Global cyber attack could cost up to $120bn, warns Lloyd's

Paterniano Del Favero
Luglio 17, 2017

A cyber-attack world massive could cause up to $ 53 billion in economic losses, is about as much as a disaster like hurricane Sandy in 2012, according to a study published Monday by the Lloyd's market, the insurance market specialist, and the firm of the Cyence business. The study, conducted together with Cyence, also found that while demand for cyber insurance is increasing, most of these losses (17%) are not now insured, leaving an insurance gap of tens of billions of dollars.

As digital technology innovations, such as the sharing economy, blockchain or the Internet of Things, are multiplying at an unprecedented pace and connecting more deeply with the physical world, cyber risks are likely to rise, according to the World Economic Forum.

Just like some of the worst natural catastrophes, cyber events can cause a severe impact on businesses and economies, triggering multiple claims and dramatically increasing insurers' claims costs, said Beale. "Global risks can only be effectively dealt with if there is a common understanding of their importance and interconnected nature, and a readiness to engage in multi-stakeholder dialogue and action".

"Average economic losses caused by such a disruption could range from $4.6 billion to $53 billion for large to extreme events". For instance, the business impact on a leading cloud platform lasts for 24 hours and causes cascaded impacts on other businesses dependent upon its services.

Inga Beale, chief executive officer of Lloyd's, said: "This report gives a real sense..."

Under the mass software vulnerability attack scenario, economic losses range from $9.7 billion for a large event to $28.7 billion for an extreme event, with re/insurance industry losses ranging from $762 million for a large loss, to $2.1 billion for an extreme event.

Average losses for a test that involved the hacking of operating systems were between £7.4 billion and £21 billion, according to the underwriter's report.

Analysis in the report shows that for this scenario the protection gap could be as high as $45 billion, meaning that roughly $20.6 billion, or less than 17% of the economic loss would be covered by re/insurance protection. The underinsurance gap could be as high as $26 billion for the mass vulnerability scenario-meaning that just seven per cent of economic losses are covered. "Insurers could benefit from thinking about cyber cover in these terms and make explicit allowance for aggregating cyber-related catastrophes".

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