Opinion: ‘Fourth Industrial Revolution’ brings new set of risks

This isn’t the manufacturing industry your grandparents knew. 

Companies use technology to transform production tasks from days or weeks to hours or minutes. We are witnessing a wave of technology in manufacturing that many are calling “Industry 4.0.” This move into the Fourth Industrial Revolution is right here in front of us, and it brings with it new ways of production and an entirely new set of risks.
 
That internet-connected computer you are using can now give you all sorts of powerful tools like Big Data, analytics and even artificial intelligence. It also houses all of your data – information entrusted to you by your employees, customers and vendors. All of their intellectual capital and private information is right there at your fingertips allowing you to be more efficient.

So what is the risk?

Well, you are legally obligated to protect that information and, according to a study by the Ponemon Institute, you have a 26 percent chance of having a data breach in the next 24 months. Do you know, according to National Fire Protection Association data, you only have a 0.6 percent chance of having a fire in your commercial building? 

A small business, right here in Springfield, emailed a “payroll batch” to their outsourced payroll provider. Unfortunately, that email was mistakenly sent to the wrong person. It happened as you might expect and what you’ve possibly done before: They filled in that person’s email address, watched Outlook prefill the recipient information – which in this case was wrong – and then hit send. All of a sudden, whether they realized it or not, they had a clearly defined data breach and there wasn’t a hacker anywhere around.

In this case, they had to do a forensic exam of their computer system to determine what data was lost and where it went. They had to get a legal consultation to determine what, if any, legal or regulatory issues they had. They had to notify people their data was lost, set up a call center and monitor their credit. All of this took seven months. All the while, their people were working on computer stuff and not performing their regular duties, which in turn hurt the bottom line. In the end, this one little mistake cost over $58,000. 

They were fortunate. They had a cyber liability insurance policy that made all of this go a lot faster than it would have otherwise, and they got the best information technology help and legal advice available.

What impact would this have on your bottom line? 

Most business owners want options and recommendations. With that in mind, here are your options:

• Do nothing. If something happens, you will simply do the best you can, self-fund the costs and hope any liability or regulatory issues don’t put you under.

• Put precautions in place to prevent a cyber event from occurring. This could include a combination of IT security measures, cybersecurity training for your employees and/or formulating a cyber response plan.

• Purchase a cyber liability insurance policy. You can do this whether you do either one of the above, but the ability to obtain that policy – and even the rating and premium you will pay – will be based on what you are doing in the precautionary section above.

Do some investigation, ask some questions and get your options. No matter what, make a proactive decision with a purpose. The National Cyber Security Alliance found that as many as 60 percent of small- and midsize companies go out of business within six months of a data breach.

Industry 4.0 and the Fourth Industrial Revolution are here, and our manufacturers in the Ozarks are at the forefront. A big thank you for what you have done to positively impact our community, but do yourself a favor: Gather some information and make a proactive decision. Your partners, customers, vendors and employees will thank you for being prepared.

Jeff Eiserman is a commercial risk adviser with Ollis/Akers/Arney. He can be reached at jeff.eiserman@ollisaa.com.