Experts tell elevators how to cope with cyber-security, contract rule threats
Speakers at the North Dakota Grain Dealers Association annual meeting in Fargo on Jan. 17, 2022, tell elevator managers and boards to tighten cyber-security defenses and shore up contract procedures.
FARGO, N.D. — It costs elevators about $2 per employee per month to minimize risk of cyber attacks.
Tightening up cyber-security and business practices were topics at North Dakota Grain Dealers Association annual meeting in Fargo on Jan. 17, 2022.
“I think most people would be surprised at the minimal investment it takes to help protect your business,” said Wade Acheson, the principal of Broadline Solutions LLC, one of the speakers.
Based in Minneapolis, Broadline is similar to an insurance broker but specific to technology. Acheson talked about best practices and how to prepare to prevent costly shut-downs or “ransom” payments.
Often criminals send emails that are called “phishing,” where they make something look like Google or Microsoft, and trick employees into providing sensitive login information.
“The way the world works today, it’s happened numerous times,” Acheson said. “It just happened in Iowa to a grain elevator. Every business has attempts to breach on a daily basis, and typically multiple (times).”
Broadline offers a “predictable spend,” to maintain that cybersecurity is maintained properly “every minute of every day.” Cybersecurity in the grain industry is similar to any other industry.
“If you have internet access on your business computers, on your work environment, you are susceptible to cyber attacks,” he said. “That’s everyone.”
Companies often have some kind of computer “firewalls,” but the level varies drastically on how often and effectively they implement practices. But some don’t respond until they have felt the pain of a breach, Acheson said.
The pattern is in place for sophisticated ransom companies — many based in Europe. Some audacious enterprises have sophisticated “customer service” employees. The goal is often to charge a ransom the company can bear, even if it hurts.
Attackers effectively “own” and dictate what’s going to take place next.
“It’s unfortunately been highly publicized, and companies have paid. Now that they’ve paid they set the standard,” Acheson said.
Broadline has more than 200 relationships with telecommunication services and cloud providers and data center providers, connecting sites together with fiber internet and back-up broadband internet.
Acheson said the company has about 10 grain elevator clients, nationally, accounting for about 5% of their work. The clients range from one location to multiple sites.
“We recommend cloud solutions,” Acheson said. “They’re more secure, they’re maintained better. And put a best practice in place to educate your staff on a daily, weekly, monthly quarterly basis. And then have a complement to what you are already doing today.”
The service can keep elevators more up to date on industry trends, and on licenses and automating so no one has to remember to do it. Some elevators buy appliances and install protective software.
“Who’s managing that? Someone internally?” Acheson said. “Do you have the expertise to do it internally? What happens if there is (employee) turnover. Who’s taking care of it?”
David Barrett, a Bismarck, North Dakota, managing partner of Ohio-based Barrett, Easterday, Cunningham & Eselgroth LLP, works in contract law and dispute resolution for with grain elevators, feed companies, pet food companies and processors.
Barrett for a decade was in-house counsel and national secretary for the National Feed and Grain Association, in Washington, D.C., a trade association for elevators. The NFGA is the primary domestic system for settling disputes out of court in the grain trade. It is also used by Canadian and Mexican companies.
The NGFA decisions can be decided with documents or in oral hearings, and as binding as a court decision, and are transparent and published, unless the case is settled before the decision is published.
He oversaw the NFGA’s arbitration, trade rules, and transportation work, including railroads and barges. Barrett explained that some companies increasingly are using electronic signatures to verify oral contracts. Some companies use apps and internet-based systems.
Step one is to “know your counter-party,” Barrett said. “If somebody new comes along you need to investigate, check them out and ask questions.”
He said government regulators can help, but farmers can protect themselves.
“Covering the issues, having all in writing, that helps both parties to the contract to understand what the deal is,” Barrett said. Companies should make sure they include dispute resolution in their contracts.
“Most of the contracts in the industry are made orally— you’re really making an oral agreement,” he said. “It’s important to send a contract confirmation as soon as possible. The industry trade rules would say by the end of the close of business the next day. If there is a mistake we want the other party to say, ‘Hey, we’ve got the bushels wrong, or the price wrong.’”
Jason Boushore, grain manager at Scranton, North Dakota, said farmers are more and more using Over the Counter (“OTC”) trades, a way for farmers to participate in the futures market without having to own options.
Boushore described the OTCs as an agreement between traders, apart from three traditional grain exchanges.
“At the end of the day the risk-to-reward ratio is a little bit better, than, say, with a standard average price contract,” he said. The goal is to get a price for a futures contract that is higher normally average them out but can create some “volume risk” because of a “double-up” feature that double the amount that must be delivered when certain prices are struck.
Barrett said “hybrid contracts” have been developed over the years. Farmers “shouldn’t be doing something where you don’t understand what the deal is,” he said. “If you’re a grain buyer you ought to be doing things to educate your customer if it’s getting complicated. Don’t just do something that’s new just because you heard about it.”