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The Emerging Cyber Threat to Industrial Control Systems 03 02 Lloyd’s disclaimer This report has been co-produced by Lloyd's, CyberCube and Guy Carpenter for general information purposes only. While care has been taken in gathering the data and preparing the report Lloyd's does not make any representations or warranties as to its accuracy or completeness and expressly excludes to the maximum extent permitted by law all those that might otherwise be implied. Lloyd's accepts no responsibility or liability for any loss or damage of any nature occasioned to any person as a result of acting or refraining from acting as a result of, or in reliance on, any statement, fact, figure or expression of opinion or belief contained in this report. This report does not constitute advice of any kind. © Lloyd’s 2021 All rights reserved About Lloyd’s Lloyd's is the world's specialist insurance and reinsurance market. Under our globally trusted name, we act as the market's custodian. Backed by diverse global capital and excellent financial ratings, Lloyd's works with a global network to grow the insured world –building resilience of local communities and strengthening global economic growth. With expertise earned over centuries, Lloyd's is the foundation of the insurance industry and the future of it. Led by expert underwriters and brokers who cover more than 200 territories, the Lloyd’s market develops the essential, complex and critical insurance needed to underwrite human progress. About CyberCube CyberCube delivers the world’s leading cyber risk analytics for the insurance industry. With best-in-class data access and advanced multi-disciplinary analytics, the company’s cloud-based platform helps insurance organizations make better decisions when placing insurance, underwriting cyber risk and managing cyber risk aggregation. CyberCube’s enterprise intelligence layer provides insights on millions of companies globally and includes modelling on thousands of points of technology failure. The CyberCube platform was established in 2015 within Symantec and now operates as a standalone company exclusively focused on the insurance industry, with access to an unparalleled ecosystem of data partners and backing from ForgePoint Capital, HSCM Bermuda, MTech Capital and individuals from Stone Point Capital. For more information, please visit www.cybcube.com or email [email protected]. About Guy Carpenter Guy Carpenter & Company, LLC is a leading global risk and reinsurance specialist with more than 3,100 professionals in over 60 offices around the world. Guy Carpenter delivers a powerful combination of broking expertise, trusted strategic advisory services and industry-leading analytics to help clients adapt to emerging opportunities and achieve profitable growth. Guy Carpenter is a business of Marsh & McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people. The company’s 76,000 colleagues advise clients in over 130 countries. With annual revenue of $17 billion, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses including Marsh, Mercer and Oliver Wyman. For more information, visit www.guycarp.com and follow Guy Carpenter on LinkedIn and Twitter @GuyCarpenter. The Emerging Cyber Threat to Industrial Control Systems 03 Acknowledgements CyberCube, Guy Carpenter and Lloyd’s Underwriting and Exposure Management worked closely with the Lloyd’s Market Association (LMA) to gain early feedback on the ICS scenario. The assistance of the individuals involved and the support of their respective organisations is greatly appreciated. CyberCube John Anderson, Principal Client Product Advisor William Altman, Cyber Security Consultant Charlotte Anderson, Cyber Risk Analyst Jenna McGrath, Economist Darren Thomson, Head of Cyber Security Strategy Yvette Essen, Head of Content & Communications Nick Beecroft, Strategic Partnership Lead Guy Carpenter Jamie Pocock, Head of GC Cyber Analytics – International Neil Sharma, Actuary, Cyber Analytics Siobhan O’Brien, Leader, Guy Carpenter Cyber Centre of Excellence, International and Global Specialties Lloyd’s project team Kirsten Mitchell-Wallace, Head of Portfolio Risk Management Emma Watkins, Head of Exposure Management Charlie Melly, Exposure Management Manager Nicola Beckles, Marketing Manager The Emerging Cyber Threat to Industrial Control Systems Contents 04 Contents Executive summary ............................................................................................................................................................... 5 1. Introduction ....................................................................................................................................................................... 8 2. Overview of the proposed scenario ................................................................................................................................ 11 3. Impacts on the insurance market .................................................................................................................................... 13 Classes of business ........................................................................................................................................................ 13 Cyber Clauses and Exclusions........................................................................................................................................ 14 4. Examining different scenario pathways .......................................................................................................................... 16 Developing attack pathways............................................................................................................................................ 16 Pathways originating with nation-state affiliates.............................................................................................................. 17 Pathway 1: Targeted supply chain malware attack ......................................................................................................... 18 Pathway 2: Targeted IoT vulnerability attack .................................................................................................................. 19 Pathway 3: Infiltration of IT networks to cross the OT “air-gap” ...................................................................................... 20 Pathways originating from non-malicious sources .......................................................................................................... 21 5. Target industries considered .......................................................................................................................................... 23 Manufacturing .................................................................................................................................................................. 23 Energy ............................................................................................................................................................................. 24 Transportation ................................................................................................................................................................. 24 Shipping ........................................................................................................................................................................... 25 6. Trends and scalability of the current threat..................................................................................................................... 27 IoT proliferation and the convergence of IT/OT .............................................................................................................. 28 Increased cloud adoption in industrial operations ........................................................................................................... 28 7. Conclusions .................................................................................................................................................................... 30 8. Glossary of terms ............................................................................................................................................................ 32 References .......................................................................................................................................................................... 33 The Emerging Cyber Threat to Industrial Control Systems Executive summary 05 Executive summary A Lloyd’s, Guy Carpenter and CyberCube Analytics collaboration provides an original analysis of potential cyber attack pathways to an industrial target. Synopsis Cyber risk is continually evolving, meaning insurers should understand emerging risks in order to keep pace with their clients' exposures. Lloyd’s, CyberCube and Guy Carpenter have conducted an analysis detailing three scenarios which represent the most plausible routes by which a cyber attack against industrial control systems (ICS) could generate major insured losses. All three scenarios have historical precedents. The report describes how more severe events could unfold. This report considers four key industries dependent upon ICS (Manufacturing, Shipping, Energy and Transportation) and assesses precedents and the potential impact on each. The potential for physical perils represents a major turning point for the broader cyber (re)insurance ecosystem. This risk has previously
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