Public Sector Risk

Public Sector Upgrading Cyber Security

States have launched initiatives ranging from cyber academies and public-private partnerships to dashboards, and cyber preparedness and response plans.
By: | October 28, 2016 • 5 min read

Public sector risk managers and experts alike say much more needs to be done about cyber security to translate awareness into concrete actions that protect sensitive data.

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Only one-third (29 percent) of IT managers in state governments provide their governors with monthly reports on cyber security, compared with only 17 percent in 2014, according to a joint report from Deloitte and the National Association of State Chief Information Officers (NASCIO).

That level of communication has not yet extended to state legislatures, according to the study, “State Governments at Risk: Turning Strategy and Awareness into Progress,” which surveyed 96 state business and elected officials.

Nearly one-third of respondents said they “never communicate” with their legislatures, unchanged from 2014 — which is “an important consideration, given the legislature’s role in appropriating funds,” according to the report.

Still, many states are starting to act and make progress in areas visible to governors.

More than half (54 percent) of respondents said they have implemented at least some of the cyber security recommendations by the National Governors Association, compared with only one-third (33 percent) in 2014.

Mark Raymond, chief information officer, State of Connecticut

Mark Raymond, chief information officer, State of Connecticut

Governors in a number of states have launched initiatives ranging from state cyber academies and public-private partnerships to dashboards, and preparedness and response plans.

The 2016 survey results are the first time there is “some significant traction around the issue,” said Mark Raymond, chief information officer for the State of Connecticut and president of the National Association of State Chief Information Officers based in Lexington, Ken.

“It’s not just about the increased risk and threat, but there are states that are making positive progress in articulating a strategy to increase awareness around what they are doing to reduce the risk,” Raymond said.

Public entities need to take a hard look at all of their computer technology — both hardware and software — and question the totality of access and whether each individual’s access is necessary and appropriate, said Marilyn Rivers, risk manager for the city of Saratoga Springs, N.Y.

“Risk managers need to take a trip to their server rooms and examine the security and access,” Rivers said. “Ask about password control and the regular backup of the information that flows throughout their organizations on an hourly and daily basis.

“Ask how your organization protects itself from all the hand-held mobile devices your employees use or the laptops taken home for work projects,” she said.

She said public sector risk managers should have a plan for what would happen if information stops flowing throughout the organization. Do you have a backup separate from the live system? Can your government recreate itself if held hostage?

Rivers also said public sector risk managers should examine access to websites, including which websites are visited by employees and what tracking cookies are involved.

“Every public entity is facing an urgent cyber crisis that is dynamic and in constant change,” Rivers said. “It is vitally important to all of us as we govern collectively to identify our network access and vulnerabilities and invest in technology and people to assist us in managing this global risk frontier.”

Barry Scott, deputy director of finance and risk manager, City of Philadelphia

Barry Scott, deputy director of finance and risk manager, City of Philadelphia

It is also important for public sector risk managers to invest in a comprehensive insurance program that assists in mitigating and managing the cost of the risks their governmental entity faces, she said.

Barry Scott, deputy director of finance and risk manager for the City of Philadelphia, said that it’s critical that his team strives “to ensure that every city department bears the responsibility for managing information correctly.”

“The first layer is trying to make sure that people are smart in how they manage the information we have about residents and businesses in the city, and storing the information in the proper format,” Scott said. “That helps work with the IT layer, so that appropriate security can be placed to protect that information.”

The public sector also faces a somewhat unique set of challenges — in order to add more resources to the organization’s capabilities, the tax base needs to be engaged, he said.

“Our citizens need to be aware that the services they seek, namely, the ease of access to their information that automated systems bring, have some issues in terms of security and protection — and those services have a cost which we as citizens have to bear,” Scott said.

“One of our biggest challenges as a public entity with finite resources is getting the best value in our resources — and in an increasingly digital world, cyber security is a priority.”

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Raymond of NASCIO recommended that IT professionals and risk management departments in the public sector measure where their organizations are on the “cyber risk scale,” what kind of data they have and how they are protecting it.

“You can’t improve the things that are you are not measuring,” Raymond said. “Once you understand the value of that data, you need to determine what controls are needed to be put in place to protect the data.”

Then IT and risk management need to articulate their strategies to the executive management team in a way that enables them to understand both the threat and the efforts around it in a concise manner, he said.

Once executive management clearly understands what can be done about cyber security risks, they can appropriately prioritize resources to reduce exposure.

“States not only have to mitigate for financial risk of data loss or theft from state accounts, but also for the loss of data containing people’s personal information from many sources like birth and death certificates,” Raymond said.

Kristin Judge, director of special projects, National Cyber security Alliance

Kristin Judge, director of special projects, National Cyber security Alliance

“State governments also need to be aware of how cyber attacks can result in lost productivity, lost trust of government, and increased risk of bad decisions — such as a cyber criminals directing the state to let someone out of jail who isn’t supposed to be, or putting someone in jail that’s not supposed to be there.”

Kristin Judge, director of special projects at the National Cyber Security Alliance in Washington, D.C., said her group stresses to public sector risk managers that they must communicate that their entire governmental organization has responsibility for cyber security, and that all workers must be part of the solution.

“We want people to create a culture of cyber security, and just as they have fire drills, they should also have cyber security drills like checking the quality of backups and the process for restoring data, for example,” Judge said.

“It’s also very important to have training, as 90 percent of attacks do not come from sophisticated code meant to break through IT security systems, but rather from employees just clicking on phishing emails — so 90 percent of attacks can be stopped by trained staff.”

