Cyber Risks

The New Air War

Web-based air traffic control introduces new cyber risks to aviation.
By: | September 15, 2013 • 10 min read

Anyone who has stewed on an airplane, watching as other planes took off, will appreciate the technology that promises to relieve congestion in crowded skies.

Over the next decade, air traffic control is shifting from ground-based radar to a system that relies predominantly on GPS satellites and aircraft-based technology. The new system — known as NextGen in the United States and the Single European Sky in Europe — is designed to boost efficiency, save fuel and accommodate growth in air travel.

A crucial ingredient is the “e-Enabled” plane, one that can report operational and maintenance data over wireless networks, both on the ground and in flight. In cockpits and hangars, meanwhile, iPads and other mobile devices are replacing paper documents, such as maps, flight manuals and maintenance logs.

While the emerging technology brings benefits, the increasing reliance on networking and wireless computing creates new risks for aviation.

“As soon as you access a web-based system, either by connection to Wi-Fi or satellite, you are opening yourself up to the potential for a cyberattack,” said Brad Meinhardt, area president and managing director of aviation for AIS Gallagher, a business unit of Arthur J. Gallagher & Co.

The most dramatic risks are epitomized by hackers who claim they can take over or fool an airplane’s GPS navigation — with dire consequences should the wrong people do so.

Aviation experts insist it would be very difficult to wrest control of a jet from its pilots or to mislead air traffic controllers. But even the most prosaic risks — computer malware that erases maintenance records and their digital backups, for example — could be costly.

“Historically, if you lost paper records, it almost made the aircraft worthless,” Meinhardt said.

It’s not just accidental bugs that fuel concern. Terrorists and disgruntled insiders with access to critical systems also pose a threat, security experts said. So do politically driven hackers, known as hacktivists, who try to shut down computer networks of targeted companies or industries.

Aviation has not been a significant target, said Emilio Iasiello, chief threat analyst for iSIGHT Partners, a cybersecurity firm in Chantilly, Va. “But if a group says, ‘Air travel is polluting the air; we can’t take it anymore,’ this could be a cause that they rally behind.”

A Focus on Prevention

Just like at airports — where passengers take off their shoes and belts and pass through full-body scanners before boarding planes — the emphasis in cyberspace is on prevention rather than figuring out how to cover losses after the fact, brokers and insurance executives said.

The effort is complicated, however, by the international scope of air travel and the variety of players, both public and private. The list includes airlines, airports and air traffic controllers, as well as vendors who do everything from deliver meals to distribute tickets.

The air also is playing host to a growing number of remotely piloted vehicles which pose their own risks, highlighted by Iran’s claim in February that it hacked into a U.S. military drone and captured it.


“They say they got it by fooling its sensors,” said Iasiello. “Whether that’s true or not, I do not know, but they do have it. It was not a crashed drone.”

The threat of GPS spoofing came to the fore again in July after a report from the University of Texas at Austin. The report outlined how researchers used a homemade device to redirect a yacht in the Mediterranean. The team brought the device on board the ship and, after aiming a fake signal at the boat’s two GPS antennas, nudged it a few degrees off course. According to a university press release, researchers said they could see and feel the boat turning, but that the GPS showed it moving in a straight line.

Mike Garrett, director of aviation security for Boeing Commercial Airplanes, a business unit of The Boeing Co., said planes are secure.

Most cyberattacks target data that can be used for economic crimes, such as identity theft, according to Garrett and other experts in cybersecurity. A much smaller portion, less than 1 percent, seeks to wreak havoc on industrial control systems, such as those used in aviation.

While fewer in number, those attacks often make headlines. One of the most well-known is the Stuxnet virus, a computer worm that struck industrial infrastructure in Iran and is believed to have originated in Israel or the United States.

“It caused us to take a more in-depth look at control systems,” said Garrett.

