February 24, 2018

A Major Global Cyberattack Could Cause Damages Worth $53 Billion

17 July 2017, 08:07 | Marlene Myers

Think Superstorm Sandy was bad? A major global cyber attack could cost $53bn, warns Lloyd's of London

Insurance companies 'must adapt to threat of cyberattacks'

The warning comes just weeks after the global ransomware cyber-attack that affected businesses around the world and the NHS in the UK.

Trevor Maynard, Lloyd's head of innovation and co-author of the report with the cybersecurity firm Cyence, said the global cyberattack in May "showed us that these sorts of attacks are absolutely possible".

The uninsured gap could be as much as $45bn for the cloud services scenario - meaning that less than a fifth (17%) of the economic losses are actually covered by insurance.

A major worldwide cyber attack could cause an average of $53 billion (£40 billion) of economic damage, according to new research from Lloyd's of London.

The insurance market has formed a partnership with Cyence, a firm specialising in analysing the economic impact of cyber risks, to urge companies and its own underwriting members to focus more on their potential losses.

In this first scenario, average economic losses ranging between $ 4.6 billion for an important event and $ 53 billion for a major event. A lack of historical data on which insurers can base assumptions is a key challenge. NotPetya was significantly less costly - globally, it cost organizations US$850 million. This mostly involved business interruptions and computer repairs.

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The hypothetical model examines the fallout of a hacking operation whereby hackers slip malicious code into a cloud service provider's software.

"Just as some of the worst natural disasters, incidents of cyber are likely to have serious impacts on businesses and economies", alarm Inga Beale, boss of Lloyd's of london, quoted in the press release.

According to Lloyds and Cyence, average economic losses from a major attack on cloud services could be about $53 billion.

The losses could come from a wide-ranging assault on their cloud service provider that causes failure for their own company, customers and suppliers, Lloyd's warns today. However, owing to the inherent uncertainty and complexity surrounding cyber risk and the potential for cyber aggregation, actual economic losses in an extreme event could be as high as $121.4 billion, or as low as $15.6 billion.

"This report gives a real sense of the scale of damage a cyber-attack could cause the global economy".

Lloyds has about one-quarter of the emerging area of cyber insurance and says risks are more hard to model than natural disasters due to the human element, which means underlying assumptions can change quickly.

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