How to Manage Energy and Utilities Insider Risk

Energy and utilities operators invest heavily in perimeter and operational technology defenses, but they’re not the only places where risk exists.

The people who keep the grid running already hold legitimate access to the systems and documentation a threat actor would need. Control room operators, field crews, engineering contractors, and OEM vendors all need access to single-line diagrams, SCADA and HMI screens, substation configs, and asset data in the course of normal work. This only increases the attack surface for energy and utility companies.

This article explains:

• Why the energy sector is particularly exposed to insider cyber threats.
• How big the risk is.
• How much inaction costs.
• How cyberattacks can be prevented with a clear strategy and advanced technology.

Why is the energy and utilities sector vulnerable to insider threats?

Insider risk in energy and utilities often arises because of two unavoidable structural issues:

1. Energy companies normally have large, distributed workforces.
2. They rely heavily on contractors and freelancers.

That puts broad access to critical systems in many hands across many sites.

The challenge is that those systems are necessary for daily operations, but they’re also key targets for data theft.

Operational documentation describes how the infrastructure works, so the same material an engineer uses doubles as a map for anyone wanting to disrupt it.

The other half of the problem is that access routinely reaches past the perimeter. Contractors and OEM vendors handle systems the operator doesn't fully administer, and privileged engineers and admins hold deep system access.

Negligence and ordinary mistakes cause most incidents. Departing staff may take configs or asset data on the way out, and engineers may paste configuration files or code into generative AI tools to troubleshoot. This moves operational data outside the company’s control.

Another issue is that this material is typically unstructured (a diagram, an HMI screen, a config file), which means pattern-matching legacy DLP tools have nothing to match against. Consequently, they classify insider activity as normal work.

What is the scale of insider risk in energy and utilities?

Insider threats in energy and utilities are routinely underestimated, precisely because they don’t always look malicious. An insider incident has no ransom note, no outage, and no firewall alert, so reported figures likely undercount it.

Take the case of John Pelton, a Cleveland Public Power operator, who used his access to install keyloggers on a computer controlling the city's power grid and posted photos of SCADA screens to a Facebook group. He pleaded guilty and received two years of federal probation.

He wasn’t caught by a tool flagging the keyloggers or the access to grid systems (which his credentials let him reach without tripping anything), but by the photos he posted online.

Insider risk across the board is widespread and climbing: 83% of organizations reported at least one insider attack in the past year.

The key there is “at least one”. Most organizations experiencing insider threats say they’re not a one-off: 68% of organizations now see between 21 and 40 insider incidents a year.

And non-malicious, unintentional insiders account for around 75% of incidents. This means employee negligence and mistakes are by far the greatest cyber risk facing your organization.

What is the cost of inaction on energy and utilities insider risk?

The direct financial hit for energy and utilities companies is heavy and rising: the average annual cost of insider risk reached $17.4 million per organization in 2025.

That cost is spread across:

• Compliance and fines: NERC CIP is mandatory, with penalties reaching $1 million per violation per day and $10.5 million issued across 22 enforcement actions in 2023. Audit findings usually derive from the company being unable to prove a control was running, not from the control being absent.
• Service disruption and physical security risks: An energy and utilities incident isn’t only measured in lost revenue; it can mean operations being down for weeks or the lights going out, endangering public safety.
• Reputation: Reputational damage is serious, with a public and national security infrastructure that depends on the consistency of energy provision, day in and day out.

What really drives up the scale and cost of insider risk for the energy and utilities industry is how long it can take to detect. Insider incidents run undetected for an average of 81 days, which means even a small slip-up can become a major sector-level loss.

Take John Farchione, a customer operations manager at a public utility who used his access to the billing system to steal more than $6 million from the utility and its customers. He did that for roughly a decade before being caught. It would have been a much smaller loss if his suspicious activity had been identified early.

How do you mitigate insider risks in energy and utilities?

Insider threat management isn’t about getting to zero incidents.

Instead, your focus should be on reducing how often something goes wrong, then catching it fast when it does, without stalling the maintenance that keeps critical infrastructure online.

Here’s how to do that:

Scope and supervise vendor, contractor, and field access

Least-privilege, role-based access controls should be the baseline, so each person sees what their job requires and nothing more.

For external contractors, you should access this by system and site, with access only being granted for the length of a job and revoked immediately after.

Also, implement live oversight of OEM and field sessions rather than providing all-or-nothing network access.

