US Insurers War-Game Chinese Cyberattack on Water Supply

Earlier this year, about 30 insurance executives gathered in a conference room high above Times Square in Manhattan for a closed-door exercise. The scenario: a China-linked hacking operation knocking out 5,000 US water utilities simultaneously, run under a countdown clock and designed by a former cybersecurity strategist. WIRED was given rare access to observe the war game.

The simulation was built to test what could happen if hackers linked to Volt Typhoon acted on groundwork they have reportedly been laying for three years. Potential consequences discussed included burst water mains, hospital evacuations, and insulin shortages.

What Volt Typhoon Is

Volt Typhoon is a Chinese state-sponsored hacking group that, unlike most Chinese state hackers, does not focus on espionage. Instead, it has spent roughly three years planting malware inside US critical infrastructure — described as "prepositioning" — reportedly aiming to gain the ability to cut power, disrupt telecommunications, and affect water supplies.

When Volt Typhoon first surfaced publicly in 2023, reports focused on its targeting of electric grids and telecom networks across the continental US and Guam, suggesting an effort to delay a US military response to a potential invasion of Taiwan. It later became clear the group had also breached civilian utilities across the country, including in towns as small as Littleton, Massachusetts, population around 10,000.

This pattern suggests China may be seeking the ability to cause broad societal disruption within the US, potentially as a diversionary tactic during a crisis such as an invasion of Taiwan. Rob Joyce, former NSA cybersecurity director, has described the planted malware as "digital bombs" strapped to US infrastructure.