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RESEARCH AND BRIEFINGS

Automotive’s Cyber Challenge

 


Digitalisation is revolutionising how companies operate, and driving business leaders to think differently. The pace of technological change is increasing, and dramatically transforming the global business environment. At the same time, while traditional risks may be reduced, the potential cyber and technology exposures that businesses face continue to expand, presenting businesses with the possibility of substantial economic losses.

Marsh’s latest research was presented in The Changing Face of Cyber Claims report, which leverages insights gathered from Marsh’s claims data and from the data, experience, and expertise from Wavestone and CMS, to look at practical ways to manage and mitigate cyber risk and claims.

In these industry deep-dives, we gather the key findings from a number of key industries, each one impacted by cyber risk in its own, unique way.

An industry in constant transformation

Changing consumer mobility habits force automotive manufacturers to rethink their business models. Multi-modal transport and ride-sharing enabled by big data and analytics power resource-efficient, flexible and on-demand multimodal mobility solutions. Meanwhile, ownership of a car is less important to consumers than it used to be.

New entrants are shaking up the automotive industry with electrification and digitalisation of vehicles, driven by consumers’ and governments’ requirement to go ‘emission free’. Electrification also allows for further digitalisation of automobiles,allowing for an advanced experience such as streaming content, digital assistants and software updating capabilities.

On the production side, automation and robotics have been a common sight in automotive factories. The trend to smart factories has been a logical step. Effective and efficient production is key in the automotive industry. While the large automotive manufacturers still have significant market share, new market entrants and changing consumer behaviours are changing the market significantly. Efficiencies will drive further steps in integrated supply chains and new technological advancements such as additive manufacturing, 3D printing and Internet of Things (IoT) are creating value for the pioneers.

The changing face of automotive

  • Advances in wireless connectivity enables car2car and car2x communications, which is the networking of the car with other cars or with the transport infrastructure (such as traffic lights) as well as the outside world through the Internet.
  • New entrants such as large tech companies are increasingly leveraging their operating system platforms to enable connected vehicle ecosystems.
  • The rapid progress made in areas such as artificial intelligence, machine learning and deep neural networks make it possible to achieve what until recently seemed utopian – namely the development of autonomous vehicles, which require no human intervention even in complex traffic situations.
  • Increased efficiency requirements drive industry-wide collaboration on production, integrated and just-in-time supply chains.

Data, robotics and cyber risks

The reliance on an integrated supply chain allows for just-in-time production but also requires a large and continuous exchange of data. Inventory levels, product and quality data and logistics drive the supply chain. Any disruption or unauthorised change in this data can significantly disrupt production facilities.

Meanwhile, factories are to a large extent reliant on robotics and digital production resources. Many of these systems were not designed with cybersecurity in mind and are therefore vulnerable to malware and hacks like many other computer systems.

The risk of ransomware infecting production systems, requiring a complete cleanse of factory systems and interrupting production can be quite costly for automotive companies.

Meanwhile, there is an ongoing debate on ownership of data produced by cars and liability in case of incidents due to e.g. programming errors in self-driving cars. While it is still too early to say how these risks will evolve exactly, automotive suppliers will do well to monitor these new cyber risks as they can significantly change the total cost of risk.