Tighten access when people join and leave

New hires don’t need access to everything at once, and giving it to them increases insider risk.

Staged access provisioning for new hires is the move here, tied to what they need as they progress through onboarding and become more independent.

Take the opposite approach when employees move on:

The rule must be immediate revocation on the last day, with closer attention in the weeks before a departure, as this is when data breaches are most likely to occur.

Build a security awareness culture

The organizations that are best protected against insider risk don’t just have robust cybersecurity measures in place. They also demonstrate an awareness of responsibility and risk points across all roles.

Scenario-based training around situations that crews and engineers encounter day-to-day is the best route to building a security-conscious culture.

Examples could be:

• Sending them fake phishing emails.
• Showing them how to handle a spoofed vendor request.
• Providing a list of unauthorized AI tools.

Team members should also have a low-friction, blame-free way to report mistakes early. When employees are afraid of repercussions, they’re less likely to report small errors, and those small errors can become major exposures.

Govern AI use

Employee AI use needs careful attention, especially as new tools and models enter the fray, and existing approved platforms roll out new features that require assessment before they can be used.

To effectively control AI usage at your energy company, you need to:

• Draft and publish policies on approved tools and how employees should use them, particularly with regard to intellectual property and sensitive data.
• Run monthly audits to find Shadow AI already in use.
• Review and update your policies regularly (a monthly cadence is a wise idea given how fast AI technology is moving).
• Leverage an AI governance tool that gives you total visibility over AI use at your organization.

Apply behavioral analytics with context

Behavioral analytics is a cornerstone of modern data protection, but it shouldn’t feel invasive.

Good behavioral analytics tools learn what “normal” activity looks like for each engineer, operator, and contractor, and flag any meaningful deviation.

How leadership uses this capability is just as crucial as the technology itself. When used as an enterprise shield for operational resilience and data loss prevention, not as a check on individual employees, behavioral analytics transforms from a friction point into a trusted security partner.

Why is Teramind ideal for preventing energy and utilities insider risk?

Insider risk in energy and utilities companies typically doesn’t look like a threat until it's too late.

Teramind is built to catch the kind of suspicious, anomalous behavior that traditional firewalls and legacy pattern-matching security tools can’t.

Here are its key features and benefits:

• Unified single-agent architecture: Combines endpoint DLP, UEBA, and workforce analytics into a single, low-overhead software agent. Teramind prevents system strain and performance latency on legacy SCADA workstations and OT hardware.
• Proactive real-time intervention: Automatically blocks unauthorized actions, locks endpoints, or halts active breaches instantly to protect critical infrastructure.
• AI tool and agent governance: Detects Shadow AI, prevents data leaks via generative AI prompts, and traces autonomous AI agents and terminal commands back to specific human users.
• Terminal and command-line visibility: Captures full console transcripts (PowerShell, CMD) and autonomous script execution across endpoints where network security tools are blind.
• Behavioral anomaly detection: Establishes individual user baselines over time to automatically flag unusual system access, unexpected file compression, or abnormal command speeds.
• Patented on-screen OCR: Extracts and indexes text embedded inside live screens and specialized operational software to trigger policy actions based on visual content.
• Forensic-grade audit trails: Captures screen recordings and tamper-proof logs that maintain a defensible chain of custody for investigations and compliance audits.
• Physical and digital data loss prevention: Blocks unauthorized data movement across USB drives, cloud uploads, email attachments, and physical document printing.
• Flexible and air-gapped deployment: Delivers full feature parity across Cloud, On-Premises, and Private Cloud (AWS/Azure) environments, backed by zero trust access controls and privacy masking.

Ready to implement insider risk management at your utility company?

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FAQs

How does insider risk in energy and utilities differ from traditional IT cybersecurity threats?

Unlike traditional IT security that focuses primarily on external perimeter firewalls, energy utilities insider risk stems from authorized users who already possess legitimate access to critical infrastructure assets.

Control room operators, field crews, engineering contractors, and original equipment manufacturer (OEM) vendors require continuous access to sensitive operational documentation (such as SCADA and HMI screens, single-line diagrams, and substation configuration files) to perform daily tasks.

Because legacy security tools are built to block external unauthorized intrusion, they often treat legitimate internal access as normal behavior, even when credentials are misused for corporate or foreign espionage.

Furthermore, critical infrastructure operational technology (OT) relies on unstructured data files that bypass traditional pattern-matching data loss prevention tools. This leaves organizations vulnerable to undetected lateral movement and systemic disruption.

