Construction firms face rising cyber and AI risks that threaten operations, data and profitability. Learn how to strengthen resilience and protect projects.
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Gallagher's Cyber practice provides integrated cyber risk management and insurance solutions to help construction firms navigate an evolving threat landscape.

As construction operations become more digitized and AI-enabled, cyber risk is no longer confined to IT; it directly impacts operational continuity, project delivery and financial performance.

New risks to be aware of with increased reliance on AI

  • AI usage risks: Including physical safety risks from malfunctioning autonomous equipment, data privacy concerns from AI-enabled data collection, and exposure from biased or inaccurate outputs.
  • Lack of governance and oversight: Many organizations are adopting AI faster than they are implementing controls, increasing the risk of errors, hallucinations and unintended outcomes.
  • Bias and decision risk: AI models trained on historical data may reinforce bias in hiring, project planning or resource allocation decisions.
  • Operational and safety risk: Autonomous systems, robotics, and smart equipment introduce new failure points that can result in injury, delay or liability.
  • Data privacy and security: Construction projects involve sensitive data, including architectural plans, financial information and personal details of workers. AI systems used in construction may collect and process this data, raising concerns about data privacy and security breaches.

Did you know?

  • Construction remains a top three targeted industry for ransomware1
  • Ransomware attacks on construction firms have increased ~41% year-over-year2
  • 75% of cyber alerts in construction are linked to credential exposure2
  • The average cost of a cyber incident is ~US$4.44M globally (CA$4.84M in Canada)3
  • Phishing remains one of the leading entry points, driving 16% of breaches4
  • Credential compromise is now the primary entry point for attackers, often leading to ransomware and financial fraud events4

According to Gallagher research, AI adoption is rising, but governance is lagging.

Construction organizations remain a high-value target for cybercriminals

Common exposures include:

  • Unauthorized access to client financial data
  • Ransomware and cyber extortion
  • Business email compromise (BEC) and social engineering
  • System disruptions impacting active projects
  • Theft of funds or payment fraud
  • Exposure of employee personally identifiable and health information
  • Project delays and downtime resulting from cyber incidents
  • Contractual penalties tied to missed deadlines or operational disruption
  • Missed bid and lost revenue opportunities resulting from cyber incidents or reputational damage

Core cyberthreats

  • Ransomware: Use of malicious software to disrupt computer operations, gather sensitive information or gain access to private computer systems.
  • Social engineering/funds transfer: The psychological manipulation of people performing harmful actions or divulging confidential information.
  • System failure: Unplanned network outage caused by system error.
  • Human error: While these incidents may lack malicious intent, the human element is uncontrollable.
  • Insider threats: Employees entrusted to access and process sensitive data can resort to criminal activity.

Is your business protected?

Cyber incidents are increasing in frequency, severity and financial impact, particularly in highly connected industries like construction.

  • Breach response costs
  • Privacy liability/network security liability
  • Privacy regulatory liability, and fines and penalties (where insurable by law)
  • PCI DSS assessment
  • Media liability
  • Cyber extortion (ransomware)
  • Business interruption/extra expense
  • Data recovery
  • Theft of funds (social engineering crime)
  • Telephone crime
  • Reputational harm
  • Missed bid coverage (where applicable)

Cyber and AI risks are converging

Attackers are using AI to scale and accelerate attacks, while organizations struggle to control internal usage — expanding both the frequency and severity of cyber events.

What is Shadow AI?

Shadow AI refers to employees using AI tools or applications without the knowledge, approval or oversight of an organization's IT, security or compliance teams. While often adopted to improve productivity, shadow AI can expose organizations to data privacy, cybersecurity, regulatory and reputational risks.

Our comprehensive approach to cyber insurance

Gallagher's eRiskHub is an interactive digital resource designed to keep our clients educated about their current cyber risks by providing access to cost calculation tools, training programs and learning resources that help minimize cyberthreats.

The key difference of Gallagher's cyber resilience structure

Gallagher's cyber risk management due diligence specifically helps our clients identify and prioritize key cyber risk concerns. Our process is designed to understand current exposures and threats through an assessment of your cyber risk.

Why construction firms face elevated risk

  • Highly interconnected project environments with shared platforms and multiple vendors increase exposure points
  • Operational disruption risk — cyber incidents can halt projects, triggering financial loss and contractual penalties
  • Third-party dependencies and legacy systems create vulnerabilities that are difficult to monitor and secure
  • Resource constraints often limit cybersecurity maturity relative to evolving threats

We do more than help protect your business. We help build it.

Sources

1Makowski, Jeremy. "Threat Landscape of the Building and Construction Sector Part Two: Ransomware," Rapid 7, 14 Nov 2025

2Dilgen, John. "Report Shows Ransomware Has Grown 41% for Construction Industry," RELIAQUEST, 12 Nov 2024

3"Cost of a Data Breach Report 2025" IBM, accessed 13 July 2026

4"2025 Data Investigations Report", Verizon, accessed 13 July 2026, PDF download

Disclaimer

Arthur J. Gallagher Canada Limited ("Gallagher") provides insurance, risk management and consultation services for our clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance/risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general informational purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient’s industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers control.

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