• Thursday, November 30, 2023
businessday logo


Insurers see shipping face more cyber threats despite long-term safety trends

Insurers see shipping face more cyber threats despite long-term safety trends

Despite continued long-term positive safety trend in the global shipping industry over the past year, cyber threats remains a challenge for the sector, analysts at Allianz Global Corporate & Specialty (AGCS) have said.

The commercial insurer’s latest annual analysis of shipping losses and accidents worldwide for 2022 released Monday revealed that the global shipping industry recorded 54 losses of vessels, compared with 65 a year earlier.

This represents a 57 percent decline over 10 years, at 127 in 2012; while during the early 1990s the global fleet was losing 200+ vessels a year.

The international shipping industry is responsible for the carriage of around 90 percent of world trade, so vessel safety is critical to the global economy.

Rahul Khanna, global head of Marine Risk Consulting at Allianz Global Corporate & Specialty (AGCS) said despite the safety progress report, the industry is not without its challenges.

“Russia’s invasion of Ukraine, costly issues involving larger vessels, crew and port congestion and managing decarbonization targets, means there is no room for complacency.”

He said another growing challenge facing the shipping industry is cyber security.

According to him, the digital era may be opening up new possibilities for the maritime industry but its growing reliance on computer and software and increasing interconnectivity within the sector, is also making it highly vulnerable to cyber-attacks.

Read also: FG ratifies international legal instrument on cybercrime

“All four of the largest shipping companies, Maersk, Cosco, MSC (and CMA CGM), have been victims of cyber-attacks in recent years. Port operators have also been affected. Even the United Nations’ global shipping regulator, the International Maritime Organization was recently targeted by a cyber-attack, forcing some of its services offline. In particular, ransomware has become a global problem, Khanna said.

According to a recent industry survey, just under half (44 percent) of maritime professionals reported that their organization has been the subject of a cyber-attack in the last three years. Of these, 3 percent agreed to pay a ransom, which averaged at around $3 million. It also found 32 percent of organizations do not conduct regular cyber security training while 38 percent do not have a cyber response plan.

To date, most cyber incidents in the shipping industry have been shore-based, such as ransomware and malware attacks against shipping companies and ports’ database systems.

“But with the growing connectivity of shipping, the fact that geopolitical conflict is increasingly being played out in cyber space, recent years have seen a growing number of GPS spoofing incidents, particularly in the Middle East and China, which can cause vessels to believe they are in a different position than they actually are, and with the concept of autonomous shipping, there is little doubt that cyber risk will become a more important exposure that will require much more detailed risk assessment going forward.”

There is concern that shipping assets and ports could become collateral damage if the conflict in Ukraine results in an increase in cyber activity.

Marine insurers have been warning for years about the cyber risk to shipping. From a hull perspective, the worst-case scenario is a terrorist attack or a nation state group targeting shipping in a bid to inflict damage or major disruption to trade, such as blocking a major shipping route or port.

While this would seem a remote possibility, it is a scenario we need to understand and monitor. Although an accident, the recent blockage of the Suez Canal by the ultra-large vessel ever given is a revelation on many fronts as it shows the disruption a momentary loss of propulsion or steering failure on a vessel navigating a narrow waterway can cause.