Hacking into cars is not a future concern. It is possible now, and the potential danger will increase as carmakers continue to enhance connectivity features in automobiles.
But even that threat pales against the potential damage cyber attacks could wreak when driverless cars take to the roads for real.
One common perceived threat here and now comes from the ease of access that manufacturers have built in for drivers. If a driver can unlock a car door and start the engine using a cell phone, an unauthorized person can turn off that engine and lock the doors from a cell phone.
Taking a drive into the near future, could someone arrange for all of the cars on a Los Angeles freeway to have their engines turned off at the exact same time?
Even now, the ability to hack into and remotely control a car is a clear and present danger.
Video: Behind the wheel of a car, you may be able to text, watch a movie or even sleep — if it’s a computer-controlled, driverless car. The WSJ’s Michael Kofsky heads to the test track to show how it works and safety questions it raises.
A pair of security engineers — doing their research with an $80,000 grant from the Pentagon — were able to hack into the systems of Toyota and Ford cars, and override a driver’s braking attempts, according to an account of the scenario in Forbes.
The pair was able to “demonstrate a range of nasty surprises: everything from annoyances like uncontrollably blasting the horn to serious hazards like slamming on the Prius’ brakes at high speeds. They sent commands from their laptops that killed power steering, spoofed the GPS and made pathological liars out of speedometers and odometers,” according to Forbes.
Expanding such abilities simultaneously to a fleet of cars is a feat yet to be accomplished.
“It could be possible to hack into one or another vehicle, but there is nothing that can stop the whole fleet at the same time,” said Mark Brooks, senior research engineer at the Southwest Research Institute (SwRI) in San Antonio. “Current levels of connectivity are not seen as major threats because they are not continuous.”
No One at the Wheel
“Even when a driver is using a navigation system, that is just a single download. The industry is much more concerned about continuous streaming back and forth, as with driverless cars,” he said.
Driverless cars rely on a number of sensors to operate, and are definitely vulnerable to attack, according to one of the hackers at the Def Con Hacking Conference in August.
“I’m a huge fan of unmanned vehicles,” said a hacker who goes by the name of Zoz to Venture Beat, a blog that focuses on technology. “I love robots. I think they’re the future. But, like everything else humans ever made, it’s going to get hacked.”
Google’s driverless car’s primary system is a “laser range finder mounted on the roof of the car,” which generates a 3D map of the area, according to IEEE, a technology professional organization.
“The vehicle also carries other sensors, which include: four radars, mounted on the front and rear bumpers, that allow the car to ‘see’ far enough to be able to deal with fast traffic on freeways; a camera, positioned near the rear-view mirror, that detects traffic lights; and a GPS, inertial measurement unit, and wheel encoder, that determine the vehicle’s location and keep track of its movements.”
Zoz told Venture Beat that it would not require sophistication to attack and derail those sensors, and he pointed out that engineers in Iran were able to hack and capture a U.S. drone by “spoofing” the GPS and feeding it incorrect location information.
Death and destruction are always a worry when hackers can subvert an operating system, but apportioning liability is also a major concern, SwRI’s Brooks said.
“If there were any problems, whose fault would it be? The carmaker? The navigation OEM? The software company? The driver? These are the discussions everyone is starting to have.”
Those initial conversations can be difficult, said Dave Wasson, professional and cyber liability practice leader at brokerage Hays Cos. in Chicago.
“The issues are known. People are aware of the risks. But at the moment there is kind of a paralysis because it is unclear how to quantify these risks, and also because even if we could quantify them, there are very limited options yet in how to deal with them.”
A Flawed System
Wasson added that a reordering of the current liability structure is both necessary and inevitable. “Right now, you have a pull market, with small OEMs seeking coverage because the first-tier OEMs and carmakers demand that they be indemnified. But that is not sustainable. A client might demand a $15 million cover from a small supplier, but that cover could cost the supplier $50,000 when he only grosses $100,000 on the contract.”
It is a situation where bigger companies are offloading their risk management onto smaller ones, and that, Wasson said, is flawed.
