5 Reasons Why Manufacturing Companies Need Cyber Insurance

By Anthony Way
Posted: September 26, 2019

Manufacturing Cyberattacks 

In early 2017, an Illinois-based steel manufacturer was the victim of a phishing scam which compromised the W-2’s of their 300 employees. By the time they realized what had happened, numerous employees already had tax returns fraudulently filed in their name. 

As you can see, cyber insurance is extremely important in the manufacturing industry. Here are 5 reasons why manufacturing companies need cyber insurance.

1. EXTORTION

An organization’s security is only as strong as the judgment of its employees. All it takes is one employee clicking on what appears to be an innocent link, but is malware, for all the company’s data to be encrypted within seconds. A hacker will then contact the organization asking for a ransom ranging from a few thousand dollars to millions to decrypt the files. This is the most prevalent attack today as it is used against every industry. The scariest part; certain types of malware are free to download on the Internet by hackers.

2. FORENSIC AND NOTIFICATION COSTS

Should there be a cyber-attack, the Manufacturer will need to engage a forensic investigator ($250-$500/hr) to determine the scope of the attack and if any sensitive data such as employee records or confidential corporate information was breached. If data has been exposed, a law firm will get involved to notify each individual and regulatory body per the laws of the state. 

3. SYSTEM DAMAGE

Manufacturers rely heavily on their computer systems to properly fill orders.  Damage to a manufacturer’s computer system could be devastating and lead to defective products or a complete halt in production.  The forensic investigator will figure out what went wrong, but it will take a team to eradicate the malware and repair the system.

4. BUSINESS INTERRUPTION

Furthermore, manufacturers will experience a direct financial loss every hour that their systems are down.  They will incur unexpected costs such as sourcing products by alternative means and paying staff overtime to meet deadlines.  Additionally, manufacturers of non-durable goods could see an exponential loss in profit if their inventory spoils during the system outage. 

5. SOCIAL ENGINEERING

Cyber Crime (aka Social Engineering) is one of the most frequent claims in cyber insurance to date. Cybercriminals will trick financially responsible employees of the manufacturing organization to send money to a fraudulent bank account.  Hackers have become patient and will often sit in the system undetected monitoring and intercepting email activity before executing their scam.  Their tactics range from posing as the CEO, a vendor, or client to simply creating fake employee profiles in the payroll system to siphon money out.

Contact the Assurance ‘A’ Team to learn more about adding this important coverage to your portfolio.  

Source: https://evolvemga.com/

Evolve MGA – Cyber Insurance Specialists. Hackers Evolve, Your Cyber Policy Should Too.

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