Expert Risk Articles

The “Internet of Things” and piracy increasing cyber exposures

Cyber incidents in the maritime industry continue to threaten and will intensify as a result of “the internet of things” and increased digitalization. Maritime organizations recognize the importance of guidelines to inform and protect increasingly vulnerable shippers. Meanwhile, piracy incidents are not abating, with pirates targetting holes in cyber security to identify specific cargoes.


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Protection and security

The shipping industry still has some catching up to do in getting to grips with the scope and nature of cyber risk. Cyber-attacks on the shipping industry are often under-reported as companies opt to deal with breaches internally for fear of worrying stakeholders. When reports of attacks do surface, details are usually vague, making it extremely difficult to gauge the headway the industry has made in strengthening online security.

Examples of cyber security issues reported to date include a hacker causing an oil platform located off the coast of Africa to tilt to one side, thus forcing it to temporarily shut down. Hackers have also infiltrated cyber systems in a port to locate specific containers loaded with illegal drugs and remove them undetected.

Cyber security is high on the International Maritime Organization’s (IMO) agenda, although having considered a number of submissions relating to cyber security at its June 2015 meeting, the MSC referred the topic to its 96th meeting in May 2016. The committee urged member states and international organizations to “collaborate on proposals for guidance on maritime cyber security” for submission at this meeting[1].

As an IMO facilitation committee document submitted to advance the development of such cyber risk guidelines[2] notes, although the maritime industry’s cyber technologies and systems provide significant efficiencies and benefits for shipboard operations they also introduce “serious, and potentially grave, operational risks”. Risks can result from improper integration of cyber systems, the unaccounted and unintended consequences of system updates, the interactions between the cyber systems of ships and ports, or the malicious attacks and threats from outside sources. Furthermore, vulnerabilities and unauthorized activities on vital cyber systems are not always readily apparent to users.

More needs to be done to educate shipping companies, say AGCS experts. “Shipping is still a long way from where it needs to be in terms of protection and security. While we as insurers can try to raise awareness and provide insurance solutions, generally the risk is not well understood and the consequences can be disastrous,” says Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS.

Cyber disruption to shipping

That said, a Cyber Risk Information Paper from the Joint Hull Committee in conjunction with legal firm Stephenson Harwood finds that the risk of a loss to a ship as a result of cyber disruption is “foreseeable, but is not yet a reality” (the technical working group which produced this paper was chaired by Chris Turberville, Head of Marine Hull & Liabilities, UK, AGCS). But while the risk of loss or damage caused to, or by, a ship as a direct result of cybercrime is currently low for bulk or general cargo shipping, more specialized or technically advanced ships engaged in oil and gas exploration and exploitation are more susceptible through their use of remote systems and Dynamic Positioning[3].

“While the likelihood of a cyber event that cuts off half of world trade is low and is more theoretical, the exposure is growing and there needs to be more in-depth research on how to improve systems and people,” says Sven Gerhard, Global Product Leader Hull & Marine Liabilities at AGCS.

In a worrying turn, pirates may have caught on to the possibilities of abusing holes in cyber security to target orders for specific cargoes, according to Captain Andrew Kinsey, Senior Marine Risk Consultant at AGCS.

Digitalized control center

Cyber and piracy incidents

“Pirates appear to have access to refineries and are able to find out who is carrying the fuel they want. Then they just need to look at the Automatic Identification System (AIS) information for the ship and they can go alongside, overpower the crew, take over the ship, disable the communications, siphon off the cargo and leave the ship adrift.”

In addition, there has already been one known incidence of Somali pirates having infiltrated a shipping company’s systems to identify vessels passing through the Gulf of Aden with valuable cargoes and minimal on-board security, leading to the hijacking of a vessel.

Kinsey believes that the industry needs more robust cyber technology and suggests making better use of technology to monitor the movements of stolen cargoes. Ongoing implementation of electronic navigation is also a potential conduit for cyber incidents, adds Kinsey. “The cyber impact cannot be overstated; it goes hand in hand with e-navigation – the simple fact is that you can’t hack a sextant.”

Cyber attacks pose threats to the shipping industry as digitalization increases.

As the Joint Hull Committee’s Cyber Risk Information Paper predicts, technological advances such as “The Internet of Things”, allied with the communications systems and protocols required by e-navigation will move shipping technology significantly toward the point where “the insurance market has less than five years to prepare itself for the risk of a cyber-attack at sea materializing into a hull and machinery loss.”

Piracy incidents up: Asian waters highest global risk, as African progress continues

For the first time in five years there was a reported increase in the number of actual and attempted piracy attacks during 2015, albeit by just one incident (246 compared with 245 in 2014), according to the International Chamber of Commerce’s International Maritime Bureau (IMB) annual piracy report.

Although the numbers of vessels hijacked and crew members captured declined year-on-year, the IMB’s Piracy Reporting Center (IMB PRC) noted that the number of vessels boarded increased 11% to 203. Meanwhile, kidnappings – where crew are taken away and held for ransom – doubled to 19 in 2015, all the result of five attacks off Nigeria.

The number of reported piracy incidents in Nigeria may have declined year-on-year (14 compared with 18 in 2014), but the country remains a hotspot for violent piracy, as evidenced by an incident on February 5, 2016, when the Nigerian Navy prevented a group of pirates from hijacking the 28,844 dwt containership Safmarine Kuramo, carrying 25 crew members.

And while it ranks as the fourth top location globally for piracy, many Nigerian incidents still go unrecorded.

On the east coast of Africa, while the civil war in Somalia is ongoing, piracy in the region has been largely quashed through the efforts of international navies. For the first time in five years no Somali-based attacks were reported during 2015. However, the potential for an attack remains high.

Attacks in South East Asia continue to increase with this region now accounting for around 60% of global incidents. Almost 55% of the region’s 147 attacks were against moving vessels compared with 37% a year earlier. Most were aimed at low-level theft. IMB cites this increase as a cause for concern as it increases potential risks to vessels and crew.

“A problem in the South East Asia region is that the traffic is very dense and different national territorial waters are adjacent to each other, making it very hard to distinguish who has responsibility,” points out Captain Jarek Klimczak,  Senior Marine Risk Consultant at AGCS.

Indonesia remains the top global hotspot, with a slight increase in incidents year-on-year despite incidents having declined in the majority of 11 ports, with only Belawan and Nipah recording marked increases in attempted thefts, according to the IMB.

Meanwhile, the Far East Asia region saw the biggest increase year-on-year in incidents (288% to 31), driven by a surge of incidents in Vietnam from seven to 27. The main cause is low-level theft against vessels anchored in Vietnam, with 15 reports from around the port of Vung Tau alone.