The Urgent Cyber Threat to U.S. Manufacturers

PRACTICAL INSIGHTS FROM HUNTINGTON


Manufacturing companies are some of the biggest targets for cyberattacks. The events that grab headlines are the spectacular ones, like entire plants being shut down or malware attacks on the supply chain. But being a smaller target affords little protection. The viral nature of cybercrime technology means it’s fast and easy to deploy thousands of attacks. Cyberthieves are eager to find companies with weak defenses— which are often those with small or overworked security staffs.

25% of manufacturing organizations

surveyed said lack of trained personnel is a major obstacle to adopting advanced security processes and technology†.

What they’re after varies. It may be money, through a ransomware attack that paralyzes your systems until you hand over funds to restore control. Or, it may be an attempt to steal intellectual property (IP)—like your unique manufacturing process. It may be data, such as confidential customer, employee or vendor information. Or, it may simply be an attack out of malice—digital vandalism that uses malware to destroy or disrupt your systems.

29% Surveyed midmarket companies

reporting breaches that cost them up to $100,000§.

As the 2019 IBM X-Force Threat Intelligence Index found, manufacturing was the fifth most attacked sector in 2018, behind finance and insurance, transportation, professional services, and retail. In a 2018 Cisco Systems survey, 29% of midmarket companies say breaches cost them up to $100,000, while another 20% reported losses between $1 million and just under $2.5 million§.

40% Surveyed security professionals

in the manufacturing sector who say they don’t even have a formal security strategy.

Despite this alarming trend, Cisco reports that 40% of surveyed security professionals in the manufacturing sector say they don’t even have a formal security strategy.

Many manufacturers are aware of the problem, however.

Don Boian, cybersecurity outreach director at The Huntington National Bank, says he sees many small to mid-sized manufacturers moving past the “denial” phase and into the “acceptance” phase, where they’re ready to take a more methodical approach to security.

Framing the Discussion.

It’s time to think of cybersecurity as the new plant safety challenge. Just as manufacturers have developed a robust physical safety culture over the past 30 to 40 years, they now have to build the same kind of awareness and protocols around cybersecurity.

“We’re trained in factory environments not to step across the yellow line,” says Marty Edwards, managing director of the Automation Federation. “We need to start thinking about a thumb drive being stuck into a computer as a safety violation#.”

Eugene Spafford, executive director emeritus of the Purdue Center for Education and Research in Information Assurance and Security in West Lafayette, IN, agrees. “The rule of thumb for anybody managing a business is to assume that their systems have been penetrated,” says Spafford. “Especially when it comes to the protection of IP, a lot of organizations don’t think about security. Today, security must be a part of the original designҰ.”

Manufacturing has unique vulnerabilities, particularly around technology that operates plant equipment. Separating the networks for information technology (IT) and operational technology (OT), such as machine control boards, becomes more difficult as modern equipment comes into plants and the Internet of Things (IoT) evolution takes hold. Managing these more complex networks in the age of IoT makes security a daunting task, particularly for companies that don’t have staff dedicated to it. To help kickstart a more proactive approach to security, we developed these insights—a checklist outlining five basic steps to understanding and helping to reduce risk—for manufacturers like you.

52% of cyberattacks

on small to mid-sized U.S. companies surveyed were initiated by phishing attempts or other attacks on employees¥.

1. Determine what you are trying to protect.

Nothing brings a threat into focus like considering what you have to lose. Begin by identifying your company’s crown jewels— perhaps a manufacturing method, or a hard-won relationship with a customer who relies on components that you supply.

“If it takes you three weeks to restore your operation, what’s three weeks’ worth of sales going to cost you?” asks Marty Edwards of the Automation Federation. “Based on those numbers, you have to look at how much you want to invest in cybersecurity to bring the risk of that occurring down to an acceptable level#.”

One sobering statistic: Kaspersky Lab estimates that the average 2018 cost of a data breach for a small or medium size business (SMB) in North America to be $149,000. That’s up 27% from 2017.

$149k Estimated average cost

of a data breach on an SMB in North America.

In addition to the immediate cost of a shutdown there is the price of remediation, workforce disruption and harm to your reputation. Also, there could be additional costs if you don’t have data properly backed up and a response and recovery plan in place. Then there could also be the cost of new security technology and practices that, if you’d invested in them earlier, might have prevented or minimized the attack in the first place.

While many manufacturers have someone on staff responsible for tech, they don’t always take the time to fully evaluate the cost of a potential cyberattack. Once you’ve seen what an attack could cost your organization, it’ll be easier to justify the investment in the next preventative steps, including hiring a consultant to investigate your vulnerabilities, training staff in cyber awareness, and segmenting your IT and OT networks.