“Even when the suppliers comply, often the package does not work the way either the supplier or the OEM client thinks it will,” he said.
“Eventually the large firms will realize that they need to take this as primary,” Wasson said. “They have the assets, the skills, the risk managers, and the brokerage relationships to get it done properly.
“Besides, they are the ones who are going to get sued. They can turn to their indemnification contracts, but if the small supplier with few assets goes bankrupt, then what? It’s the company with the badge on the car that people are going to go after.”
As those issues percolate, commercial vehicle operators have other challenges as well.
“One really big cyber issue for a logistics company or express delivery service would be to have the GPS signals for their vehicles scrambled, or the electronic shipment documents tampered with,” said Steve Surber, area vice president for Arthur J. Gallagher in Irvine, Calif.
A cyber attack could be used to divert a shipment, cover theft, tamper with cargo, or even just to delay a shipment that is time sensitive. And the theft could be of the truck or trailer itself, some of which are worth up to $60,000, he said.
On another level, hacking can be used to disrupt the loss control systems of trucking lines, many of which use GPS and electronic reporting to track their fleet performance, Surber said.
Cyber alterations of such reporting could hide potential liability issues such as speeding, sleeping, unauthorized stops, fuel diversion, or many other misdeeds by shippers, loaders, drivers or consignees.
“Companies already rely heavily on computer systems and networks to help with loss control,” he said.
Among insurers, coverage is still evolving, he added. “There is some coverage from cyber policies, but mostly we are still seeing claims handled through general liability.”
Wasson, at Hays Cos., said that while the cyber risk and liability markets are pull markets at present, with owners seeking to transfer risk, the business is not without push.
“We are energetic about working with our carriers,” he said. “There is coverage and there is capacity.”
Cyber Security Efforts
In April, an automotive consortium started revving up its efforts to enhance cyber security.
The Automobile Consortium for Embedded Security — a part of SwRI — includes automakers, original equipment manufacturers, other suppliers, and cyber security experts.
The program aims to provide “pre-competitive and non-competitive research in automotive embedded systems security to protect the safety, reliability, brand image, trade secrets and privacy of client members’ future products,” according to the organization.
“As soon as they start claiming their vehicles are secure, they would paint a target on themselves. It’s not like safety or fuel economy. With security, there are bad guys and you don’t want to attract their attention.”
The consortium, Brooks said, “is looking at emerging research both in new technologies and new protections for embedded security for the automotive world.”
“There are lots of theoretical threats,” he said, “but we want to be sure we are focusing our efforts on the most relevant ones.”
The unique challenge is that automakers want to enhance the protections in their vehicles, but ironically, it is not something they want to advertise.
“As soon as they start claiming their vehicles are secure, they would paint a target on themselves.
“It’s not like safety or fuel economy. With security, there are bad guys and you don’t want to attract their attention.”
He said that automakers also are hesitant to unilaterally invest in cyber security efforts.
“As we started talking to automakers, we found them eager to be part of developing security, but it’s tough for them to take the lead or commit a lot of money to something that will not help them sell cars,” Brooks said.
“They also don’t want to reinvent the wheel,” he said. “They are very interested in solving common problems with peer-reviewed research and applications.”
Complete coverage on the inevitable cyber threat:
Risk managers are waking up to the reality that the cyber risk landscape has changed.
Cyber: The New CAT. It’s not a matter of if, but when. Cyber risk is a foundation-level exposure that must be viewed with the same gravity as a company’s property, liability or workers’ comp risks.
Critical Condition. The proliferation of medical devices creates a host of scary risks for the beleaguered health care industry.
Unmanned Risk. The dark side of remote-controlled drones, which have already been hacked — by students.
An Electrifying Threat. There is a very real possibility hackers could devastate the nation’s power grids — for a potentially extended period of time.
