Guarding the utility

YANIV Vardi is passionate about wines. He has his own vineyard where as a connoisseur he has produced a number of vintages that have won international prizes. While he has many people helping him at his vineyard in Israel, he has the final say on the flavour, body and composition of the wine - he's very hands-on.

Talking to him, it is obvious that Mr Vardi brings the same passion to his regular job as CEO of Claroty, a leading cybersecurity company that helps to keep industrial systems safe.

The privately-owned and New York-headquartered company, which has its origins in Israel, makes products that are used to monitor what are known as industrial control systems (ICS). The latter is part of operational technology (OT) networks that form the vital nervous system of any modern industrial facility, be it large manufacturing units or public utilities such as power plants and waste water treatment plants.

Singapore's Temasek is one of the early investors in Claroty; it led the company's US$60 million Series B funding round in June 2018. Rashmy Chatterjee, operating partner at Temasek Holdings, joined Claroty's board of directors in June this year. Claroty works closely with Singapore in the Asia-Pacific region.

According to a 2019 study by Deloitte, securing OT or ICS is ranked third (jointly with data analytics and Internet of Things) in digital transformation priorities of cybersecurity leaders. Increasingly, this area of an organisation's network is gaining attention as cyber threats grow.

Speaking to this writer on a video call from Sde Warburg, a small town 20 minutes away from Tel Aviv in Israel where he has based himself during this pandemic, Mr Vardi stresses the importance of protecting OT networks. Unlike information technology (IT) which has caught the popular imagination, OT systems are less well known but are equally important and perform vital functions. He observes that OT components like programmable logic controllers (PLCs) and Scada (supervisory control and data acquisition) systems are vital for the smooth functioning of any large industrial set up since they manage and monitor the health of the complex and its machinery.

Initially designed as standalone systems, OT systems have been around for a long time, Mr Vardi notes. Their sole purpose was to ensure the smooth functioning of the industrial machinery and they were not connected to any external networks like the Internet or an organisation's Intranet.

"Legacy OT systems have not been designed with (cyber)security in mind since they are never conceived of being connected to any network and have been designed to operate within an isolated silo," he adds.

That is changing very fast thanks to rapid digitalisation and the advent of the fourth industrial revolution, or Industry 4.0, says the Claroty CEO. The key aspect of digitalisation and Industry 4.0 is network connectivity.

As companies modernise, they are connecting legacy OT systems to IT networks so as to allow for remote access to PLC, Scada and other such systems. This makes them easier to manage remotely but at the same time they become more vulnerable.

"There is no longer a physical gap between the OT and IT networks and this poses a major problem because while the IT network is usually well-protected from cyberattacks, since they are built ground up with security in mind, legacy OT systems are becoming a major source of vulnerability for industrial infrastructure," says Mr Vardi.

He adds: "The attackers know that the IT network is completely covered (with cybersecurity) and it is hard to get in from this part of the network. But then they see the vulnerability in the OT network and that gives them the possibility of access into the network.

"The way I see it is that you protect your house with the latest security and alarm systems in order to make it very smart and secure. But you leave the front door open."

Around the world, there is growing awareness of the threat that unsecured OT networks pose to infrastructure, particularly critical infrastructure. Last year, the Cyber Security Agency of Singapore (CSA) released its OT Cybersecurity Masterplan as part of efforts to enhance the security and resilience of Singapore's Critical Information Infrastructure (CII) sectors in delivering essential services, the Claroty CEO notes.

Citing some random examples, Mr Vardi adds that besides Singapore, the Australian government has proposed to develop legislation that would introduce cyber standards on operators of critical infrastructure and systems of national significance. The Korea Internet and Security Agency (KISA) is also finalising its guidelines for ICS which are expected to be introduced in late 2020.

Internet of things

With fifth generation mobile telephony networks coming online, and thanks to Industry 4.0, the use of Industrial Internet of Things (IIoT) devices is going up exponentially and these are being connected to OT networks, thus adding to their complexity, Mr Vardi notes.

"These IoT devices are essentially sensors that collect data and are connected to the network to which they continuously transmit information. An attacker doesn't need to go through a crazy complicated IT network that is completely secured. They can easily go through a humidity sensor or airflow sensor, or a temperature sensor that is connected to a Scada or PLC system. Hence, there is a need to manage both industrial control system security as well as IIoT security," he says.

The Claroty CEO notes that many companies' OT systems get attacked - in incidents that do not usually come to light. According to a report by Claroty's research team, in the first half of this year, more than 70 per cent of the ICS vulnerabilities around the world could be exploited remotely. Energy, critical manufacturing, water and wastewater treatment infrastructure were the sectors that saw maximum cyber-attacks, Mr Vardi notes.

"Usually the attacks are ransomware related and since these companies do not have systems that secure OT networks, a majority often end up paying the ransom.

"Most people are not aware of these cases as only the biggest ones get mentioned in the news cycle. We know about them because they usually come to us for help," he adds.