2. Conduct a detailed cyber risk assessment.

Because many mid-sized manufacturers often lack dedicated cybersecurity staff or budget, it’s important to prioritize which threats to tackle first so you get the most bang for your buck.

$160k Average cost per stolen record

from a data breach in the global industrial sector.

Collecting a detailed and actionable understanding of your vulnerabilities is typically the work of an IT security consultant, who will do things like scan your external facing connections to check for malware and other attacks, review your system configurations and look for any software flaws. The consultant will then give you a report and help you develop strategies to patch your systems and watch for network vulnerabilities like unused network ports exposed to intruders. In some cases, you may hire the same consulting company to do routine follow-up checks of the network, or to train your internal IT team to do the updates and monitor work.

For a small or mid-sized manufacturer, this kind of assessment and a follow-up plan should cost about $15,000. If that seems costly, remember that a typical attack can cost almost 10 times that—$149,000.

When searching for a consultant, executives need to understand the level of complexity their company can handle, and have the consultant offer a program that will work for their company’s sophistication and resources. For example, says Rob Westervelt, a research director within the Security Products group at International Data Corporation, if you’re not technically savvy, you don’t want to get a huge detailed report on every single software vulnerability in your environment. For many, the crucial component will be guidance on where to begin.

Some questions executives should pose to the consultant include:

  • Can you offer a program that is tailored to my company's level of sophistication and resources?
  • What are the highest risk parts of my environment?
  • What are the most cost-effective ways to invest in security?
  • How much should I spend on security equipment and staff to mitigate my biggest risks?

3. Initiate regular cyber awareness training.

The human component is critical in cyberattack prevention, and companies of all sizes will benefit from staff training. In fact, according to the Ponemon Institute, the single biggest cause of data breaches is negligent employees or contractors. And the problem is getting worse. 60% of survey respondents cited this cause in 2018, up six points from 54% the year prior¥.

Training often includes a class on how to spot suspicious phishing emails as well as a review of basic cyber hygiene, such as password management, and teaching staff which kinds of devices they can connect to the network. For people who work remotely, changing the default password on their home wi-fi router is the sort of detail easily overlooked. Staff also must learn to see unauthorized thumb drives as a source of risk.

“Someone can plug a USB drive into a computer or machine and infect the plant. It could be that someone’s kid is a gamer, and they picked up a virus on the drive,” says John Nicholas, professor of computer information systems and cybersecurity expert at the University of Akron. “It’s a matter of practicing continuous cyber hygieneΠ.”

60% of survey respondents

who reported a data breach cite the root cause as negligent employees or contractors¥.

Mindy Ball, enterprise fraud director at Huntington, says manufacturers also have to set clear policies about office ‘access to’ and ‘use of’ the Internet and social media. Social platforms can be entry points for hackers. Companies should decide how and if they allow access to Internet sites.

“Companies should also consider whether or not they let workers send emails from home to work, and vice versa. Enabling someone to introduce malware from a home PC defeats all the efforts of creating a great system inside.” Ball adds that similar problems can be introduced by how companies communicate with third party providers on one end; and with clients on the other end. “Leveraging security experts that can assist with ensuring secure communication protocols are in place will go a long way to helping prevent a company from becoming exposed to a vulnerability created by these channels,” Ball says.

Perspective
Most importantly, response plans need to be tested and practiced. The first time you run the response, it will not go smoothly. You want to discover any hiccups long before a real incident.
Marty Edwards
Managing Director of the Automation Federation

Lastly, she adds that it is important that workers are well-grounded in understanding how security vulnerabilities present themselves in their daily processes, both upstream and downstream. This is particularly important in areas where key assets, such as payments/ receivables and confidential information, flow through the company. Companies should look to enforce hard stops and limits of money movement, for example, to only what is necessaryΩ.

Racine Metal-Fab, a 60-employee precision sheet metal and fabrication service company based in Wisconsin, hired a consultant to do a security assessment a couple of years ago. As part of the exercise, the consultant phished the company’s employees with fake emails, then used the results in a follow-up presentation.

Surprised employees learned how many of them had not only been fooled, but had actually offered up usernames and passwords to the might-havebeen cyberthieves.

Dean Popek, CFO of Racine Metal-Fab, who also serves as the IT manager, says the company now runs a phishing exercise once a year, followed by a brief review††.

