Hacking Risk and Liability Issues Don’t Deter Makers of Driverless Cars

A red VW Golf jerks back and forth as it maneuvers into a parking space in the English spa town of Cheltenham. The halting efforts resemble those of a new driver, and in a sense they are — just not from the person sitting at the wheel.

The car itself is navigating into the spot, which it manages without a scratch. The man in the driver’s seat, who has his hands resting leisurely on his lap except for the occasional gear change, is a mere onlooker in this demonstration of the latest automated-car technology.

While the idea of robo-cars whisking us off to our destinations may sound like science fiction, the technology exists and is largely ready for the real world. What’s harder to determine is the risk associated with the emergence of these vehicles.

If automakers effectively take the wheel, that puts them in the firing line for liability suits stemming from accidents. The vehicles would also be exposed to threats from hackers who could hijack cars and potentially control them remotely, turning them into mules for criminal purposes or even using them as weapons.

“A hacker could redirect a whole bunch of traffic to gridlock a city” or even “kidnap people,” said Wil Rockall, director of information protection at consulting company KPMG in Tonbridge, England. “The risk goes from being one of human error on the part of the driver or road user to being human error on the part of a developer.”

Still, such worst-case scenarios aren’t halting efforts to push the technology, which is forecast to become an $87 billion market by 2030, according to Boston-based Lux Research. The Golf’s self-directed parking job in the August presentation by Volkswagen AG is just one example of the trend.

Google Inc. unveiled a cartoonish prototype of a self- driving car in May. A Mercedes-Benz S-Class drove itself 100 kilometers (62 miles) through real daytime traffic on crowded German roads last year, and parent Daimler AG is developing self-driving trucks.

The prospect of cars being controlled by online navigation systems is troubling to regulators and law enforcers. The U.S. Federal Bureau of Investigation has determined that hackers could take over automated vehicles and use them as “lethal weapons,” the Guardian reported in July, citing a study obtained by the British newspaper.

Yet there are benefits as well. The FBI report acknowledged that police could monitor connected cars more easily. In any case, automakers are attuned to the risks.

“The biggest stumbling block to any of these things is car security and also liability,” said Gavin Ward, a spokesman for Bayerische Motoren Werke AG. “Those are the sort of issues that are still being worked out.” The Munich-based carmaker has tested self-driving technology on the German autobahn.

Volkswagen, based in Wolfsburg, Germany, is also keeping its eye on the tactics of cyber criminals to keep a step ahead, spokesman Paul Buckett said at the demonstration in Cheltenham. Google declined to make someone available to discuss risks associated with their automotive efforts.

To limit hacker risk, autonomous cars will need “much more security” and that requires constant monitoring, said Andrew Miller, chief technical officer at Thatcham Research, which supplies data to British vehicle insurers. “As fast as people come up with software and encryption processes, the criminals come up with ways around them.”

Aside from worst-case risks like remote carjacking, there’s the mundane question of who’s to blame in an accident when human error is no longer an issue. That could ease the burden on the driver, as the responsibility shifts to carmakers.

Because robotic vehicles don’t suffer from daydreaming and fatigue, “you are going to have a lower frequency of incidents because these cars are an awful lot safer,” said Murray Raisbeck, a partner at KPMG’s insurance practice. “However, if something does go wrong, the severity could be an awful lot greater.”

The change in liability could shift the burden of insuring against accidents to carmakers, suppliers and developers, while consumers would pay less. That might hit the auto insurance business, which is worth $200 billion a year in the U.S., according to the National Association of Insurance Commissioners.

“It is difficult to be precise on what impact driverless cars will have for us, but we know there are going to be issues,” said Alan Gairns, product manager for home and motor insurance at Allianz SE in the U.K.