Addressing cyber risks in the energy sector is critical not only to energy security, but is also vital for a resilient state and economy, according to a World Energy Council report.
The report investigates how cyber risks can be managed taking into account the changing nature of the energy industry and energy infrastructure.
with the emergence of smart grids and smart devices make the energy sector a highly attractive target for cyberattacks aimed at disrupting operations. In a worst case scenario these attacks can result in infrastructure shut down, triggering economic and financial disruptions or even loss of life and massive environmental damage.
The report The road to resilience: managing and financing cyber risks’ published by the Council in collaboration with Swiss Re Corporate Solutions and Marsh & McLennan Companies, investigates how cyber risks can be managed taking into account the changing nature of the energy industry and energy infrastructure.
Christoph Frei, Secretary General, World Energy Council, said: “Cyber threats are among top issues keeping energy leaders awake at night in Europe and North America. Over the past three years, we have seen a rapid change from zero awareness to headline presence. As a result, more than 30 countries have put in place ambitious cyber plans and strategies, considering cyber threats as a persistent risk to their economy.
“What makes cyber threats so dangerous is that they can go unnoticed until the real damage is clear, from stolen data over power outages to destruction of physical assets and great financial loss. Over the coming years we expect cyber risks to increase further and change the way we think about integrated infrastructure and supply chain management.”
The report illustrates the rapid growth of cyber risks highlighting past attacks and potential cyber incident scenarios plus insurance claims implications. Effectively addressing cyber risk demands much higher public awareness, in governments and utilities.
Jeroen van der Veer, Executive Chair, Financing Resilient Energy Infrastructure study, and former CEO of Royal Dutch Shell, said: “The energy sector must take a systemic approach and assess cyber risks across the entire energy supply chain, improve the protection of energy systems and limit any possible domino effects that might be caused by a failure in one element of the value chain. Nevertheless, measures that require supply chain compliance or cross-border cooperation are more difficult to implement, and require increased cross-sector cooperation.”
Key recommendations of the report include:
- Industry: Energy utilities must view cyber as core business risk, increase awareness and build strong technical and human cyber resilience strategies. Adopting a common cross-sector cybersecurity framework for example can help locating key areas of cyber risk management and identify those systems that need to be protected at all costs.
- Technology companies can play an innovative role. They must monitor the nature of cyber-attacks and embed security features into the products they are developing and delivering.
- Governments: Policymakers must stimulate the introduction of standards, regulation and support information sharing, and in doing so support strong responses from companies to cyber risks. A cybersecurity talent pool is vital given the demand for skilled workers exceeds the supply with a growth rate that is more than two times faster than all other IT jobs.
- Insurance and finance: The insurance sector must monitor cyber risks and focus on managing newly arising and changing risks. They need to develop appropriate cyber insurance products and better understand how their existing portfolios are impacted by cyber incidents. In analyzing energy sector information in detail, they must help companies to better quantify their cyber risks.