The Federal Aviation Administration already has established procedures that govern activities such as downloading software and handling memory sticks, Garrett said. For example, an airplane’s operational software can’t be downloaded unless its wheels are down, brakes are locked and doors are open. The procedures also allow for tracing the source of any problems, should they arise.

“The flight controls and how we control the airplane in flight are probably some of the most protected things we have from a safety standpoint,” Garrett said.

One area that could stand improvement, he said, is the sharing of threats to the industry. Aviation is global, but technical information about aircraft control systems is often classified, making it difficult to disclose potential dangers.

Nonetheless, Boeing is working closely with other major aircraft manufacturers, airlines and airports to establish a center for collecting and sharing threats, as banks have done.

“This is one area where we are not being that competitive,” Garrett said. Early detection is critical, he said, because it takes time to certify upgrades to hardware and software.

If an attack succeeds, pilots and air traffic controllers will be the first to sense something is wrong. Thus, people may serve as something of a security backstop, experts said. But as cyber threats evolve, training needs to keep pace so people can recognize what’s happening and react in situations where seconds count.

“It is going to be the first responders who have to deal with this,” said Steve Carver, a consultant with Aviation Management Associates in Alexandria, Va.

You don’t have to interfere with a plane in flight to inflict pain. Cyberattacks or computer problems that ground planes could cause substantial economic losses.

American Airlines suffered a network system outage in mid-April that forced it to cancel or delay hundreds of flights nationwide. The outage lasted about two to three hours, according to news reports.

Related Risks

It’s not the vulnerability of individual systems alone that worries security experts and risk managers. It’s also the weaknesses that surface when systems share data, whether it’s the credit card information entered by passengers calling up an in-flight movie, or the readiness of a plane to pull out of the gate.

“It’s a challenge, definitely a challenge,” said Carver, a former information systems security manager for the FAA’s National Airspace System. As an example, he cited emerging technology designed to better manage ground traffic at airports.

The technology will inform controllers exactly when planes are ready to leave the gate, improving efficiency. But it will rely on the exchange of data between the private sector — airlines — and the public — air traffic control. A disruption of the exchange, whether accidental or deliberate, could be devastating, Carver said.

“If you have a system impact at many, many airports, you’ve got a financial impact to both the airport authority and the airlines,” he said. “And, of course you’ve got a problem for the public, because they’re probably going to have their flights delayed or canceled.”

The system’s complexity could be one of its strengths, said Brian Legan, vice president in the aerospace and transportation business for consulting firm Booz Allen Hamilton in Herndon, Va.

The air traffic control system traditionally has been able to weather the temporary malfunction here or there, such as the loss of voice communication, Legan said. And computer networking might make it easier to transfer critical information to equipment that is still working.


“The positive side of this complexity and enormity is you’ve got more than one pair of eyes on an asset,” Legan said, noting that portions of the old radar system are likely to remain in place even as new technology comes online.

Still, as systems become more interconnected, the potential for a bigger failure grows, Legan said. More attention should be paid to the vulnerabilities that arise from systems operating together.

“I’m not sure it’s greater or worse,” he said. “But the threat is different, and the way you would manage it is different.”

Remember Iceland

The volcanic eruption in Iceland in 2010, which blocked flights between Europe and North America, shows the scale of losses possible from a single event. Over the course of a few weeks, airlines lost an estimated $1.7 billion, according to the International Air Transport Association. The Britain-based Airport Operators Associated pegged airport losses at around £80 million.

“That’s one of the problems with aviation. It’s not isolated to just one store,” said Kevin Kalinich, global practice leader for cyber insurance at Aon Risk Solutions in Chicago.

Airlines generally do not cover business interruption losses stemming from flight cancellations or delays, whether the cause is volcanic ash or a computer bug, insurance executives said. Still, cyber insurance can protect them from other risks of doing business online.

Data breaches and network outages can generally be covered, Kalinich said, with money available for costs related to regulatory actions, crisis management and customer notification.

