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What Can We Expect as Manufacturers Respond to COVID-19?

COVID-19 has the world’s most powerful nations in its grip, and as an increasing number of countries start to fight back, the economic impact of this novel virus is starting to compound. But what can we expect to see from the manufacturing sector as the battle rages on, and how might these responses affect risk in the future?

Panic buying drives demand and transforms business models

The increase in demand for non-perishable food products has now risen above typical Christmas levels, causing a significant knock-on effect on supply chains. Many manufacturers are now working at full capacity, having hired additional staff to help in the production of record numbers of products. For some companies, business models have been hugely affected. In their efforts to get products to consumers quickly, many have found themselves dramatically altering the way they work.

Recent changes in production methods could even bring new exposures for some companies, in terms of the increased risk of unsafe products, or products which might not meet strict quality guidelines.

Coronavirus spending patterns impact contract manufacturers

New trends in buying patterns have led to a shift in the prioritization of the products many retailers distribute. Amazon recently began prioritizing essential household items in its warehouses, meaning longer waits for those ordering non-essential items. Demand for luxury products has fallen as a result of the coronavirus, and many brands are limiting production as a result. However, as the world begins to acclimatize to its new normal, we could well see an increase in the uptake of luxury products, strengthened by this limited availability.

Lockdown and the domino effect

Many nations are in lockdown, and huge restrictions have been placed on businesses all over the world. The domino effect of these lockdown measures is set to become one of the biggest challenges of the coronavirus. A single lockdown can have a huge impact on an entire supply chain, inevitably threatening business continuity and perhaps even leading to insolvency for some.

Staff illness and isolation measures

With growing numbers of the workforce being diagnosed, it’s only a matter of time until key quality assurance staff are taken away from the front lines of operations in order to self-isolate. In terms of risk, this could spell trouble for manufacturing businesses.

Joseph Bermudez, a lawyer specializing in crisis management at Stewart Smith Law explains, “colleagues will substitute in and may inadvertently cause contamination, mislabeling, or manufacturing defect issue”.

Social distancing may slow distribution

Safe social distancing measures are making deliveries more difficult. Drivers and workers accepting goods are reluctant to get too close to one another, and as this continues it could cause additional time lags in the restocking of supplies. There might come a time where individual staff members at stores are permitted to accept deliveries only when wearing the correct personal protective equipment. Distributors too might start to put the pressure on stores to provide such equipment.

The effects of import and delivery restrictions

Significant restrictions have already been placed on the movement of individuals. We start to see these restrictions extended to foreign trade, making it more difficult, and more expensive, to import or export goods. Should countries face food shortages, we can expect manufacturers and distributors to focus their efforts on their own domestic markets. Any increases in expense or logistical challenges associated with supplying other nations could well add to their reluctance to supply other markets.

If shortages do begin to affect food availability, we might also see price increases, and a reduction in the variety of products available, as manufacturers turn their attention to maximising output as quickly as possible.

What does the future hold for manufacturers?

Sadly, none of us can say with any certainty what’s in store for businesses in the near, and more distant, future. The world’s response to COVID-19 has been dramatic, with many countries introducing increasingly draconian measures to prevent the spread of this deadly virus. But as more and more restrictions are introduced, the timeframe in which we might see a return to normality grows longer.

In the short term, business risk hasn’t changed. Yet the long-term effects of the coronavirus pandemic on businesses are likely to be far-reaching. And the impact on all of us, as individuals, may well be just as significant.

Source: www.cfcunderwriting.com


Liability Concerns from Working Remotely

As COVID-19 disrupts our economy, it’s been remarkable to watch how different businesses adapt to the new normal. Across the board, companies have been arranging their workforce for full-time remote work. These changes have been implemented with impressive efficiency, yet there are still significant areas to watch out for in terms of increased liability that comes along with a remote workforce.

  • Privacy concerns. Does your virtual meeting software of choice track whether users are “paying attention” or not? Some programs will do this by informing the organizer when certain viewers don’t have the meeting or presentation in full screen for a certain amount of time. What about the data that the attendees are generating by using the software—is it being sent to any third parties for data mining? Are “private” chats being monitored?
  • Cyber risks. Bad actors are already tying phishing and other types of messages to COVID-19 in order to entice clicks. For example, some phishing messages are even impersonating the Centers for Disease Control and Prevention or World Health Organization and offering “help” or “important updates” so that the reader clicks through. Is your workforce trained on how to resist these kinds of traps? Do all employees know to use private, secured Wi-Fi networks while working remotely? Have information technology business continuity plans been tested recently?
  • Wage and hour exposures. Adjusting to remote work can make some routine timekeeping tasks more difficult. If you have workers that usually clock in and out in the office or at a worksite, are they set up to do this easily at home now? Do they know to still record their breaks as they would if they were in the office? When appropriate, are they being reimbursed for reasonable expenses that come along with working remotely?
  • Workers compensation adjustments. When employees switch to working from home, some workers compensation insurers may want to change insureds’ classification codes.

