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New technologies in construction and potential risks

New technologies are set to transform the construction industry. Artificial intelligence (AI) and robotics are at the forefront, offering improved productivity, safety, and resource management across the construction industry. Digital-based solutions are already leading to contracting, procurement, building, and maintenance benefits.

During a recent discussion, specialists from Marsh Canada discussed the evolution of technology in the construction sector, the cybersecurity implications, and the need for effective risk management.

Supporting the construction workforce with new technology

Many construction companies are already embracing various technological applications to support their digital transformation, and more companies are expected to follow suit. Applications include predictive analytics, building information modelling (BIM), wireless monitoring, autonomous equipment, augmented reality, and cloud collaboration, all of which are underpinned by constantly evolving AI solutions.

Advancements in technology can empower and de-risk workforces and their environment, helping ensure people are safe and secure. For instance, technologies that can help improve workforce safety include:

Smart personal protective equipment (PPE) that use tracking devices, sensors, and monitors to provide insights into worker conditions, such as exhaustion and heart rate concerns.
Internet of things (IoT) devices can be attached to assets, machinery, vehicles, and even people to provide information on servicing, maintenance, and security.
Education and training via digital platforms to support skills development and knowledge enhancement.
3D printing of objects from a digital file can facilitate the production of specific and unique tools, products, replacement parts, and maintenance devices on-site.
Virtual and augmented reality can provide a safe environment for staff to operate in remote or high-risk settings through digital twins or integration with BIM software.

Understanding the cyber risk

As construction companies look to adopt and incorporate these new technologies, it is important to be aware of the increased cyber risks and potential for cyber events. Continuous training is key to mitigating these risks, as staff are often the weakest link in any organization’s cybersecurity; 74% of data breaches are attributable to human error.

The good news is that the average security and cyber resilience of organizations has increased, leading to improved cyber insurance market conditions underpinned by key cyber controls. As a result, the use of specific cyber controls is now a requirement for most insurers and is considered a bare minimum before coverage can be considered. Furthermore, by establishing and maintaining a culture of cyber awareness during employee onboarding and creating safeguards for worst-case scenarios, both information technology (IT) and physical operational technology (OT) networks can become more resilient to cyber threats, even as the adoption of new technologies and solutions increases at the corporate level.

Physical meets digital: OT and IT integration

The integration of OT and IT systems, which combines physical operating technologies (machinery, vehicles, heavy equipment) with information technology (back-office databases and systems), offers valuable data-led insights that can optimize operations and ensure staff safety. However, OT-IT integration also increases the potential magnitude of cyber events as the digital and physical worlds can threaten each other. Without proper precautions, threat actors can infiltrate IT networks, disrupt production in the OT environment, and hold the company to ransom. It’s important to implement proper segmentation and security measures to prevent unauthorized access to confidential data.

Supply chain risks

A general contractor’s digital supply chain will include various stakeholders’ independent networks, all interconnected through shared communications, file management, financials, and peer access rights. Cyber events can affect all levels of a supply chain within the construction industry. A breach in one party's network, such as the architect's, can have significant consequences and expand across the entire supply chain if not secured and managed properly.

To help address the risk of cybersecurity breaches in the digital supply chain, insurers are increasing underwriting scrutiny to incorporate supply chain diligence and organizations are implementing increasingly demanding peer contractual requirements. These requirements may include confirming that partners have specific cybersecurity controls in place and adequate levels of cyber insurance.

Even if companies do not have direct integrations with other companies and primarily rely on email or localized databases, a digital chain is still created as soon as one company transfers files and engages in digital communications with another. Therefore, it is crucial to maintain security and resilience in all digital interactions.

Regulatory requirements

Emerging regulations are also strengthening cybersecurity requirements at all levels of government. Municipal, provincial/state, and federal cyber regulations — such as Bill C-27, Canada’s draft privacy law — aim to address emerging risks, such as AI, and establish secure requirements for controlling, housing, and transmitting customer and citizen data. Increased regulatory requirements may also support stronger data governance, such as controls to validate and scrub data, ensuring its accuracy and reliability. Prudent data governance frameworks are crucial for regulatory compliance and leveraging AI solutions effectively, as well as drawing insights from the vast amounts of data companies accumulate.

Even if a company is based in one jurisdiction but conducts business or houses data in another, it is essential to map out all data transmission and storage locations, including offshore servers, to ensure compliance with regulatory standards as data travels and keep the enterprise secure.

How can Canadian contractors leverage AI?

Canadian contracting companies have numerous opportunities to leverage AI to their advantage. For instance:

Fleet and heavy construction vehicles powered by AI technology can improve efficiency and safety on construction sites while minimizing downtime.
AI-powered chatbots can provide customer and back-office support and answer common questions, saving time and resources for contracting companies, staff, and customer base.
BIM platforms are beginning to use AI for proactive risk modelling and exposure reviews, saving time and money.
Autonomous drones can be used for architectural and engineering services, providing high-risk access to remote locations quickly and safely.
Analyzing the growing vast amounts of data to provide insights and recommendations for future actions and mitigate risks quickly and intelligently.

While coverage for AI-related risks is currently limited, it is expected that AI will gradually find its way into cyber insurance applications and policy language. Companies should ensure they have appropriate coverage as AI becomes more prevalent in the industry.

What’s on the horizon?

Looking ahead, Canadian contractors should be prepared for evolving regulatory requirements, especially regulations regarding data transmissions. Adapting to these changes is essential to remain compliant and avoid penalties or financial concerns.

Longer-term may include broad-sweeping integrations as formerly siloed business divisions are brought together into a leaner and more agile business model underpinned by digital solutions and AI.

When you begin to use new technologies, consider how they might impact your company’s cyber risk profile and foster collaboration across the organization to address these risks effectively.

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New technologies in construction and potential risks