What is the difference between negligent users and malicious insiders in the energy sector?

Understanding the distinction between negligent staff and malicious insiders is essential for designing an effective utility security program:

• Negligent insiders: Account for approximately 75% of all insider security incidents. These involve unintentional mistakes, such as engineers pasting proprietary configuration code into unauthorized generative AI tools, departing employees downloading asset data onto thumb drives without bad intent, or personnel falling for phishing scams.
• Malicious insiders: Involve intentional actions designed to harm the utility, exfiltrate intellectual property, or cause physical disruption. Examples include employees deploying keyloggers on grid control systems or exploiting billing system access to commit multi-million-dollar fraud over extended periods.

While their motives differ, both present severe operational hazards. Teramind addresses both vectors by establishing individual user behavioral baselines. It catches unintentional slips before data leaves the network, while blocking unauthorized exfiltration attempts driven by bad actors.

Can energy utilities DLP software operate in air-gapped operational technology (OT) and SCADA environments?

Yes. Operational technology and SCADA networks frequently run in strict air-gapped or localized environments to preserve grid stability and physical safety. Legacy cloud-only security tools cannot function in these disconnected environments, creating critical visibility gaps.

Teramind’s energy utilities DLP solution is engineered specifically to accommodate high-security industrial deployments:

• Air-gapped and on-premises architecture: Delivers complete feature parity across Cloud, On-Premises, and Private Cloud (AWS/Azure) deployments, operating seamlessly within fully air-gapped networks without requiring outbound internet connections.
• Patented Optical Character Recognition (OCR): Scans and indexes text embedded within live screens and specialized OT software in real time. This enables policy enforcement and automated blocking based on visual content, even when working with proprietary or unstructured file formats.
• Low-overhead endpoint footprint: Designed to preserve terminal performance on mission-critical control hardware and legacy SCADA workstations without introducing latency.

How does Teramind support NERC CIP compliance and strengthen an incident response plan?

With NERC CIP mandatory compliance penalties reaching up to $1 million per violation per day, utility firms must maintain continuous, audit-ready proof of security controls. Most compliance audit findings stem from an inability to produce verifiable proof that a control was running rather than the control being absent entirely.

Teramind strengthens compliance and enriches an organization's incident response plan in several key ways:

1. Tamper-proof forensic logs: Maintains an immutable chain of custody with video replay, system event logs, and command transcripts to satisfy NERC CIP auditing mandates.
2. Accelerated threat detection: The average insider incident runs undetected for 81 days. Teramind shortens dwell time by triggering real-time alerts and automated mitigation actions (such as locking endpoints or revoking user sessions) the moment anomalous behavior occurs.
3. Data-rich context for investigations: Provides security teams with exact visual and digital context during an active investigation, allowing response leads to verify whether an alert was triggered by an innocent operator mistake or a coordinated breach effort.

How do utility companies balance insider risk visibility with privacy and regulatory trust?

A primary concern for utility executives and HR leaders is ensuring behavioral analytics doesn’t feel overly intrusive or erode workforce trust. When implemented incorrectly, these programs can create employee friction or conflict with regional data privacy laws like the GDPR.

Teramind resolves this through privacy-first behavioral analytics:

• Contextual risk scoring: Focuses on detecting meaningful deviations from normal behavioral baselines rather than applying blanket oversight across the entire workforce.
• Privacy masking and selective auditing: Enables administrators to mask sensitive personally identifiable information (PII), exclude personal web activity or non-work applications, and restrict screen recording to specific critical asset interactions.

How does Teramind detect industrial espionage and prevent unauthorized data exfiltration?

Industrial espionage in the energy sector often involves subtle exfiltration of sensitive asset maps, single-line diagrams, grid capacity models, or custom configuration scripts.

Because these operational files are unstructured, standard pattern-matching security tools fail to recognize them as sensitive material.

Teramind prevents data exfiltration through multi-layered behavioral and visual detection:

• Multi-vector channel protection: Blocks unauthorized data movement across USB drives, personal email attachments, cloud uploads, command-line file transfers, and physical printing.
• User behavior analytics: Identifies anomalous behaviors indicative of data theft, such as unusual off-hours file compression, bulk command execution, or unexpected visual access to restricted SCADA screens.
• Shadow AI governance: Prevents engineers and field technicians from accidentally uploading sensitive configuration code or operational parameters into unapproved generative AI models.