Industry 4.0

IIoT Cyber-Risks: Common Errors to Avoid and Main Types of Cyberattacks to Manufacturing Organizations

February 2024

Manufacturing organizations are embracing innovation by embarking on their Industrial Internet of Things (IIoT) journey to ensure competitiveness in the modern market. However, alongside the promise of innovation comes the looming specter of cyber risks.

Ransomware organizations, such as LockBit and ALPHV, had a surge in activity from the second half of 2022 to the first half of 2023, leading to a 53% rise in attacks against the manufacturing industry.

Manufacturing is now the most targeted sector, even more so than financial enterprises.

Security challenges in IIoT differ significantly from those in IoT across multiple aspects – such as attack surface, connectivity, interoperability, and integration with Operational Technology (OT).

For manufacturing businesses to enjoy the positive effects of digitalization, they must become cyber-resilient and ready to face the dynamic threat environment.

This blog post will guide you through the most common mistakes organizations make when implementing IIoT technology, as well as the most frequent types of cyber-attacks aimed at manufacturing organizations.

 

Fortifying Manufacturing Security

Although they provide unquestionable benefits for operations productivity, IIoT devices are appealing targets for cybercriminals because of the numerous security holes they pave the way to. Once they gain access, hackers may go laterally and access other servers, devices, and private information.

Smart factories have expanded attack surfaces, meaning that a large number of “entry points” to the commercial or industrial infrastructure are readily discoverable by adversaries.

Potential security threats include the exploitation of vulnerabilities, malware deployment, and both DoS and DDoS attacks. Properly introducing a solid security strategy across OT security and physical safety necessitates a cohesive approach by Smart Manufacturing organizations.

Originally, the industrial environment was not designed with cybersecurity considerations, and this transition to IP-based cyber-physical systems has introduced significant vulnerabilities.

 

Steer Clear of Typical Slip-ups when Implementing IIoT

As systems convert from closed to connected cyber-physical configurations, new vulnerabilities emerge – and they require urgent attention.

Despite the critical need for advanced cybersecurity measures, many manufacturers‘ cybersecurity maturity is not yet sufficient to combat these risks effectively.

Below are the most common mistakes to look out for to ensure a secure IIoT implementation.

Insufficient security features in IoT devices
IoT devices often include basic security functionalities that are inadequate for blocking sophisticated cyber threats.

Vulnerabilities in these devices can become conduits for attackers to penetrate broader enterprise networks.

Flawed authentication and authorization protocols
Weak authentication and authorization mechanisms rank among the top vulnerabilities in IoT infrastructures.

Utilizing easily guessable or default passwords, not implementing MFA, and poor access control measures can enable unauthorized access.

Gaps in network visibility
Ensuring comprehensive visibility over an expanding network of connected devices presents a substantial challenge.

Lack of visibility into which user is connected to which device and their activities leaves organizations vulnerable to threats that remain undetected within their networks.

Excessive trust in devices
Placing undue trust in IoT devices, especially those unauthorized or lacking robust security measures, introduces risks.

Such shadow IoT devices, not complying with organizational security policies, create additional avenues for security breaches.

Lagging behind in updating and patching devices
Failing to update and patch IoT devices consistently exposes them to attacks, as cybercriminals often target known vulnerabilities.

Regular updates are essential for protecting against these threats.

Neglecting encrypted traffic inspection
While employing encryption is a vital security measure, it can also veil malicious activities.

Failing to scrutinize encrypted traffic leaves organizations at risk of overlooking threats hidden within encrypted communications.

 

Knowing What You’re Up Against Is Half the Battle

Any network might be vulnerable to any of the following cyberattacks. But with the rise of the IoT, these dangers operate on a whole new dimension.

Their cyber roots may now have real-world effects, particularly in the IIoT space where IT and OT are converging.

The following overview outlines the most common types of cyber-attacks you should be mindful of and provides tips to protect your manufacturing organization.

 

 

Revenue Loss and Safety Risks: the Expensive Consequences of Overlooking Cybersecurity

Failing to protect systems, processes, data, and thereby enabling exploitation, can cause significant financial and operational harm and shatter a company’s image.

For a manufacturing organization, a cyber-incident could lead to equipment failures, unplanned downtime, supply shortages, or other issues.

When production ceases, revenue generation comes to a halt, causing immediate economic impacts.

Additionally, the interruption can strain relationships with partners due to disrupted supply chains.

Besides, manufacturing downtime significantly elevates the risk of workplace accidents. Research indicates a significant increase (about 40%) in workplace accidents during production startups and shutdowns, underscoring the importance of avoiding downtime to maintain a safe working environment.

 

Numbers Don’t Lie: Calculating the Real Cost of Downtime

According to Siemens’ 2023 report, the cost of downtime has significantly increased over the past two years (2021-22), with unplanned downtime now costing Fortune Global 500 companies 11% of their yearly turnover (almost $1.5 trillion).

The cost of a lost hour now ranges from an average of $39.000 to more than $2 million depending on industry (with the highest in Automotive). In Oil & Gas, the cost of an hour’s downtime has more than doubled in just two years to almost $500,000.

The total losses to downtime are also rising sharply. The cost for an average large plant in the sectors surveyed is now $129 million a year, up 65% in just two years.

Among respondents, the average manufacturing facility suffers 20 monthly downtime incidents – six fewer than two years ago.

When a manufacturer experiences downtime, the financial impact can be significant and is usually calculated based on two main categories: direct costs and indirect costs.

Direct costs encompass tangible expenses directly related to the downtime event. This includes the value of lost production during the downtime period, the wastage of raw materials that occurred while production was halted, and any expenses associated with repairing or restoring equipment to operational status.

Indirect costs, on the other hand, are less tangible but equally important. These include factors such as missed sales opportunities due to the inability to fulfill orders during downtime, additional expenses incurred from having to pay overtime to employees to catch up on lost production time, and potential damage to the company’s reputation or brand image resulting from delayed deliveries or poor customer service.

Combining these two categories, the overall cost of downtime can be estimated by considering factors like the duration of the downtime event, the financial impact per unit of time (such as the cost per minute of downtime), lost revenue opportunities, overtime labor expenses, and potential reputational damage.

While these considerations provide a simplified framework for estimating downtime costs, the actual financial impact will vary depending on the unique circumstances of each manufacturing operation. You can evaluate the potential cost of downtime in your organization using our calculator.

 

To Wrap It Up: Protecting the Industrial Ecosystem

Do you want to ensure you are putting the best cybersecurity practices in place when implementing IIoT technology? We compiled a list of recommendations for effective risk management in our IIoT whitepaper. Get your free copy below to learn all you need to know about Industrial IoT and how you can set your organization up for success when implementing it in your production facilities.


 

IIoT for Smart Manufacturing: All you need to know in one guide.
Download it now!

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