For additional resources, visit IRMI’s frequently updated page that compiles several free online resources related to COVID-19.

Source: www.irmi.com


Remote Working Vulnerabilities Hit School Hard

The CFC case study below explains how hackers accessed a school’s systems through remote desktop protocol and held data to ransom.

The education sector is no exception to the massive technological changes that have occurred over the past 20 years or so. Schools in particular are now increasingly dependent on their computer systems to provide students with a 21st century education. Both teachers and students now regularly make use of computer technology in the classroom, whether that be through delivering PowerPoint presentations on interactive whiteboards, conducting interactive learning on tablets and laptops, completing online assessments and tests, or using software programs for compiling student grades and monitoring classroom attendance. Schools are also seeing a shift away from paper filing and are storing more and more of their important data in an electronic format.

Although the use of computer technology has undoubtedly brought many benefits to schools, their increasing dependence on computer systems and electronic databases also makes them vulnerable to cyber losses. If teachers and staff are unable to gain access to their computers, whether that be as a result of a malicious cyber attack or a non-malicious system failure, it can result in serious operational disruption for the school. And if a hacker gains access to sensitive electronic data held by the school, it could have a negative impact on the school in terms of both its finances and its reputation.

One of CFC policyholders affected by a cyber loss was a private school responsible for educating approximately 800 students aged 11-18, with the school catering for both day and boarding students.

The incident began when a hacker managed to gain access to the school’s computer systems through the remote desktop protocol (RDP). RDP allows remote users to connect to the desktop of another computer through a network connection and is typically used by schools to allow staff and students to access their networks whilst they are not on school premises. In this case, the port that the school used for RDP access was exposed directly to the internet. Hackers are constantly using scanning tools to identify vulnerable organizations and establish any weak points that they may have in their cyber security, and an RDP port that is exposed directly to the internet is one of the most common that they look out for.

Having identified this area of weakness, the hacker looked to gain access to the school’s network by initiating a brute force attack against a local administrator account. A brute force attack is where a hacker uses a computer program to crack passwords by trying numerous possible password combinations in rapid succession, with the program typically trying a long list of the most commonly used passwords. Generally speaking, the longer and more complex the password, the more difficult and time consuming it is for the program to crack. Unfortunately, however, the school’s local administrator account had a weak password in place that had been used as a default but never been changed. With the password lacking in complexity, the program quickly cracked the password. What’s more, the school did not have multi-factor authentication enabled for RDP access, so as soon as the password was cracked, the hacker was able to gain access to the school’s network without having to go through a second verification procedure.

Upon gaining access, the hacker took the opportunity to unleash ransomware across the school’s computer systems. Ransomware is a type of malicious software that works by encrypting data on a network, and then demands that a ransom be paid in exchange for a decryption key to regain access to the data. In this case, the ransomware had encrypted multiple servers, effectively locking the school out of its computer systems, and the hacker demanded a payment of 2 bitcoin for the decryption key. In many cases, it’s possible to mitigate ransomware attacks by recovering from back-up. However, the school’s back-ups were contained on one of the servers encrypted by the ransomware, rendering them useless.

Fortunately for the school, the ransomware attack occurred over the course of a school holiday, but without being able to restore from back-ups, the school recognized that a great deal of disruption would ensue if its computer systems were still unavailable once students returned. For example, the school would be unable to have ready access to highly important information, such as the financial information needed for accounting purposes, details about prospective students for the next school year and critical information about students under the school’s care, such as medical records and dietary requirements;  teachers would be unable to make use of interactive whiteboards to provide presentations to students; students would no longer be able to use e-learning courses in the classroom or complete online assessments; and boarding students would be unable to complete homework assignments on schools computers in the evening.

With the prospect of significant operational disruption looming over the school, it was at this point that the incident was notified to CFC’s incident response team. The team’s first priority was to establish what ransomware variant had been used in the attack by looking at a copy of the ransom note and a sample of the encrypted files. Having identified the likely ransomware variant, the team then carried out some research to see if there was any way of removing the ransomware without paying the ransom demand. One of our incident response partners produces a regularly updated list of freely available decryption keys for known ransomware variants. Luckily for the school, the team were able to find a decryption key online. With the decryption key to hand, the school was able to begin the process of decrypting the affected data and applications without having to pay the ransom.