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Robotics Risk

Rise of the Cobots

Collaborative robots, known as cobots, are rapidly expanding in the workforce due to their versatility. But they bring with them liability concerns.
By: | May 2, 2017 • 5 min read

When the Stanford Shopping Center in Palo Alto hired mobile collaborative robots to bolster security patrols, the goal was to improve costs and safety.

Once the autonomous robotic guards took up their beats — bedecked with alarms, motion sensors, live video streaming and forensics capabilities — no one imagined what would happen next.

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For some reason,  a cobots’ sensors didn’t pick up the movement of a toddler on the sidewalk who was trying to play with the 5-foot-tall, egg-shaped figure.

The 300-pound robot was programmed to stop for shoppers, but it knocked down the child and then ran over his feet while his parents helplessly watched.

Engaged to help, this cobot instead did harm, yet the use of cobots is growing rapidly.

Cobots are the fastest growing segment of the robotics industry, which is projected to hit $135.4 billion in 2019, according to tech research firm IDC.

“Robots are embedding themselves more and more into our lives every day,” said Morgan Kyte, a senior vice president at Marsh.

“Collaborative robots have taken the robotics industry by storm over the past several years,” said Bob Doyle, director of communications at the Robotic Industries Association (RIA).

When traditional robots joined the U.S. workforce in the 1960s, they were often assigned one specific task and put to work safely away from humans in a fenced area.

Today, they are rapidly being deployed in the automotive, plastics, electronics assembly, machine tooling and health care industries due to their ability to function in tandem with human co-workers.

More than 24,000 robots valued at $1.3 billion were ordered from North American companies last year, according to the RIA.

Cobots Rapidly Gain Popularity

Cobots are cheaper, more versatile and lighter, and often have a faster return on investment compared to traditional robots. Some cobots even employ artificial intelligence (AI) so they can adapt to their environment, learn new tasks and improve on their skills.

Bob Doyle, director of communications, Robotic Industry Association

Their software is simple to program, so companies don’t need a computer programmer, called a robotic integrator, to come on site to tweak duties. Most employees can learn how to program them.

While the introduction of cobots into the workplace can bring great productivity gains, it also introduces risk mitigation challenges.

“Where does the problem lie when accidents happen and which insurance covers it?” asked attorney Garry Mathiason, co-chair of the robotics, AI and automation industry group at the law firm Littler Mendelson PC in San Francisco.

“Cobots are still machines and things can go awry in many ways,” Marsh’s Kyte said.

“The robot can fail. A subcomponent can fail. It can draw the wrong conclusions.”

If something goes amiss, exposure may fall to many different parties:  the manufacturer of the cobot, the software developer and/or the purchaser of the cobot, to name a few.

Is it a product defect? Was it an issue in the base code or in the design? Was something done in the cobot’s training? Was it user error?

“Cobots are still machines and things can go awry in many ways.” — Morgan Kyte, senior vice president, Marsh

Is it a workers’ compensation case or a liability issue?

“If you get injured in the workplace, there’s no debate as to liability,” Mathiason said.

But if the employee attributes the injury to a poorly designed or programmed machine and sues the manufacturer of the equipment, that’s not limited by workers’ comp, he added.

Garry Mathiason, co-chair, robotics, AI and automation industry group, Littler Mendelson PC

In the case of a worker killed by a cobot in Grand Rapids, Mich., in 2015, the worker’s spouse filed suit against five of the companies responsible for manufacturing the machine.

“It’s going to be unique each time,” Kyte said.

“The issue that keeps me awake at night is that people are so impressed with what a cobot can do, and so they ask it to do a task that it wasn’t meant to perform,” Mathiason said.

Privacy is another consideration.

If the cobot records what is happening around it, takes pictures of its environment and the people in it, an employee or customer might claim a privacy violation.

A public sign disclosing the cobot’s ability to record video or take pictures may be a simple solution. And yet, it is often overlooked, Mathiason said.

Growing Pains in the Industry

There are going to be growing pains as the industry blossoms in advance of any legal and regulatory systems, Mathiason said.

He suggests companies take several mitigation steps before introducing cobots to the workplace.

First, conduct a safety audit that specifically covers robotics. Make sure to properly investigate the use of the technology and consider all options. Run a pilot program to test it out.

Most importantly, he said, assign someone in the organization to get up to speed on the technology and then continuously follow it for updates and new uses.

The Robotics Industry Association has been working with the government to set up safety standards. One employee can join a cobot member association to receive the latest information on regulations.

“I think there’s a lot of confusion about this technology and people see so many things that could go wrong,” Mathiason said.

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“But if you handle it properly with the safety audit, the robotics audit, and pay attention to what the standards are, it’s going to be the opposite; there will be fewer problems.

“And you might even see in your experience rating that you are going to [get] a better price to the policy,” he added.

Without forethought, coverage may slip through the cracks. General liability, E&O, business interruption, personal injury, cyber and privacy claims can all be involved.

AIG’s Lexington Insurance introduced an insurance product in 2015 to address the gray areas cobots and robots create. The coverage brings together general and products liability, robotics errors and omissions, and risk management services, all three of which are tailored for the robotics industry. Minimum premium is $25,000.

Insurers are using lessons learned from the creation of cyber liability policies and are applying it to robotics coverage, Kyte said.

“The robotics industry has been very safe for the last 30 years,” RIA’s Doyle said. “It really does have a good track record and we want that to continue.” &

Juliann Walsh is a staff writer at Risk & Insurance. She can be reached at [email protected]