Don’t get caught without cyber insurance!

We discover why cybersecurity and insurance are important for transport operators.

Eric Miller, a senior reporter at US-based trucking and freight transportation publication Transport Topics, says it best: “The rise of cybersecurity adversaries and the confirmation of potential security flaws in technologies deployed by fleets underscores the urgent need for motor carriers [transport operators] to take these threats seriously.”

He quotes Urban Jonson, senior vice president of information technology and cybersecurity services for US-based security training firm Serjon: “Most small businesses do not stay in business longer than six months following a cyberattack.”

At the 2024 Technology and Maintenance Council Annual Meeting and Transportation Technology Exhibition, Jonson cited new research at Colorado State University that shows it is possible to compromise electronic logging devices remotely and – once compromised – use these to compromise other devices on the same provider network.

“This could result in an attack against a large number of devices at scale, where one device would attack and compromise others who then, in turn, would attack others, rapidly spreading the attack across the entire provider network,” Johnson said, describing a type of automatically propagating malware known as a computer worm.

Jonson said the research comes after a US National Security Agency advisory in February indicated a significant interest by the People’s Republic of China in being able to impact and cripple US infrastructure, including trucking. “Given the essential role trucking plays in the US logistics and supply chains, this is a serious national security risk,” Jonson said. “Trucking companies must assess their cybersecurity risk and take proactive measures to improve their cybersecurity posture.”

The trucking industry experienced several high-profile cyberattacks in 2023, he elaborated, “including successful ransomware attacks against large, mature trucking companies”. Attacks on transport operators can not only cripple a company’s operations, but could even potentially stop trucks from moving and create traffic jams, Jonson said. 

The transport and logistics sector as a whole is particularly prone to cyberattacks, as data continually flow throughout the supply chain, and digital systems continually track and monitor goods throughout their networks. “Yet, despite the growing risks, many haulage and logistics companies do not have adequate protection in place,” points out PIB Insurance Brokers – part of the international PIB Group – a market leader in the provision of specialist insurance solutions across the UK.

“In June 2023, Kettering-based KNP Logistics Group, parent company of the 158-year old Knights of Old haulage firm, suffered a major ransomware attack that affected key systems, processes and financial information. The attack damaged the group’s financial position and ability to secure additional investment and funding, and as a result, the business was unable to continue. In September 2023, the group entered administration, resulting in 730 employees being made redundant,” the insurance broker points out. “KNP’s story is very much a cautionary tale, showing what can happen in a worst-case scenario of a cyberattack.”

PIB highlights the following key cyber exposures:

• Deployment of ransomware and encryption of target business data.
• Exfiltration of confidential customer, third party, and employee data, with the threat of selling/leaking online unless a ransom demand is paid.
• Operations within the target business disrupted by distributed denial-of-service (DDoS) attacks designed to bring additional pressure on the victim to pay a ransom demand.
• Business email compromise events.
• System failure/data corruption – where networks, systems, and data cannot be accessed.
• Reputational damage.

“As a matter of course, all organisations should take preventative steps to mitigate the risk of a cyberattack. Unfortunately, there is no silver bullet, and a good overall level of cybersecurity and controls remain(s) key,” it continues. “Given the complexity, prevalence and sophistication of cyberattacks, and potential damage inflicted to operational ability, income and reputation, the threat posed by cyber criminals needs to be taken very seriously. PIB recommends having an appropriate level of protection in place via a stand-alone cyber insurance policy.”

However, having adequate security measures in place also comes down to money. Mimecast’s* seventh annual State of Email Security report, which was released towards the end of last year, reveals that 72% of South African companies say they need to spend an average of 13.5% more on cybersecurity – the highest percentage globally.

“I expect this figure to increase with time, and it can prove to be a big challenge, due to the economic pressures that businesses find themselves under in South Africa. We are faced with rising inflation that is having an impact on the economy, as well as loadshedding and higher interest rates. Thus, to find an additional 13.5% for the cyber budget is a big ask for many,” says Ryan van de Coolwijk, product head of the cyber division at iTOO Special Risks, an SA-based special risk insurance provider, operating as Hollard’s preferred underwriter of specialty products.

“We need to be cognisant that trying to find additional budget is really difficult, but adhering to some of the fundamentals of security does not have to cost a fortune. For example, companies can roll out two-factor authentication where possible, but if they lack budget, they can adopt pass phrases and more complicated credentials instead of simple passwords that can easily be compromised,” he says.

“Patching also remains important and organisations should apply security patches as close to when they are released as this can make a difference,” Van de Coolwijk continues. “These patches are released to address known security exploits that are vulnerable to hackers, so the longer you have the exploit available and running in your environment, the more opportunities hackers have, so cut down the window of opportunity.”

Furthermore, the report shows that South African companies are divided on the value of cyber insurance policies, with 56% seeing them as worthwhile additions and 39% not seeing cyber insurance as part of a comprehensive safety net.

“The fact that more businesses are becoming aware that they have exploits that they must defend against is a positive. But while companies are constantly looking for mechanisms to secure against attacks, this is an ongoing battle – just as they tick some boxes, hackers simply move the goal posts,” says Van de Coolwijk. “A cyber insurance policy has big value as a safety net, as it helps to protect against things you haven’t foreseen, especially in a landscape that is always changing and forcing you to catch up all the time, while having to apply more resources to implement controls to defend against threats.”

* Mimecast is an American/British company specialising in cloud-based email management for Microsoft Exchange and Microsoft Office 365, including security, archiving, and continuity services to protect business mail.