Understand three key risks affecting the energy industry and how to build and strengthen your business’ energy resilience.
Whether it be cyber crime, extreme weather or geopolitical events, a wide variety of threat vectors are affecting the world’s energy systems and infrastructure—leaving many organizations and communities more vulnerable than ever.
For instance, this past summer, record temperatures in the U.S. placed undue stress on much of the country’s national grid. Meanwhile, European countries enacted counter measures after Russia turned off the flow of gas through a major pipeline, shortening the region’s energy supply. These factors, among many others, are causing oil prices to fluctuate around the globe.
As such, many security and risk leaders are turning their attention to energy resilience—which is critical to an organization’s ability to maintain operations during an energy outage or disruption. Here, we’ll explain what energy resilience is, why it’s important and what you can do to strengthen it within your organization.
What does energy resilience really mean?
In simple terms, energy resilience is an organization’s ability to prepare for, minimize, adapt to, avoid and rebound from an energy disruption, whether it’s anticipated or not. A lack of energy supply is in and of itself a major risk event, not to mention the many potential knock-on effects that can also significantly impact business operations.
Energy resilience, in turn, is one way to protect an organization against these multidimensional risks. However, that energy supply shouldn’t just be available—it must also be affordable. Managing steep prices can harm a business just as much as limited access.
Both sides of the energy industry—the supply side (companies who sell energy) and the buy side (the companies that purchase said energy)—have a part to play in mitigating the impact of power outages, severe weather and other factors that threaten their critical infrastructure.
Suppliers within the energy system can better protect against risks by:
- Turning on backup grids during outages and severe disruptions
- Inspecting and maintaining grids to avoid environmental damage
- Forecasting demand to cope with periods of intense use
- Deploying on-site teams with the right skills for swift repairs and maintenance
- Investing in infrastructure and technology to keep the price of energy down
Buy-side organizations can ensure business continuity with:
- Diversified energy suppliers
- Distributed energy resources at the point of use
- Reliable renewable sources that remain cost-effective
- Plans to reduce energy demand wherever possible
- A corporate-wide energy policy that includes disaster response
- Backup strategies of their own for supply, processes and employee safety
To become truly resilient, an organization must do more than push for a reliable energy system. Resilience means weathering uncertainty during times of crisis, acknowledging that the worst can happen but ensuring there’s a recovery plan in place.
3 significant risks in the energy industry
Energy resilience has always been somewhat uncertain. Yet in the past decade, threats to power supplies have magnified and multiplied. These threats often overlap, creating a domino effect that accelerates the severity of an incident. This is especially damaging when managing facilities, people and assets on a global scale.
Below are three of the most impactful sources of energy disruption.
High temperatures, strong winds, floods, landslides and forest fires can wreak havoc on energy infrastructure. Pipes might crack. Whole facilities can become submerged or destroyed. For example, Cuba recently experienced a blackout after Hurricane Ian struck the west coast, preventing the country’s key power plants from reactivating.
As the world continues to experience such extreme weather events, energy grids are becoming more exposed and natural disasters are becoming more prevalent every year. As such, it’s essential that organizations understand how their critical infrastructure might be affected.
World events often leave a significant imprint on the energy industry, particularly when it comes to energy supply and oil prices. The Russia-Ukraine conflict, for instance, is a clear example of how a geopolitical disruption can affect the global energy system.
Russia, one of the world’s top crude oil producers and second largest natural gas supplier, sent oil prices into a frenzy when it invaded Ukraine in 2022. According to the World Economic Forum, the conflict has skyrocketed oil prices to over $110 per barrel, which is well above what it was prior to the invasion.
As energy companies are inextricably linked to critical infrastructure, they are seen as lucrative cyber targets. 2021 was a landmark year for cyber disruption in the industry. The Colonial Pipeline—5,500 miles of it supplying power to 45% of the U.S. East Coast—shut down for five days after a ransomware attack.
This shed light on another cyber trend with large implications for the energy industry: a rise in the convergence of cyber-physical risks. Also on the rise are ransomware-related data leaks, which have increased by 82% according to Crowdstrike’s annual report.
Watch on-demand webinar: Cyber-Physical Converged Threats & Trends in the Energy Industry
How to improve energy resilience
We’ve looked at several ways organizations on both sides of the energy industry—as either suppliers or buyers—can build energy resilience. Now let’s explore how to achieve that resilience.
Planning and preparation are essential to executing an effective response when a crisis strikes. Security and risk leaders should devise a comprehensive business continuity plan and response playbook that can be enacted at a moment’s notice. The plan should clearly define all roles and responsibilities necessary to manage the risk, identify alternative sources of energy and minimize the impact of a shorter energy supply or complete power outage.
Once a risk has been identified and mitigated, and the flow of energy is back to normal, it’s important to assess performance. Determine which aspects of the response were successful and which were ineffective. This will help to identify areas of improvement that can strengthen responses when the next threat arises. Feed these lessons back into planning and preparation to continuously improve workflows and ensure energy resilience.
Real-time risk detection is often the deciding factor between surviving or succumbing to a major disruption or crisis. Knowing about potential threats as soon as possible allows organizations to mitigate risks quickly and make timely, well-informed decisions.
Doing so requires access to relevant, real-time information. Real-time alerting solutions like Dataminr Pulse provide energy companies with the earliest indications of cyber attacks, extreme weather, blackouts, power outages, facility emergencies and other business-critical information.
Pulse also offers the tools needed to take action on the real-time information it delivers, including geovisualization capabilities, collaboration workflows to manage incidents and the ability to communicate with employees before, during and after an incident.
Learn more about how Dataminr Pulse can help energy companies like yours strengthen resilience, while protecting people and critical infrastructure.