Are the Keys to Cyber Risk Management Already in Your Pocket?

By: | November 14, 2018

Chris Johnson is executive vice president at FM Global. He oversees operations outside of the Americas and AFM, a division that specializes in mid-market property insurance. In 2017, Johnson assumed legal responsibility for FM Global’s newly formed Luxembourg-headquartered subsidiary, FM Insurance Europe, S.A., which delivers coverage throughout the EU. He can be reached at [email protected]

Is there a silver bullet that risk managers can fire to thwart cyber attacks as technology becomes more sophisticated, and as hackers turn their attention to disrupting critical infrastructure and industrial controls that are tied to the Internet of Things (IoT)?

Not yet, but there is an opportunity to significantly limit the risks, simply by turning to loss prevention principles and practices used to combat traditional perils.

For years, the biggest threat from cyber attacks has been the theft of information, and while the media focuses on attacks against big data organizations with household names, every business is vulnerable.

Information security officers have focused on understanding such attacks and designing ways to beat hackers at their own game, while the expansion of IoT has created a broad and plentiful field of new opportunities and vulnerabilities for hackers to exploit.

Yet many managers believe they are either unable to or don’t have the resources to fight against such cyber attacks.

Earlier this year, the Ponemon Institute surveyed 1,100 senior IT professionals from the U.S., Europe and the Middle East/Africa region on the state of cybersecurity. Ponemon found that 82 percent of the respondents believe a data breach from an unsecured IoT device in the workplace is very likely over the next three years, and 80 percent of the respondents say such a breach would be catastrophic to their operations.

At the same time, more than half of the respondents are pessimistic about their ability to protect their organizations from cyber threats and only 36 percent of the respondents say that their senior management believes cybersecurity is a strategic priority, impacting investments in technology and staff.

At my company, FM Global, we believe the majority of loss is preventable, including loss from a cyber attack. So what is to be done? Several considerations and questions come directly from the risk manager’s property resilience toolbox.

The cyber attack risk potential is huge. Cisco estimates there will be more than 50 billion internet-connected devices worldwide by 2020, overseeing everything from production lines to HVAC systems to sophisticated state-of-the-art wireless meters helping to control water and gas lines.

Control systems are generally designed with functionality first and security second, if at all. Protection often comes in the form of inadequate bolt-on security fixes, or other solutions that are either costly or take too long to implement. The threat to industrial control systems from cyber attacks is here now, and if there are vulnerabilities left open on a system, they could be exploited.

In manufacturing facilities, many systems run just-in-time production lines, a ripe target for hackers who might find a backdoor into an older or inadequately protected industrial control system (ICS). A ransom demand may be the least of a manager’s worries given the potential for real physical damage from an ICS that has been hacked.

In some cases, the threat could come from within an organization. It doesn’t take much for an employee to fall for a phishing scam, and whether inadvertently or not, allow a threat to bypass all the security controls in place and gain access to an entire network.

At my company, FM Global, we believe the majority of loss is preventable, including loss from a cyber attack. So what is to be done? Several considerations and questions come directly from the risk manager’s property resilience toolbox.

To identify risk from traditional perils, risk managers need to understand the business. Specifically, risk managers should identify the potential exposures to the “crown jewels” of the business and how those exposures can impact areas such as business operations, customer confidence and market share.

Risk managers can then work to help prevent or minimize the risk through some sort of control; or if all else fails, transfer the risk through insurance.

The cyber attack risk potential is huge. Cisco estimates there will be more than 50 billion internet-connected devices worldwide by 2020, overseeing everything from production lines to HVAC systems to sophisticated state-of-the-art wireless meters helping to control water and gas lines.

Just as it is important to understand the fire and natural hazards your company and its locations may face, it is also important to understand the overall cyber risk to your organization, beginning with a clear understanding of the “crown jewels” and the inherent risk.

This understanding provides the foundation for the building of your defenses. Among the key questions to ask: What is your business activity? How are you generating revenue? Where are your company’s headquarters and business intelligence located? What is the inherent cyber risk in the country(ies) where you operate? Is your brand highly visible in the public eye?

Other key considerations could include:

  • Identifying how your organization detects and protects against internal threats.
  • Making sure to design, implement and monitor proper IT security controls to prevent unauthorized access into your organization.
  • Assigning someone dedicated to response and recovery preparedness.
  • Ensuring that corporate governance practices address cybersecurity.

How your organization prepares for, responds to and recovers from a cyber attack are equally important to ensure long-term viability, as well as limiting business interruption and reputation impact.

A company’s public response to a cyber attack can make a huge difference to reputation and enterprise value. Starting at the very top of the company, clear communication is vital. The risk manager can play a key role in helping prepare leadership to speak to the media, employees and all other constituents.

We recommend that businesses have the people, processes and technology in place to help prepare for and respond to cyber attacks in a timely and organized fashion.

It is important to realize that cybersecurity should be a collaborative effort between risk managers, industrial controllers and information technology specialists.

Even the most technologically savvy organizations acknowledge that cyber attacks are likely. By understanding the threats from cyber attacks, and recognizing that sound risk management principles can mitigate those threats, organizations can help to ensure that they remain resilient.

More from Risk & Insurance

More from Risk & Insurance

Risk Matrix: Presented by Liberty Mutual Insurance

10 Risks Becoming More Severe Due to Climate Change

Climate change is generating powerful storms, excess flooding and billions in damages. These are the risks insurers need to keep an eye on as temperatures increase.
By: | September 3, 2019




The R&I Editorial Team can be reached at [email protected]