Building a cybersecurity culture takes a commitment from top management, and mutual understanding that employees are the first line of defense. Nothing happens unless the staff takes ownership of cybersecurity. It’s management’s job to reinforce and update the training and keep security awareness top-of-mind.

“The other thing I do,” Popek says, “is any time I read an article about security... I’ll send it out to everybody in the company and just say, ‘Hey, folks, here’s a reminder about the risks out there today††’”

4. Protect and segment your networks.

Smaller manufacturers are at an important technology crossroads. As they replace old equipment with new machines that are connected to the Internet—now that manufacturing is well into the Internet of Things era—and as more pumps, valves, hand tools and even helmets come with wireless radios, it’s increasingly difficult to separate the IT and OT networks.

For years, manufacturers created what became known as an “air gap” between IT and OT, where the systems were on physically separate networks. (In truth, it was never a foolproof strategy: All it took was inserting a thumb drive with bad code for the gap to be jumped.) As these new, networked equipment and IoT products come into the plant, often joining the company’s IT networks, they may introduce a cyber vulnerability that manufacturers simply haven’t had to deal with before.

State-of-the-art machinery often includes security features that mitigate risk, but that level of equipment may be cost prohibitive to smaller manufacturers who need to find other ways to secure older, vulnerable equipment.

The problem is that small and mid-sized companies have put far more money into equipment than into IT, but now the two areas overlap, says John Nicholas of the University of Akron. “Manufacturers are going to have to start investing in IT personnel and people who offer services to keep their systems secureΠ.”

The first step in helping to protect the network should be installing firewalls that identify and block vulnerabilities in industrial environments, says Bryan Tantzen, senior director of industry solutions at Cisco Systems. Plants also need a secure method of remote access, so equipment vendors can communicate with their installed machines to troubleshoot problems and maintain the systems§§.

Manufacturers rolling out new equipment should work with their network provider to isolate or segment the part of the network the new machines run on. Network providers can also install tools that offer visibility: the ability to monitor network performance and identify potential security issues in all segments of the network. Tools are available that provide the same sort of visibility in OT networks that network managers have had for years in IT networks.

The best bet for small and midsized manufacturers: Even if you anticipate that it’ll take three to five years to upgrade to IoT equipment, start creating a security plan for introducing it now, so you’re ready as your old, vulnerable machines need to be replaced.

5. Develop a response and recovery plan.

Response and recovery plans are essential to any security program because it’s likely more a matter of when you are going to be hacked than if you will be hacked. You don’t want to be caught offguard.

A response and recovery plan is another cybersecurity tool a consultant can help develop. It should detail step-by-step 7 Huntington Practical Insights: The Urgent Cyber Threat to U.S. Manufacturers processes and responsibilities for incident response, including who will do the hands-on work of analyzing the scope of the attack and restoring lost systems and databases, as well as when to notify the company’s attorney, law enforcement and, possibly, the local media.

Companies may want to publish the step-by-step plan in the company manual or at least create redundancy in responsibilities, so if the IT person is out sick or on vacation, somebody else can get started on crucial steps like unplugging infected computers or machines and calling legal counsel.

While most manufacturers will first concentrate on their office IT systems, it’s also important to include OT systems in the plan.

Marty Edwards, of the Automation Federation, says many manufacturers neglect to make regular OT backups. He says this can become a real problem, pointing to a recent ransomware case in which a Midwest hospital resorted to paying more than $50,000 ransom because it just didn’t have the mechanisms in place to restore its systems.

“I would ask them, ‘Why is a ransomware infection on your system any different than a fire or some other disaster?’” he says. “You should have a plan to recover from that.” Most importantly, he adds, those plans need to be tested and practiced. The first time you run the response, it will not go smoothly, so you want to discover any hiccups long before a real incident. For example, Edwards says, “If you’ve done these backup tapes for years and years, when’s the last time you took one off the shelf and actually tried to restore it#?”

Cyber Risk Management Tips

Do's
  • Do start thinking about cyber safety with the same attention you give to plant safety.
  • Do conduct a thorough risk assessment to figure out the real cost of a cyber incident.
  • Do consider hiring a cybersecurity consultant to prioritize your vulnerabilities.
  • Do create a cyber training plan for all employees.
  • Do take steps to help protect your OT just as you do your IT, with firewalls and controlled network access.
Don'ts
  • Don’t ignore your IP or client IP in your risk assessment.
  • Don’t overestimate your company’s resources and sophistication in creating a cyber protection plan.
  • Don’t forget about departments like HR in your cyber training and policies.
  • Don’t assume your manufacturing equipment has the latest patches and updates.
  • Don’t wait until you’ve had an incident to test your response plan.

