What are the Benefits and Risks of the IoT for Businesses?
What is IoT?In simple terms, the IoT describes billions of physical devices that are now connected to the internet, and which collect and share data. Those devices can be as small as a smart light bulb or as large as a driverless truck or aeroplane. In the case of an aeroplane, a jet engine these days is fitted with thousands of sensors that collect and send data back to the aeroplane operator, so they can understand in real time how it is performing.2 There are essentially three kinds of ‘things’ that connect to the IoT – those that collect and send data, those that receive data and act on it, and those that do both. For instance, a sensor in commercial kitchen refrigerator might detect a fault or simply that the temperature is too high. That IoT-connected sensor will pass that information to another device, via the internet, which – having received that data - might act to either alert someone to the issue or automatically adjust the temperature.1 An example of an IoT device that might do both could be an agricultural sensor that collects data on soil moisture and then acts by turning irrigation systems on or off.1
What are the Benefits of IoT?
Even though the IoT has been around since 2008,3 its applications are expanding all the time – but already we can see from existing uses that plenty of benefits can accrue.1
At present those benefits broadly break down across three main areas:
- Efficiency: For instance, using sensors to track the performance of machinery 24/7 and without any human input. That provides vital data that businesses can use to make sure machinery is operating efficiently, or to spot potential problems before they become major issues.
- Safety: IoT sensors can automatically detect threats to the business from, for instance, temperature, power loss, flooding and a wide range of other issues – giving it more time to respond and minimise any resulting issues. IoT devices can also be used to strengthen physical security, by detecting and alerting businesses to unauthorised access.
- Cost savings: One example here is using IoT sensors to monitor power consumption in real time, providing data that can help to identify efficiencies and cost savings. Equally, by taking over manual, repetitive monitoring tasks, IoT sensors can enable staff members to focus their time on higher value activities.1
Where is IoT Currently Being Used?
The applications for the IoT are many and varied but, in a commercial setting, retail was one of the first industries to take advantage. In retail, smart IoT sensors are being used to track inventory as it moves through the supply chain and, in some cases, right up to the point of sale – for instance in Amazon Go, no checkout stores.
Those applications are not limited to retail. In fact, any industry seeking to find efficiencies in supply chain management can find efficiencies through the IoT – from hospitality to manufacturing.4
Another industry that has already embraced the IoT is logistics. Freight, fleet management and shipping companies are already using ‘smart tags’ attached to parcels and consignments so they can track location, speed and even storage conditions in real time.4 That visibility lets freight managers plan capacity more accurately and also provide end customers with more detailed information about the location and status of their consignments.5
There are plenty of examples of IoT being used in industrial settings too – from manufacturing to energy. For instance, in manufacturing, the equipment-maker, Caterpillar, is using IoT sensors to give a comprehensive view of the status of equipment while in operation – covering everything from fuel levels to maintenance requirement early-warning.4 Meanwhile, in the energy sector, some companies are using IoT sensors to alert customers when they are running low on oil and gas.4
What are the Risks Associated With the IoT?
Clearly the potential benefits of IoT are very real. But as ever, change brings risk, so it is important to consider and minimise those risks before investing in IoT applications. The chief risk to consider is security because, while IoT devices can bring many benefits, they are connected to the internet and so can be hacked just like any other internet-connected device.6
In that way, they increase the size of the ‘attack surface’ hackers can use to gain access to a business’s wider computer network. In essence, the ‘attack surface’ of a network consists of all the places where it could possibly be attacked – so an IoT system, potentially made up of hundreds of devices, can expand that attack surface considerably.6
Unfortunately, once hackers gain access to a computer network via an IoT device, they can go on to steal or leak sensitive data, install viruses, initiate ransomware attacks and much more – and all these cyberattacks can have quite serious financial and reputational consequences. In fact, in a recent survey one in six businesses affected by a cyberattack reported that it had threatened their survival.7
How to Mitigate IoT Security Risks
Realising the benefits of IoT depends to an extent on ensuring the security of IoT devices, and industry experts point to a number of ‘good housekeeping’ actions here. They include:6
- Using strong passwords: Many IoT devices come with default passwords, which are weak and easily cracked by hackers, so setting strong passwords on all IoT devices is an absolute fundamental of IoT security.
- Strengthening network security: It’s a universal truth of network security, but ensuring you have strong network security and a firewall in place is vital to reducing the chances that hackers will gain access, including from IoT devices.
- Keep devices up to date: Many IoT device vendors periodically release software updates, or patches, to help secure devices against known vulnerabilities or new threats. It is vital that these patches are installed in a timely fashion.
- Think about necessity: It’s important to weight the benefits and risks for every IoT application and make decisions about whether they are necessary. For instance, while an IoT sensor in a refrigerated truck could save a lot of time and money, an internet connected fridge in the office kitchen might be more risk than it is worth.
- Consider cyber insurance: Unfortunately, in our internet-connected age, cybercrime is a fact of life – even businesses with the strongest security can never be sure they won’t fall victim to cyber criminals. That is where cyber insurance can step in, to help with the costs that can flow from cyber IoT attacks – covering liabilities, rectification and IT systems repair.
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