However, even though the school had managed to regain access to its computer systems, there was still a question mark over whether the attack had resulted in a data breach. The ransomware attack had impacted servers containing sensitive data, including parents’ names, phone numbers, and residential addresses; data on past and present students, such as grades, attendance, disciplinary and medical records; information on staff, such as contact details, addresses and bank account details; and information on prospective students who were likely to be inducted in the next school year. As the school was subject to local data breach notification laws, it meant that if it transpired that some or all of this data had been accessed or exfiltrated in the course of the attack, the school would have to notify the affected individuals, potentially resulting in a regulatory investigation and damaging the school’s reputation in the eyes of staff, students and parents alike.

In order to address this issue, we engaged one of our incident response partners to conduct a forensic investigation to establish how the hacker had gained access to the insured’s computer systems and whether they had accessed any sensitive data whilst they were there. Unfortunately, when the hacker had carried out the attack, they had set up a temporary user profile, which meant that there was no way of knowing for sure what folders the hackers may have explored and what files may have been opened.

Nevertheless, our incident response team and our forensic partners were able to establish some pertinent facts about the case. First, based on previous incidents and threat intelligence, the ransomware variant used during the course of the attack was not known to be capable of accessing or exfiltrating data. Second, the bandwidth usage logs obtained from the school’s internet service provider did not show high levels of traffic during the period that the hacker had access to the school’s computer systems, indicating that there had not been any major data exfiltration from the school’s network. Third, the hacker was only logged on to the school’s computer systems for a short period of time, suggesting that they were primarily focused on deploying the ransomware rather than seeking out sensitive data.

Given this, our forensic partners determined that the hackers main motive appeared to be financial gain through the use of ransomware, rather than the theft of sensitive data. After engaging legal advice to determine whether a data breach notification would be required, the lawyers advised that, based on the findings of the forensic investigation, no notification would be needed in this instance, thus ensuring that the school’s reputation was not damaged unnecessarily.

The total cost of carrying out a root cause analysis, network security assessment, forensic investigation and engaging legal counsel came to £17,560, all of which was covered by the school’s cyber policy with CFC.

This claim highlights a few key points. Firstly, it highlights the importance of securing the remote desktop protocol (RDP) effectively. If organizations are using RDP, they should make sure that it is not directly exposed to the internet and use a virtual private network (VPN) instead. In addition, businesses should ensure that they have good password hygiene in place and enable multi-factor authentication for any remote access to the network. If the school had had these measures in place, it is highly unlikely that the hacker would have gained access to its computer systems.

Secondly, it highlights the importance of having a good data back-up policy. In this case, the school had been prudent enough to back up its data. However, by not saving these back-ups external to the school’s servers, it meant that when the ransomware started encrypting, it encrypted the back-ups too. Ideally, businesses should maintain daily offline back-ups to help prevent back-ups from being compromised during the course of an attack.

Finally, this claim highlights the value of cyber insurance. When you buy a cyber insurance policy, you are not just buying a promise to pay valid claims. You are also paying for a service to help and advise you when things go wrong. In this case, CFC’s incident response team and our partners were able to provide threat intelligence on the ransomware variant and obtain a free decryption key, enabling the school to regain access to its computer systems; conducted a root cause analysis to establish how the hacker got into the system, enabling the business to identify and remedy any cyber security weaknesses; and conduct a forensic investigation that allowed us to determine that the ransomware attack had not resulted in a data breach, thus preventing the school from conducting an unnecessary notification procedure and needlessly damaging its reputation.

Source: cfcunderwriting.com


Cybercriminals Exploiting Coronavirus

Public concern and working-from-home mandates are providing opportunities for cybercriminals.

This CFC advisory provides some background on these risks along with some easy-to-implement steps that businesses can follow to avoid falling victim.

COVID-19 increasingly being used in phishing attempts

As new cases of the COVID-19 Coronavirus continue to be reported daily, cybercriminals have been leveraging the situation to take advantage of those looking for information on the outbreak. Scams include the following and are changing each day:

  • The Sophos Security Team has spotted emails impersonating the World Health Organization (WHO). The emails ask victims to “click on the button below to download Safety Measure”. Users are then asked to verify their email by entering their credentials, redirecting those who fall for the scam to the legitimate WHO page, and delivering their credentials straight to the phisher.
  • Interpol has warned of a large increase in fraudulent websites claiming to sell masks, medical supplies and other high demand items that simply take money from victims and never deliver the promised goods. It is advisable that internet users purchase items only from established and reputable sources.
  • There have been reports of airlines and travel companies being impersonated by fraudsters in a bid to either obtain sensitive information, like passport numbers, or install malware on victims’ computers. They may say they want to advise you of COVID-19 infected passengers on past flights you’ve taken or offer discounts on future flights. When in doubt, we advise users to be vigilant when clicking on any links, delete any suspicious emails, and not disclose sensitive information if you are approached unexpectedly.
  • Fraudsters are also developing fake charitable donation campaigns which claim to help individuals and communities impacted by the Coronavirus. Any money donated is sent to fraudulent accounts. Again, if you are wanting to support relief efforts, make sure to research the organizations you are looking to donate to.
  • A Twitter user has identified another malware campaign purporting to be a “Coronavirus Update: China Operations”. The emails have attachments linking to malicious software.

