BTR: Identity, Insurance, and Operational Risk - Mid-Market Industrial Firms Face a New Cybersecurity Reality

Wes Spencer, CyberFox

WASHINGTON, DC, UNITED STATES, January 29, 2026 /EINPresswire.com/ -- In response to rising ransomware attacks that are targeting mid-market industrial organizations, a consensus is emerging among business leaders that a much more integrated, multi-disciplinary strategy is needed to reduce risk and enhance resilience across both IT and operational technology environments. This is because manufacturers and utilities are being forced to confront risks their legacy systems were never engineered to withstand.

In a recent BizTechReports executive interview, Wes Spencer, Vice President of Cybersecurity Strategy at CyberFox, detailed how ransomware incidents on OT networks have surged more than 60% over the past year, with roughly three-quarters of those breaches originating in IT environments before moving laterally into production systems. The trend, he said, is exposing a widening vulnerability gap between decades-old industrial infrastructure and contemporary expectations for cyber hygiene, underwriting readiness, and operational continuity.

Legacy OT Meets Modern Threats

Industrial operators have historically relied on air-gapped systems—many deployed in the 1970s, 1980s, and 1990s—that were designed for reliability and safety and not for modern cybersecurity demands. For years, isolating OT environments from the broader internet was considered the most practical safeguard.

“That approach worked for a long time,” Spencer said. “But modern business requirements—remote access, cloud integration, distributed operations—have made true air gapping nearly impossible.”

As a result, attackers now frequently exploit IT networks as an entry point before pivoting into OT environments where downtime carries far greater physical and financial consequences. Spencer noted that this “cross-contamination” effect has become one of the defining risks for industrial operations.

The stakes are not hypothetical. Spencer pointed to a well-reported incident in Florida in which threat actors attempted to increase the level of lye in a municipal water system to lethal levels. It’s an example that reframes the traditional cybersecurity concept of “blast radius.” In OT environments, blast radius is not measured in data exposure—it is measured in physical safety and risk to life.

Events like that have prompted many industrial leaders to look toward emerging technologies—particularly AI—as a potential countermeasure. But even as AI accelerates innovation across IT operations, its role in OT environments remains far more constrained.

AI’s Uneven Impact on Industrial Resilience

The rapid rise of AI—especially agentic automation—is reshaping boardroom conversations. Yet its impact on OT remains limited for now, largely due to architectural constraints.

“AI is moving fast inside modern IT environments,” Spencer said. “But OT systems often lack the application program interfaces (APIs), data streams, and interoperability needed to benefit from intelligent automation.”

Still, he sees long-term potential for AI-driven anomaly detection in environments where human operators may not detect subtle deviations in real time. An intelligent system could flag or halt atypical operational commands until a human reviews them—potentially preventing dangerous escalation.

“It’s early,” he said. “But used correctly, AI could provide a buffer of safety. The challenge is bringing that capability into environments built decades before APIs and telemetry were standard.”

In the meantime, another force is accelerating the push for stronger controls: the insurance industry. As industrial operators wrestle with slow-to-modernize OT systems, cyber insurers are tightening requirements and redefining what ‘minimum acceptable security’ looks like across the mid-market.

Insurance Carriers Push for Higher Standards

In so doing, cyber insurers—confronting rising losses—are shaping cybersecurity priorities across the industrial mid-market. According to Spencer, industrial firms saw the sharpest year-over-year increase in breach costs, rising by more than $800,000 per incident. Underwriters are responding by higher standards.

“They’re getting much more sophisticated,” he said. “Insurers aren’t just checking whether companies have cybersecurity tools—they’re evaluating how those tools are configured and whether the controls operate consistently.”

Many carriers are shifting from static annual reviews to ongoing technical assessments using APIs that integrate directly with endpoint detection, privilege access tools, and identity systems. These data feeds help insurers validate whether controls remain active, effective, and aligned with frameworks such as NIST and CIS.

“Most incidents come from known vulnerabilities or misconfigured controls,” Spencer explained. “Carriers know that eliminating preventable gaps is the fastest way to reduce their exposure.”

Over time, he expects insurers to reward companies with lower premiums and broader coverage based on the modernity and upgradeability of secure OT systems. This would create an economic shift that could eventually pressure mid-market operators to modernize aging SCADA and industrial control systems.

But even as insurers push for stronger controls and more modern architectures, many mid-market organizations lack the people and resources to execute those expectations.

