The energy industry is a critical sector that encompasses the production and distribution of various forms of energy. It plays a fundamental role in powering economies, supporting infrastructure, and enabling modern living. In part due to the industry’s vital importance, it has become rampant with cyber risks such as phishing, ransomware attacks, and third-party risks. As part of his Certified Cyber Insurance Specialist (CCIS) training, Saku Saarela created a comprehensive analysis of cyber risk in the energy industry.
Underlying Causes of Cyber Risks in The Energy Industry
The energy industry operators represent an interesting target for malicious actors (e.g. cyber criminals and nation-states) due to their criticality to the surrounding society. For this reason, they are also regulated in terms of cyber security, and they often possess strict security controls. The energy sector has a wide attack surface due to its potentially complex supply chains and possible legacy systems, especially concerning its operational technology. This attack surface is continuously widening even further due to the adoption of different technologies in their production and distribution operations leaving companies open to internal cyber threats, ransomware attacks and phishing, and third-party risks.
Internal Cyber Threat
An internal cyber threat in the energy industry is the risk posed by employees, contractors, or other individuals with authorized access to the company’s network, systems, and data who intentionally or unintentionally engage in malicious activities or violate cybersecurity policies. These insider threats can potentially cause significant harm to the organization, compromise sensitive information, disrupt operations, and lead to financial losses. These internal cyber threats could include unauthorized access to sensitive data and systems, and introduction of malware, or theft of intellectual property of the company.
Ransomware Attacks and Phishing
Ransomware attacks in the energy industry are a popular form of cyber risk. Targeted phishing emails are opened and malware on the compromised computer spreads laterally across the company’s network, and the attacker gains access to the Supervisory Control and Data Acquisition (SCADA) systems that control the power plant’s operations. With access to the SCADA systems, the attacker takes control of various processes in the power plant, such as turbine control, voltage regulation, and circuit breakers. They disrupt the plant’s normal operations, causing power fluctuations and potential damage to the equipment.
Third-Party Risks
Third-party cyber risks in the energy industry are the cause of many potential security vulnerabilities and threats that arise from the company’s relationships with external vendors, suppliers, contractors, and other business partners. When an energy company shares access to its network, data, or systems with third parties, it can introduce additional points of exposure and potential weaknesses that cybercriminals may exploit.
The energy industry relies on a complex supply chain to obtain equipment, software, and services. Cyber threats may emerge from compromised components or software integrated into critical infrastructure, leading to security gaps. Sharing data with partners or integrating systems with external entities can expose sensitive information, and any weaknesses in data handling by third parties could lead to data breaches. Third parties requiring remote access to the energy company’s network (e.g., for maintenance purposes) can inadvertently introduce cyber risks if their systems are not adequately secured.
Protective Measures Used to Mitigate Cyber Risk in the Energy Industry
The energy industry deals with vast amounts of data, including consumption patterns, grid performance, maintenance records, and more. Effective data management and analytics platforms are essential for processing, analyzing, and deriving valuable insights from this data. Given the critical nature of the energy industry and the increasing risk of cyber threats, energy companies invest in robust cybersecurity infrastructure. This includes firewalls, intrusion detection and prevention systems, endpoint protection, encryption mechanisms, and continuous monitoring tools to safeguard against cyber attacks. Many energy companies are adopting cloud services to store data, host applications, and scale their infrastructure more efficiently. Cloud solutions offer flexibility, cost savings, and easier access to resources.
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