconnect. Help us understand what you learned and what you worked out. You want things to fail during these incident response tests, because that is how we learn,” he explained.

“Bringing in these outside firms, detailing what they learned and defining roles and responsibilities in the event of an incident is really the best practice, and we are seeing more and more companies do that.”

Support from the Board

Good cyber protection is built around a combination of process, technology, learning and people. While not every cyber incident needs to be reported to the boardroom, senior management has a key role in creating a culture of planning and risk awareness.

David Legassick, head of life sciences, tech and cyber, CNA Hardy

“Cyber is a boardroom risk. If it is not taken seriously at boardroom level, you are more than likely to suffer a network breach,” Legassick said.

However, getting board buy-in or buy-in from the C-suite is not always easy.

“C-suite executives often put off testing crisis plans as they get in the way of the day job. The irony here is obvious given how disruptive an incident can be,” said Sanchez.

“The C-suite must demonstrate its support for incident response planning and that it expects staff at all levels of the organization to play their part in recovering from serious incidents.”

“What these people need from the board is support,” said Jill Salmon, New York-based vice president, head of cyber/tech/MPL, Berkshire Hathaway Specialty Insurance.

“I don’t know that the information security folks are looking for direction from the board as much as they are looking for support from a resources standpoint and a visibility standpoint.

“They’ve got to be aware of what they need and they need to have the money to be able to build it up to that level,” she said.

Without that support, according to Legassick, failure to empower and encourage the IT team to manage cyber threats holistically through integration with the rest of the organization, particularly risk managers, becomes a common mistake.

He also warned that “blame culture” can prevent staff from escalating problems to management in a timely manner.

Collaboration and Communication

Given that cyber incident response truly is a team effort, it is therefore essential that a culture of collaboration, preparation and practice is embedded from the top down.


One of the biggest tripping points for companies — and an area that has done the most damage from a reputational perspective — is in how quickly and effectively the company communicates to the public in the aftermath of a cyber event.

Salmon said of all the cyber incident response plans she has seen, the companies that have impressed her most are those that have written mock press releases and rehearsed how they are going to respond to the media in the aftermath of an event.

“We have seen so many companies trip up in that regard,” she said. “There have been examples of companies taking too long and then not explaining why it took them so long. It’s like any other crisis — the way that you are communicating it to the public is really important.” &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected] Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]