As global concern about the coronavirus grows, it is likely that threat actors will continue to abuse this outbreak to their advantage.

Increased remote working can open gateway to hackers

Remote desktop protocol (RDP), when set up correctly, is a great tool for remote working. However, using it without multi-factor authentication (MFA) enabled or on an insecure network can open the gateway to hackers. In fact, in 2019, 80% of the ransomware attacks we handled were initiated through RDP.

Businesses that start using RDP for remote working during the outbreak should be aware of some of the cybersecurity risks it can pose and ensure it is being used securely. Employees should always log on within a trusted network and ideally work with their IT department to secure personal devices – and implement MFA – prior to remote working.

CFC recommendations

We suggest implementing the following steps to bolster security:

  1. Test remote log-in capabilitiesNot only should personal devices be configured for secure remote working, but business should ensure that multi-factor authentication (MFA) is set up immediately. MFA is an authentication process that requires more than just a password to protect an email account or digital identity and is used to ensure that a person is who they say they are by requiring a minimum of two pieces of unique data that corroborates their identity. Implementing this significantly reduces the chances of cybercriminals being able to log into a business’s RDP. For more information on MFA and how to implement it, click here.
  2. Train your employees on how to spot a phishing emailAs a CFC cyber policyholder, you can get free access to a range of risk management tools, including CyberRiskAware, an e-learning tool focusing on phishing attacks. This valuable tool teaches people within your business to be more vigilant when in comes to opening attachments, clicking on links, transferring money, or sending sensitive information. To find out more about it, including instructions on how to access it, click here.
  3. Prepare for operational disruption in advancePut simply, prepare for the worst. As with so many cyber incidents, time is of the essence so ensure you have an incident response plan in place, a template for which you can access for free as a CFC cyber policyholder. And as ever, if you believe that one of your employees has fallen victim or that you are experiencing any kind of cyber event, notify CFC as soon as possible so that we can help you.
  4. Finally, be vigilantWhat’s becoming clear as this pandemic plays out is that cybercriminals are shifting tactics daily. If you see something on social media or receive an unsolicited email that seems too good to be true, it probably is. Aside from learning how to spot phishing emails, make sure to do your research, use reputable companies, and follow-up requests for money or information with a phone call using a number from a separate, trusted source.

Source: www.cfcunderwriting.com


A Message on COVID-19

We want to take a moment and extend our well wishes to you and your families. As the growing concern around the spread of corona virus (COVID-19) is on all of our minds and everyday business functions are being challenged, ABEX is committed to working with our brokers to provide the best service we can under the circumstances.

The well-being and safety of our employees and our communities are our top priorities, so all of our employees currently work from home. As the situation unfolds, we will be monitoring recommendations from national health authorities and making adjustments as necessary.

Business as usual

  • We’ve invested in our infrastructure so that all of our staff are equipped to connect remotely into our secure network and continue to provide seamless service to our clients.
  • Our staff continue to be available via email and phone as most of our underwriters’ extensions are routed to their cell phones.
  • General voicemail is being monitored and emailed to respective recipients.

Possible delays

  • We will endeavor to remain operating to service our obligations, but our service may be delayed due to circumstances outside of our power.
  • A number of our UK partners are in the same situation so this may cause additional delays.

Broker payments

  • We continue to receive mail and courier so please continue sending in your payments.
  • We encourage our brokers to use / sign up for ClearPay which is the safest and most productive way of making a payment.
  • As a last resort, we will accept EFTs, even though they are not as safe as the above methods. Please contact accountsreceivable@abexinsurance.com for our EFT information.

Open market placements

  • If you are having difficulty collecting payments for open market placements please reach out to the underwriter on file or if unsure, contact us at service@abexinsurance.com and we will work with our syndicates to extend premium payment conditions.
  • For open market policies needing extensions, please ensure you give us enough notice, so that we can communicate to syndicates.

Renewals

  • Please ensure you give us enough notice on any changes so that we can communicate to syndicates accordingly.

Thank you for your patience and understanding and please do not hesitate to contact us with any questions.  Stay safe and we wish you the best as we navigate through these challenging circumstances.


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