November 11th, 2014

Cyber-Related Risk to Critical Infrastructure

Posted at 1:00 AM ET

The table shows the sectors identified as critical by both the US government in the recent Presidential Policy Directive 21, and by the European Commission, as stated in the proposal, Directive on European Critical Infrastructure.

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For US critical infrastructure businesses, such as power utilities, telecommunications and water suppliers, the threat of cyber-attack is a growing and persistent concern. The White House recently issued its cybersecurity framework for critical infrastructure, developed by the National Institute of Standards and Technology.

The Bipartisan Policy Center, in its February 2014 report titled Cybersecurity and the North American Electric Grid: New Policy Approaches to Address an Evolving Threat,(1) stated that the federal government should set up backstop cybersecurity insurance through legislation modeled after the Terrorism Risk Insurance Act (TRIA). Utilities in the United States are expected to spend more than USD7 billion on cybersecurity by 2020,(2) the report said.

So-called “smart grid” technologies may make utilities more vulnerable to hackers and other types of cyber-attacks. For instance, the number of installed smart meters that connect customers to their utilities through the web is expected to rise to 1.1 billion in the year 2022 from 313 million in 2013, according to a report from Navigant Research.(3)

Cyber insurance coverage for utilities is limited and often expensive, the Bipartisan Policy Center report stated. “Another question for power sector entities and other operators of critical infrastructure is how the insurance market can address large-scale events with both cyber and physical components.”(4)

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Note:

1. Bipartisan Policy Center, Cybersecurity and the North American Electric Grid: New Policy Approaches to Address an Evolving Threat, February 2014, Pages 10 and 41.

2. Bipartisan Policy Center, Cybersecurity and the North American Electric Grid: New Policy Approaches to Address an Evolving Threat, February 2014, Page 61.

3. Navigant Research, The Installed Base of Smart Meters Will Surpass 1 Billion by 2022, November 11, 2013.

4. Bipartisan Policy Center, Cybersecurity and the North American Electric Grid: New Policy Approaches to Address an Evolving Threat, February 2014, Page 40.

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