
News | December 10, 2024
Costero Brokers Unveils New WebsiteIn today’s hyper-connected world, the boundary between digital and physical realms has never been thinner. The convergence of cyber and physical systems has created new vulnerabilities for businesses across various sectors.
Cyber-physical incidents, where cyberattacks lead to tangible property damage, are becoming more prevalent . These emerging risks pose significant challenges to businesses and insurance brokers worldwide who need to navigate this increasingly complex landscape.
This article explores the concept of “cyber-physical” risks, particularly focusing on how cyber attacks can lead to property damage in sectors such as energy, construction and manufacturing. We’ll also discuss how partnering with a cyber insurance expert like Costero Brokers can help you navigate these complex risks with tailor-made insurance solutions.
Cyber-physical incidents exploit vulnerabilities in the integration of digital and physical systems. They can cause significant physical damage and operational disruptions.
These risks are particularly relevant for businesses in sectors such as energy, construction and manufacturing – which increasingly rely on interconnected systems, autonomous machinery, robotics, drones, and other operational technology (OT). Here, cyber-physical incidents can have devastating consequences for businesses and the wider public environment.
In the energy sector, cyber incidents can lead to widespread power outages, significant economic losses, damage to physical infrastructure, and even catastrophic events like explosions. The interconnected nature of energy systems makes them particularly vulnerable to cyberattacks, which can compromise the safety of workers and the public.
In the construction and manufacturing sectors, the use of autonomous machinery and robots is on the rise. Today’s connected smart industrial machines are far more advanced, intelligent and mobile than the ‘robot arms’ introduced on production lines in the 1970s. These technologies offer numerous benefits, such as increasing productivity and reducing workplace accidents.
However, as these technologies become integral to industries, their cybersecurity weaknesses are a growing concern. they have expanded the attack surface for cybercriminals, and increased exposure to cyber-led physical damage. Rapid technology adoption without adequate cybersecurity measures is exposing these industries to significant risks.
For example, hacked inspection robots or compromised 3D printing systems could lead to operational disruptions, production delays, financial loss, property damage and even physical injury.
The rapid digitalisation of these industries has outpaced security improvements, making them prime targets for cybercriminals. The cyber-physical risks are amplified by factors such as:
The financial and reputational costs of these incidents can be immense, impacting not only the affected businesses but also their customers, supply chains, regulators and insurers. As technology evolves, so do the tactics of cybercriminals, making it imperative for businesses to understand these threats and implement robust risk management strategies.
Several high-profile incidents worldwide in recent years have highlighted the potential for cyber attacks to cause physical damage:
These incidents highlight the vulnerability of industries and critical infrastructure to cyber-physical attacks, and the growing capability of cyber actors in executing such sophisticated attacks globally. They underscore the critical need for businesses in these industries to have robust cybersecurity measures and appropriate cyber insurance solutions.
To mitigate the financial fallout from cyber-physical incidents, businesses must consider comprehensive cyber insurance solutions. Traditional insurance policies often exclude damages stemming from cyber-physical events, leaving significant gaps in coverage. However, the insurance market is evolving to address these challenges, offering products to meet changing needs.
An expert in cyber-physical insurance can help companies and insurance brokers bridge the gap, with tailored solutions designed to address the unique challenges of cyber-physical risks, such as:
As well as protection for property damage, such solutions can include coverage for:
For an in-depth exploration of cyber-physical risks and their insurance implications, download this Lloyd’s of London report: ‘Shifting powers: physical cyber risk in a changing geopolitical landscape’.
Working with a cyber insurance expert like Costero Brokers can significantly enhance your ability to manage cyber-physical risks. Our Cyber, Media, and Technology (CMT) division specialises in creating tailor-made cyber insurance solutions designed around your specific needs. Our team of experts understands the unique challenges faced by businesses in sectors such as energy, construction and manufacturing, and can help you navigate the complexities of cyber-physical risks. By working with Costero, you can find the right protection against the evolving cyber threat landscape.
We understand that no two businesses are alike. That’s why our approach is never “off-the-shelf.” Our team collaborates closely with you to assess your risks and develop a bespoke insurance strategy that aligns with your operational needs and regulatory requirements. Here’s how we ensure companies are protected:
Whether you are a wholesale insurance broker seeking bespoke solutions for your clients or a business leader looking to secure your operations, partnering with Costero can give you the competitive edge.
Don’t leave your business or clients exposed to the growing risks of cyber-physical incidents. Talk to Costero today to secure a tailor-made cyber insurance programme that aligns with each client’s unique needs and risk appetite.
To learn more about our commercial cyber insurance solutions and discuss your goals, please get in touch with our expert Jonathan Olley at Costero Brokers.