Industry 4.0 has created more complex and harmful cyber exposures

An increased reliance on digital technology due to the competitive environment brought on by so-called ‘Industry 4.0’ has created more complex and harmful exposures to cyber events.

This is according to Adam Peckman, global practice leader of cyber risk consulting at Aon Risk Solutions, and Tracey Skinner, director of insurance and risk financing at British Telecoms (BT), who spoke at a cyber-themed workshop at Airmic’s (UK’s risk management association) annual conference, which is taking place this week in Birmingham, UK.

Industry 4.0 refers to the trend of automation and data exchange in manufacturing technologies, which includes cyber-physical systems, Internet of Things and cloud computing.

Peckman said that companies are using technology to drive efficiencies and become more competitive. They are, for example, utilising big data for customer insight or purchasing insights, or putting their entire enterprise supply chain onto a cloud solution.

“They might be using artificial intelligence or machine learning, or maybe deploying robotics within their own production,” he added.

Skinner suggested that, over the last couple years, very few companies have avoided exposure to these areas, and, as a result, have had to really change their approach to cyber risk.

Airmic also put out a report during the conference that suggested that cyber risk management remains high on the risk agenda of firms, but its implementation is often patch and lacks an enterprise-wide approach.

The report, Cyber risk – Understanding your risk and purchasing insurance, showed that less than a third of Airmic members are satisfied with their organisation’s ability to manage the risk, and argue that it is not just an IT issue.

However, the report also noted a shift towards more relevant coverage in the past year.

Carl Moore, partner at legal firm Lockton Companies, who contributed to the report, added: “Cyber insurance is the fastest-growing area of the market, and we are seeing a major increase in the relevance of cyber products, the capacity available, and the number of companies purchasing cover, especially in the last 12 months.”

Julia Graham, deputy CEO of Airmic, said that there had been an increase in ‘add-on’ solutions, including support for data breach, legal and media advice. “The insurance industry is offering more than just insurance - there are some really valuable risk advisory and services available that will support them risk managers taking a cyber-risk leadership role,” she said.

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