Risk Technology: Risk Managers Lead from Within
This year marks my twentieth in the risk management field. Now I would never call myself a risk manager. Far from it: I’m a computer geek, and proud of it. Today we refer to the Internet, Cloud, Mobile and Big Data, but I’ve been working with technology my entire life. So much has changed in those twenty years. Networking computers together was rudimentary and extremely limited when I started. Now everything, and everyone, is interconnected, and that has changed everything.
That interconnectivity has allowed organizations to move away from the isolated, siloed processes of the past, and produced dramatic changes in the way we conduct our business and our lives. I’ve watched risk management evolve from a department called upon primarily when things go wrong, to a pervasive philosophy for running a successful business. Fewer and fewer risk managers I speak to work in isolation, reacting to claims as they come in. Rather they are a collaborative lynchpin to manage risk. They don’t wait for bad things to happen. They proactively put safety programs in place, analyze loss data and make their organizations more risk-aware. They know an enormous amount about the inner workings of their organization, its suppliers, distributors, vendors and team members. This is a fundamental transition from a middle management, administrative function, to an executive level function that is key to the organization’s success.
But risk managers are increasingly finding that email and spreadsheets are clumsy, inefficient, and ultimately create obstacles to managing risk throughout their company. With the speed and global reach of business, when even ‘local’ businesses rely on a far-flung supply chain, yesterday’s technology introduces risk, inefficiencies and increased levels of error. Today’s business demands technology that facilitates decisions for tomorrow’s business challenges. Organizations need a platform – a platform that provides secure, efficient and consistent methods of communicating risk-related events and data. Fortunately this need comes at a time when we have a convergence of technologies that can make this vision a reality.
This is a fundamental transition from a middle management, administrative function, to an executive level function that is key to the organization’s success.
Just imagine running your business on technology of twenty years ago. Sending paper memos (when CC referred to a literal ‘carbon copy’), using a phone tethered to your desk, taking delivery of policy documents in hard copy – oh wait, they still do that. Would that put your business at a competitive disadvantage? Of course it would – and risk management would suffer too.
Risk management no longer has to take a back seat to other parts of the organization. Quite the opposite. By leveraging commercial cloud platforms, the pervasiveness of the Internet and the interconnectivity of everyone and everything, the risk management team can be the most modern, forward-looking part of the company. Risk management has become the bellwether of change – actually bearing the standard for technology-enabled collaboration and productivity across the organization. Imagine that.
Six Best Practices For Effective WC Management
It’s no secret that the professionals responsible for managing workers compensation programs need to be constantly vigilant.
Rising health care costs, complex state regulation, opioid-based prescription drug use and other scary trends tend to keep workers comp managers awake at night.
“Risk managers can never be comfortable because it’s the nature of the beast,” said Debbie Michel, president of Helmsman Management Services LLC, a third-party claims administrator (and a subsidiary of Liberty Mutual Insurance). “To manage comp requires a laser-like, constant focus on following best practices across the continuum.”
Michel pointed to two notable industry trends — rises in loss severity and overall medical spending — that will combine to drive comp costs higher. For example, loss severity is predicted to increase in 2014-2015, mainly due to those rising medical costs.
Debbie discusses the top workers’ comp challenge facing buyers and brokers.
The nation’s annual medical spending, for its part, is expected to grow 6.1 percent in 2014 and 6.2 percent on average from 2015 through 2022, according to the Federal Government’s Centers for Medicare and Medicaid Services. This increase is expected to be driven partially by increased medical services demand among the nation’s aging population – many of whom are baby boomers who have remained in the workplace longer.
Other emerging trends also can have a potential negative impact on comp costs. For example, the recent classification of obesity as a disease (and the corresponding rise of obesity in the U.S.) may increase both workers comp claim frequency and severity.
“The true goal here is to think about injured employees. Everyone needs to focus on helping them get well, back to work and functioning at their best. At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep.”
– Debbie Michel, President, Helmsman Management Services LLC (a subsidiary of Liberty Mutual)
“These are just some factors affecting the workers compensation loss dollar,” she added. “Risk managers, working with their TPAs and carriers, must focus on constant improvement. The good news is there are proven best practices to make it happen.”