For example, an airline may need to hire a public relations firm after a data breach, as well as specialists to conduct forensics investigations and notify consumers. Most states require companies to notify customers whose personal data has been stolen, and laws vary by state.

Once airlines and airports have secured their own systems, they need to ensure their vendors are doing the same, Kalinich said.

Airlines, for example, most likely have outsourced email, data storage, cloud computing and social media. “The focus can’t just be on your internal IT systems anymore,” Kalinich said.

If a vendor experiences a data breach, the consumer is going to go after the airline or the airport, he said. The claims can be covered, but it has to be spelled out in the insurance policy.

“That’s a huge part of the aviation industry’s exposure,” Kalinich said.

Deliberate cyber attacks on aviation likely would be covered by war risk insurance, which is available through the FAA, as well as the private market, according to Joseph Strickland, head of Americas for aviation at Allianz Global Corporate & Specialty, an arm of Allianz.

But coverage would depend upon the facts of the claim, especially if no airplanes were damaged, Strickland said. An attack may disrupt an airline’s operations. But if there’s no proof of malevolent intent, and there’s a lack of physical harm, the business interruption alone likely would not be covered under the wording currently offered in the private market, Strickland said.

“The airlines would struggle as much as the insurance companies would to quantify the risk and pricing profile for an exposure like that,” Strickland said.

If a cyber vulnerability does ever lead to a fatal crash, courts may hold airlines to a higher standard of liability than they would face in a traditional data breach, said Thomas J. Smedinghoff, a partner in the privacy and data protection group at law firm Edwards Wildman Palmer LLP in Chicago.


Victims who suffer financially generally have to prove negligence by the parties they believe responsible, Smedinghoff said. In cases of injury or death, liability is harder to escape.

“The standard that would be applied is going to be much tougher, and much more likely to result in a finding of liability,” Smedinghoff said.

The risks extend throughout the aviation supply chain, he added.

While airlines may balk at cyber coverage, airports are taking a closer look, according to Dawn Mehler, risk, insurance and contracts manager for Broward County Aviation Department, which owns and operates Fort Lauderdale/Hollywood International Airport in Florida.

Airports are recognizing the many entry points that hackers might exploit, she said. An assessment by Broward County Aviation identified risks to everything from employee information to credit card data collected at an airport parking garage. The agency purchased cyber liability insurance this summer for the first time, Mehler said.

“There’s a lot of thresholds that could possibly be hacked into by third parties, which would obviously be an economic drag,” said Mehler, who chairs the risk management committee of Airports Council International. “We obviously want to be protected.”



Joel Berg is a freelance writer and adjunct writing teacher based in York, Pa. He has covered business and regulatory issues. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

A Recall Nightmare: Food Product Contamination Kills Three Unborn Children

A failure to purchase product contamination insurance results in a crushing blow, not just in dollars but in lives.
By: | October 15, 2018 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.


Reilly Sheehan, the Bethlehem, Pa., plant manager for Shamrock Foods, looks up in annoyance when he hears a tap on his office window.

Reilly has nothing against him, but seeing the face of his assistant plant operator Peter Soto right then is just a case of bad timing.

Sheehan, whose company manufactures ice cream treats for convenience stores and ice cream trucks, just got through digesting an email from his CFO, pushing for more cost cutting, when Soto knocked.

Sheehan gestures impatiently, and Soto steps in with a degree of caution.

“What?” Sheehan says.

“I’m not sure how much of an issue this will be, but I just got some safety reports back and we got a positive swipe for Listeria in one of the Market Streetside refrigeration units.”



Sheehan gestures again, and Soto shuts the office door.

“How much of a positive?” Sheehan says more quietly.

Soto shrugs.

“I mean it’s not a big hit and that’s the only place we saw it, so, hard to know what to make of it.”

Sheehan looks out to the production floor, more as a way to focus his thoughts than for any other reason.