Mr Vardi cites a case of an automotive company whose entire production line was taken down and the company had to pay up to get back to production. There have been recent attacks on an electricity utility company as well. "Usually what they do is they cripple the system to a certain extent to show what they are capable of. If the company does not pay up they then take the network down completely."

It is often easier for companies to pay up and keep production running than risk the time-consuming and costly process of eliminating the ransomware before restarting operations.

On how Claroty works with customers, Mr Vardi says: "When we go into a company we get visibility of their entire industrial network and map all their assets. By doing that we are able to identify potential vulnerabilities; we do a kind of vulnerability and risk management assessment. We provide alerts and notifications on what needs to be done to protect the system.

"And then we also deploy continuous threat detection systems and our customers now have one look at their industrial network and all the assets they have. We're really excited about that. It's (our products) really best-in-class."

According to him, 90 per cent of Claroty customers do not have a full understanding of what they have within their industrial networks. "After we go in we start to send out notifications and alerts on vulnerabilities, on risks, and also about stuff that is not necessarily a threat, stuff that operationally was not dealt with until now, or somebody had the wrong configuration or, you know, a setup that was wrong.

"And so it's not just a security threat. We are taking the industrial networks to the next level, as far as being more effective and efficient is concerned. Obviously we see that because it ends up to be a threat if you don't take care of it, but it's also fixing setup and configuration and the ability to manage your industrial networks more effectively," he adds.

Big growth engine

Mr Vardi notes that the Asia-Pacific market is a big growth engine for the company. "There is a mandate from governments as well as board of directors of different organisations to enhance risk management on the OT side because, as opposed to, say 10 years ago, people understand the risks involved in not doing so," he says. Claroty is growing via partnerships in the region, he adds.

According to a Garner study, the OT security market is "in transition" due to the OT/IT convergence that is resulting in a growing number of cyber-physical systems in operational and mission-centric environments. Consolidation is happening in the market, with IT security vendors trying to enter the OT security space via acquisitions, the research agency notes.

Mr Vardi concurs with Gartner's observations. "Just to give two examples - Microsoft bought Cyber X and Cisco bought Sentryo, both with the idea to provide security to industrial control systems. Instead of developing in-house solutions that would take years many companies are buying the expertise," he notes.

To a question of how would Claroty survive in such an environment where big companies are entering what used to be a relatively niche market, Mr Vardi says it would be though partnerships. "We partner with service providers like Deloitte and KPMG and we also partner with the biggest industrial control systems providers like Siemens, Schneider, and Rockwell. Claroty also works with managed security service providers (MSSPs) like NTT. So our strategy is to focus on partnerships and converge and consolidate to provide a bigger play and grow market share to solidify our leadership position," he adds.

Talking about his career, Mr Vardi shares that after serving in the Israeli defence force, he lived in New York City for 10 years and graduated in industrial management engineering from New Jersey Institute of Technology (NJIT).

"Over the last 20 years I have managed different companies. To give a brief history of the different roles that I have taken up, I set up a New Jersey-based software company, dealing with the life sciences, and I also co-founded a sister company and managed it for about 10 years and then sold it. I then became the CEO of an energy company, Panoramic Power, which made unique sensors that are wireless and non-invasive and which could be strapped on to any industrial machinery," he adds.

Eventually he helped to sell this company to Centrica, a British multinational energy and services company. He then managed the international business of Centrica and grew it from a few dozen million dollars to a few hundred million dollars in revenue, Mr Vardi adds. He joined as Claroty CEO early this year.

Discussing why he joined the company, Mr Vardi points to the huge market opportunity that "is growing every day". "The market leadership position is up for grabs and we have amazing talent in the company, along with amazing products and partners.

"We have all the ingredients to put it all together to become a market leader in this exciting space," he adds.

And so while he waits out the pandemic in a small idyllic town outside Tel Aviv, Mr Vardi perfects his wine making when he's not busy running the company. Wine, a drink for the connoisseur, was developed in the Middle East and he is just bringing it back to its roots. He also loves to play basketball and do off-road biking.

With eyes twinkling in anticipation, he notes: "I can't follow my passions as often as I like due to the nature of my work but there is a trail from my house directly to the beach through the mountains; it's a 30 km ride and the scenery is wonderful."

It is pretty obvious that Mr Vardi is looking forward to an exhilarating ride both professionally and recreationally as he gives wings to his passions.

YANIV VARDI

Chief Executive Officer Claroty

EDUCATION

1996-2001 New Jersey Institute of Technology, US;

Majors in Industrial and Management Engineering, and Management of Information Systems

CAREER HIGHLIGHTS

1996-1999 Manager, Air Force Armament Procurement, Israel Ministry of Defence

1999-2001 Director of Systems Integration, DM Inc

2001-2012 Co-Founder and Managing Director, Sparta Systems Europe

2012-2016 Chief Executive Officer, Panoramic Power

2016-2020 Managing Director, Centrica Business Solutions

Since 2020 CEO, Claroty