Cyber Risk Management: How Huntington Can Help.

As risk-management leaders, CFOs, treasurers and other executives must help protect corporate data and systems without handcuffing the technologies that improve speed, efficiency and connectivity of plants and overall businesses. To do this, they need to work with their boards of directors, IT and OT managers—and, importantly, with their financial institutions.

“Cybersecurity should be viewed in conjunction with an overall business continuity strategy, and your financial institution should be helping your business operate and be successful,” said Don Boian, cybersecurity outreach director at Huntington.

We work closely with businesses to provide tailored, actionable insights that help them mitigate risk and manage uncertainties. By leveraging our collective experience, we can help navigate the risks associated with cyberattacks to help better protect your company and your customers. Talk to a local Huntington Relationship Manager about managing and mitigating the impact of cybercrimes on your company.


Cyber Security Resources

The National Institute of Standards and Technology (NIST) provides guidance around cybersecurity standards for manufacturers. There are also free resources, published by universities and tech companies.

NIST Manufacturing Extension Partnership
https://www.nist.gov/mep/cybersecurity-resources-manufacturers/dfars800-171-compliance

NIST Self-Assessment Handbook 
https://nvlpubs.nist.gov/nistpubs/hb/2017/NIST.HB.162.pdf

NIST Cybersecurity for IoT Video
https://www.nist.gov/programs-projects/nist-cybersecurity-iot-program

MForesight: Alliance for Manufacturing Foresight, Guide for Manufacturers
https://cra.org/ccc/wp-content/uploads/sites/2/2017/10/MForesight-Cybersecurity-Report.pdf

Center for Education and Research in Information Assurance and Security, Purdue University
https://www.cerias.purdue.edu

Deloitte and MAPI Video on Cyber Risk in Advanced Manufacturing
https://www2.deloitte.com/us/en/pages/manufacturing/articles/cyber-risk-in-advanced-manufacturing.html

Contact a Relationship Manager

We'll get back to you shortly.

Preferred contact type
Annual sales revenue

Loans subject to credit application and approval.

Insurance products are offered by Huntington Insurance, Inc., a subsidiary of Huntington Bancshares Incorporated, and underwritten by third-party insurance carriers not affiliated with Huntington Insurance, Inc.

The information provided in this document is intended solely for general informational purposes and is provided with the understanding that neither Huntington, its affiliates nor any other party is engaging in rendering financial, legal, technical or other professional advice or services. Any use of this information should be done only in consultation with a qualified and licensed professional who can take into account all relevant factors and desired outcomes in the context of the facts surrounding your particular circumstances. The information in this document was developed with reasonable care and attention. However, it is possible that some of the information is incomplete, incorrect, or inapplicable to particular circumstances or conditions. NEITHER HUNTINGTON NOR ITS AFFILIATES ACCEPT LIABILITY FOR ANY DAMAGES, LOSSES, COSTS OR EXPENSES (DIRECT, CONSEQUENTIAL, SPECIAL, INDIRECT OR OTHERWISE) RESULTING FROM USING, RELYING ON OR ACTING UPON INFORMATION IN THIS DOCUMENT EVEN IF HUNTINGTON AND/OR ITS AFFILIATES HAVE BEEN ADVISED OF OR FORESEEN THE POSSIBILITY OF SUCH DAMAGES, LOSSES, COSTS OR EXPENSES.

Third-party product, service, and business names are trademarks and/or service marks of their respective owners.

Cisco Systems. Cisco 2017 Midyear Cybersecurity Report. July 2017.

IBM Corporation. X-Force Threat Intelligence Index 2019. February 2019.

§Cisco Systems. Small and Mighty: How Small and Midmarket Businesses Can Fortify Their Defenses Against Today’s Threats. July 2018.

Don Boian interview. September 24, 2018.

#Marty Edwards interview. May 14, 2018

ҰEugene Spafford interview. May 2, 2018.

¥Ponemon Institute. 2018 State of Cybersecurity in Small & Medium Size Businesses. November 2018.

Kaspersky Lab. On the Money: Growing IT Security Budgets to Protect Digital Transformation Initiatives. 2018.

IBM Security and Ponemon Institute. Cost of a Data Breach Report. 2019.

Rob Westervelt interview. May 16, 2018.

Π John Nicholas interview. June 28, 2018.

ΩMindy Ball interview. October 11, 2019.

††Dean Popek interview. May 17, 2018.

‡‡Bryan Tantzen interview. May 7, 2018.