The Mid-Market Capacity Gap

While large enterprises can staff security teams and invest in modernization, mid-market manufacturers and utilities often struggle with capacity at every level.

“A mid-market company might have one or two full-time IT professionals who are working with very limited budgets,” Spencer said. “There is no possible way those individuals can handle IT responsibilities and modern cybersecurity needs simultaneously.”

This makes the role of managed service providers (MSPs) increasingly critical. Co-managed service models allow MSPs to augment in-house staff by providing advisory services, security operations, and platform expertise—particularly for firms seeking to meet cyber insurance requirements.

“We’ve seen immense growth in MSPs providing cybersecurity services,” Spencer noted. “They’re filling a gap that mid-market organizations simply cannot solve on their own.”

Risk Negotiation Meets Operational Reality

A recurring challenge, Spencer said, is the tendency of mid-market firms to attempt to “negotiate” risk by selectively adopting controls.

“Executives want ROI and guarantees. But cybersecurity doesn’t operate in absolutes,” he said.

He likened the dynamic to preventative healthcare: routine screenings reduce risk but cannot eliminate it. Cybersecurity controls operate similarly, and cyber insurance exists to absorb the residual risk that remains even after controls are in place.

This dynamic is now driving adoption. “Companies are turning to privilege management and identity controls because insurers either require them or increase premiums accordingly,” Spencer said. “Sometimes economic pressure is what finally spurs action.”

In mid-market industrial environments, privilege and access management has become one of the most consequential—and difficult—disciplines to modernize. Many manufacturers and utilities operate with decades of accumulated user accounts, shared credentials, hard-coded service IDs, and administrative privileges that were granted for expediency and never revoked. In these environments, a single over-privileged account can act as a bridge from IT into OT, giving an attacker the ability to move laterally into production systems that were never designed with modern identity safeguards in mind.

For insurers, this represents one of the clearest indicators of unmanaged risk. For MSPs and internal security leads, it is increasingly the frontline of risk reduction. It is driving an ongoing effort to tighten access pathways, eliminate privilege sprawl, and ensure that no user or system—human or machine—has more access than is required to perform its operational role.

MSPs that understand the evolving requirements of cyber insurers—and can guide their mid-market industrial clients toward meeting those baseline controls—are well positioned to differentiate themselves. Their ability to translate underwriting expectations into practical security roadmaps gives internal risk-management champions critical leverage when making the case to a CFO or business owner who is skeptical of new spending and focused on controlling operational costs. In many mid-market organizations, this alignment between MSP expertise, insurance incentives, and internal advocates is becoming the only viable path to raising the security floor.

Toward a Culture of Operational Resilience

Spencer argues that industrial and mid-market firms must shift from focusing exclusively on breach prevention to prioritizing resilience.

The federal government defines cyber resilience as the ability to maintain essential operations despite adverse cyber events. For industrial operators, that includes planning for reduced production capacity, degraded efficiency, and temporary system loss.

“This is one of the healthiest conversations business leaders can have,” Spencer said. “We need to ask: When—not if—an incident occurs, how do we continue operating?”

Identity and privilege controls play a central role by shrinking the number of footholds attackers can exploit. “Threat actors rely on credential sprawl,” he said. “If they can find one foothold, they can often reach everything and expand their presence across the enterprise. This can include OT environments.”

MSPs and the Future of Industrial Security

Implementing effective privilege and identity controls requires a staged approach consisting of audits, assessments, and a careful transition to enforcement. This is where MSPs become indispensable.

Initial non-enforcement audits often uncover excessive administrative privileges, unused software, or misaligned access rights. MSPs help organizations interpret findings, prioritize remediation, and prepare for full enforcement without disrupting operations.

“The audit phase generates healthy discussions,” Spencer said. “MSPs that have the experience to help organizations correct issues before enforcement can take cost and effort out of making transitions smoother while minimizing user disruption.”

As industrial firms digitize, insurers refine their risk models, and MSPs expand their defensive capabilities, the industrial mid-market faces a rapidly evolving threat environment—one that requires coordination across technology, finance, policy, and operations.

“We have to recognize the limitations of these legacy environments and the pressures faced by OT teams,” Spencer said. “If we approach this collaboratively, we can build strategies that reflect both modern threats and the realities of industrial operations.”

For mid-market manufacturers and utilities, that convergence is no longer theoretical. It is the new operating environment—and resilience is increasingly the defining measure of success.

Click here to read the Q&A based on this interview.

Airrion Andrews
BizTechReports
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