Cyber attacks like the NotPetya malware that struck Maersk are raising concerns about cyber risk and its effects on resilience, according to specialty insurer XL Catlin
Shipping industry firms and port operators are worried about linkage between cyber-attacks and supply chain risk, insurer XL Catlin has warned.
Big interdependencies between systems mean maritime firms face major business continuity risks from online threats.
“The problem is that nobody knows, other than the computer systems, where your goods are,” said Pascal Matthey, head of global lines for marine risk engineering at XL Catlin.
“You might never find your container again. Refrigerated containers might lose power, which would mean huge damage,” said Matthey.
Maersk was among those organisations worst hit by the NotPetya contagious malware attack last year.
The global shipping and logistics firm had to reinstall some 4,000 servers, 45,000 PCs, and 2,500 applications; the process took 10 days and cost the company around $450m.
The company was forced to temporarily switch to manual systems – pen and paper, and lots of overtime – resulting in a temporary 20% drop in volumes.
Another cyber-attack, revealed in 2013, struck two shipping companies operating in the Belgian port of Antwerp, and had reportedly gone undetected for about two years before that.
An organised crime group allegedly used hackers to infiltrate computer networks, allowing cocaine and heroin, hidden in containers shipped from South America, to be intercepted by criminals.
“The idea was not to harm the port but to get things out by hacking the system,” said Matthey, based in the specialty insurer’s Zurich office.
He warned about the potentially catastrophic consequences of a cyber-attack by terrorists, such as targeting a ship and interfering with its steering or navigation to cause a collision in congested waters, such as a port or major trade artery such as the Panama Canal.
“What happened on 9/11, you could perhaps now do with a ship, by steering a large vessel into an oil or gas terminal, which could have disastrous consequences,” said Matthey.
XL Catlin is among those re/insurance firms involved in developing blockchain applications – distributed ledger technology for smart contracts, sharing data instantaneously between the relevant counterparties.
A new blockchain platform for marine insurance contracts at XL Catlin and MS Amlin is expected to go live this year.
“We take a holistic approach to risk engineering and the whole supply chain,” said Matthey, who extols the benefits that blockchain can bring to insurers and risk managers alike.
“It is difficult for a marine insurer, for example, to gain a complete picture of accumulated exposure within a given port at a specific time of day on a certain date,” he said.
“Blockchain can help solve those accumulation issues,” Matthey added.