Michel outlined some of those best practices risk managers can take to ensure they get the most value from their workers comp spending and help their employees receive the best possible medical outcomes:
1. Workplace Partnering
Risk managers should look to partner with workplace wellness/health programs. While typically managed by different departments, there is an obvious need for risk management and health and wellness programs to be aligned in understanding workforce demographics, health patterns and other claim red flags. These are the factors that often drive claims or impede recovery.
“A workforce might have a higher percentage of smokers or diabetics than the norm, something you can learn from health and wellness programs. Comp managers can collaborate with health and wellness programs to help mitigate the potential impact,” Michel said, adding that there needs to be a direct line between the workers compensation goals and overall employee health and wellness goals.
Debbie discusses the second biggest challenge facing buyers and brokers.
2. Financing Alternatives
Risk managers must constantly re-evaluate how they finance workers compensation insurance programs. For example, there could be an opportunity to reduce costs by moving to higher retention or deductible levels, or creating a captive. Taking on a larger financial, more direct stake in a workers comp program can drive positive changes in safety and related areas.
“We saw this trend grow in 2012-2013 during comp rate increases,” Michel said. “When you have something to lose, you naturally are more focused on safety and other pre-loss issues.”
3. TPA Training, Tenure and Resources
Businesses need to look for a tailored relationship with their TPA or carrier, where they work together to identify and build positive, strategic workers compensation programs. Also, they must exercise due diligence when choosing a TPA by taking a hard look at its training, experience and tools, which ultimately drive program performance.
For instance, Michel said, does the TPA hold regular monthly or quarterly meetings with clients and brokers to gauge progress or address issues? Or, does the TPA help create specific initiatives in a quest to take the workers compensation program to a higher level?
4. Analytics to Drive Positive Outcomes, Lower Loss Costs
Michel explained that best practices for an effective comp claims management process involve taking advantage of today’s powerful analytics tools, especially sophisticated predictive modeling. When woven into an overall claims management strategy, analytics can pinpoint where to focus resources on a high-cost claim, or they can capture the best data to be used for future safety and accident prevention efforts.
“Big data and advanced analytics drive a better understanding of the claims process to bring down the total cost of risk,” Michel added.
5. Provider Network Reach, Collaboration
Risk managers must pay close attention to provider networks and specifically work with outcome-based networks – in those states that allow employers to direct the care of injured workers. Such providers understand workers compensation and how to achieve optimal outcomes.
Risk managers should also understand if and how the TPA interacts with treating physicians. For example, Helmsman offers a peer-to-peer process with its 10 regional medical directors (one in each claims office). While the medical directors work closely with claims case professionals, they also interact directly, “peer-to-peer,” with treatment providers to create effective care paths or considerations.
“We have seen a lot of value here for our clients,” Michel said. “It’s a true differentiator.”
6. Strategic Outlook
Most of all, Michel said, it’s important for risk managers, brokers and TPAs to think strategically – from pre-loss and prevention to a claims process that delivers the best possible outcome for injured workers.
Debbie explains the value of working with Helmsman Management Services.
Helmsman, which provides claims management, managed care and risk control solutions for businesses with 50 employees or more, offers clients what it calls the Account Management Stewardship Program. The program coordinates the “right” resources within an organization and brings together all critical players – risk manager, safety and claims professionals, broker, account manager, etc. The program also frequently utilizes subject matter experts (pharma, networks, nurses, etc.) to help increase knowledge levels for risk and safety managers.
“The true goal here is to think about injured employees,” Michel said. “Everyone needs to focus on helping them get well, back to work and functioning at their best.
“At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep,” she said.
To learn more about how a third-party administrator like Helmsman Management Services LLC (a subsidiary of Liberty Mutual) can help manage your workers compensation costs, contact your broker.
Debbie discusses how Helmsman drives outcomes for risk managers.
Debbie explains how to manage medical outcomes.
Debbie discusses considerations when selecting a TPA.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Helmsman Management Services. The editorial staff of Risk & Insurance had no role in its preparation.