Sheehan is jammed. It’s April, the time of year when Shamrock begins to ramp up production for the summer season. Shamrock, which operates three plants in the Middle Atlantic, is holding its own at around $240 million in annual sales.

But the pressure is building on Sheehan. In previous cost-cutting measures, Shamrock cut risk management and safety staff.

Now there is this email from the CFO and a possible safety issue. Not much time to think; too much going on.

Sheehan takes just another moment to deliberate: It’s not a heavy hit, and Shamrock hasn’t had a product recall in more than 15 years.

“Okay, thanks for letting me know,” Sheehan says to Soto.

“Do another swipe next week and tell me what you pick up. I bet you twenty bucks there’s nothing in the product. That swipe was nowhere near the production line.”

Soto departs, closing the office door gingerly.

Then Sheehan lingers over his keyboard. He waits. So much pressure; what to do?

“Very well then,” he says to himself, and gets to work crafting an email.

His subject line to the chief risk officer and the company vice president: “Possible safety issue: Positive test for Listeria in one of the refrigeration units.”

That night, Sheehan can’t sleep. Part of Shamrock’s cost-cutting meant that Sheehan has responsibility for environmental, health and safety in addition to his operations responsibilities.

Every possible thing that could bring harmful bacteria into the plant runs through his mind.

Trucks carrying raw eggs, milk and sugar into the plant. The hoses used to shoot the main ingredients into Shamrock’s metal storage vats. On and on it goes…

In his mind’s eye, Sheehan can picture the inside of a refrigeration unit. Ice cream is chilled, never really frozen. He can almost feel the dank chill. Salmonella and Listeria love that kind of environment.

Sheehan tosses and turns. Then another thought occurs to him. He recalls a conversation, just one question at a meeting really, when one of the departed risk management staff brought up the issue of contaminated product insurance.

Sheehan’s memory is hazy, stress shortened, but he can’t remember it being mentioned again. He pushes his memory again, but nothing.

“I don’t need this,” he says to himself through clenched teeth. He punches up his pillow in an effort to find a path to sleep.


“Toot toot, tuuuuurrrrreeeeeeeeettt!”

The whistles of the three lifeguards at the Bradford Community Pool in Allentown, Pa., go off in unison, two staccato notes, then a dip in pitch, then ratcheting back up together.

For Cheryl Brick, 34, the mother of two and six-months pregnant with a third, that signal for the kids to clear the pool for the adult swim is just part of a typical summer day. Right on cue, her son Henry, 8, and his sister Siobhan, 5, come running back to where she’s set up the family pool camp.

Henry, wet and shivering and reaching for a towel, eyes that big bag.

“Mom, can I?”

And Cheryl knows exactly where he’s going.

“Yes. But this time, can you please bring your mother a mint-chip ice cream bar along with whatever you get for you and Siobhan?”

Henry grabs the money, drops his towel and tears off; Siobhan drops hers just as quickly, not wanting to be left behind.


“Wait for me!” Siobhan yells as Henry sprints for the ice cream truck parked just outside of the pool entrance.

It’s the dead of night, 3 am, two weeks later when Cheryl, slumbering deeply beside her husband Danny, is pulled from her rest by the sound of Siobhan crying in their bedroom doorway.

“Mom, dad!” says Henry, who is standing, pale and stricken, in the hallway behind Siobhan.

“What?” says Danny, sitting up in bed, but Cheryl’s pregnancy sharpened sense of smell knows the answer.

Siobhan, wailing and shivering, has soiled her pajamas, the victim of a severe case of diarrhea.

“I just barfed is what,” says Henry, who has to turn and run right back to the bathroom.

Cheryl steps out of bed to help Siobhan, but the room spins as she does so.

“Oh God,” she says, feeling the impact of her own attack of nausea.

A quick, grim cleanup and the entire family is off to a walk-up urgent care center.

A bolt of fear runs through Cheryl as the nurse gives her the horrible news.

“Listeriosis,” says the nurse. Sickening for children and adults but potentially fatal for the weak, especially the unborn.

And very sadly, Cheryl loses her third child. Two other mothers in the Middle Atlantic suffer the same fate and dozens more are sickened.

Product recall notices from state regulators and the FDA go out immediately.

Ice cream bars and sandwiches disappear from store coolers and vending machines on corporate campuses. The tinkly sound of “Pop Goes the Weasel” emanating from mobile ice cream vendor trucks falls silent.

Notices of intent to sue hit every link in the supply chain, from dairy cooperatives in New York State to the corporate offices of grocery store chains in Atlanta, Philadelphia and Baltimore.

The three major contract manufacturers that make ice cream bars distributed in the eight states where residents were sickened are shut down, pending a further investigation.

FDA inspectors eventually tie the outbreak to Shamrock.

Evidence exists that a good faith effort was underway internally to determine if any of Shamrock’s products were contaminated. Shamrock had still not produced a positive hit on any of its products when the summer tragedy struck. They just weren’t looking in the right place.


Banking on rock-solid relationships with its carrier and brokers, Shamrock, through its attorneys, is able to salvage indemnification on its general liability policy that affords it $20 million to defray the business losses of its retail customers.


But that one comment from a risk manager that went unheeded many months ago comes back to haunt the company.

All three of Shamrock’s plants were shuttered from August 2017 until March 2018, until the source of the contamination could be run down and the federal and state inspectors were assured the company put into place the necessary protocols to avoid a repeat of the disaster that killed 3 unborn children and sickened dozens more.

Shamrock carried no contaminated product coverage, which is known as product recall coverage outside of the food business. The production shutdown of all three of its plants cost Shamrock $120 million. As a result of the shutdown, Shamrock also lost customers.

The $20 million payout from Shamrock’s general liability policy is welcome and was well-earned by a good history with its carrier and brokers. Without the backstop of contaminated products insurance, though, Shamrock blew a hole in its bottom line that forces the company to change, perhaps forever, the way it does business.

Management has a gun to its head. Two of Shamrock’s plants, including Bethlehem, are permanently shuttered, as the company shrinks in an effort to stave off bankruptcy.

Reilly Sheehan is among those terminated. In the end, he was the wrong person in the wrong place at the wrong time.

Burdened by the guilt, rational or not, over the fatalities and the horrendous damage to Shamrock’s business. Reilly Sheehan is a broken man. Leaning on the compassion of a cousin, he takes a job as a maintenance worker at the Bethlehem sewage treatment plant.

“Maybe I can keep this place clean,” he mutters to himself one night, as he swabs a sewage overflow with a mop in the early morning hours of a dark, cold February.


Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are their recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

Shamrock Food’s story is not an isolated incident. Contaminations happen, and when they do they can cause a domino effect of loss and disruption for vendors and suppliers. Without Product Recall Insurance, Shamrock sustained large monetary losses, lost customers and ultimately two of their facilities. While the company’s liability coverage helped with the business losses of their retail customers, the lack of Product Recall and Contamination Insurance left them exposed to a litany of risks.

Risk Managers in the Food & Beverage industry should consider Product Recall Insurance because it can protect your company from:

  • Accidental contamination
  • Malicious product tampering
  • Government recall
  • Product extortion
  • Adverse publicity
  • Intentionally impaired ingredients
  • Product refusal
  • First and third party recall costs

Ultimately, choosing the right partner is key. Finding an insurer who offers comprehensive coverage and claims support will be of the utmost importance should disaster strike. Not only is cover needed to provide balance sheet protection for lost revenues, extra expense, cleaning, disposal, storage and replacing the contaminated products, but coverage should go even further in providing the following additional services:

  • Pre-incident risk mitigation advocacy
  • Incident investigation
  • Brand rehabilitation
  • Third party advisory services

A strong contamination insurance program can fill gaps between other P&C lines, but more importantly it can provide needed risk management resources when companies need them most: during a crisis.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]