Major cyber attack could cost global economies £40 billion

Uninsured losses for cloud service providers would range between $4.6bn and $53bn, according to the model, while average insured losses range from $620m for a large loss to $8.1bn for an extreme loss.

By that time, the malware would have spread among the cloud provider's customers, causing all to lose income and incur other expenses, pushing actual losses as high as $121bn, the report said. On average, the economic loss for such a cyberattack is predicted to be around $53 billion.

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.

The latest research from the Lloyd's of London has found that a major, global cyber attack could trigger an average of $53 billion of economic losses, a figure on par with a catastrophic natural disaster such as US Superstorm Sandy in 2012.

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.

"Unlike traditional catastrophe losses due to natural causes, insurers do not have any meaningful claims data to draw on to model catastrophe cyber losses and price products", Birdsey said.

Lloyds said underwriters should ensure their premium calculations keep pace with the reality of such costly threats. Financial services is most at risk, followed by software and technology, hospitality, retail and healthcare.

Where people are involved, risk changes quite rapidly, Maynard said, from cyber attacks to terrorism and political risk.

Analysis by Lloyd's of London compared the effects of a hypothetical global cyber-attack to the super storm known as Hurricane Sandy that hit the United States coast in 2012, in terms of the financial impact. However, climate change remains the biggest challenge in the long run. "It affects the global economic structure, food, water".

Beale added, climate change is another major threat, which affects some areas of the world that "don't really know about insurance", such as the Philippines which suffered severe floods last autumn.

All that in spite of the rise in demand cyberassurance, the amounts covered are still limited, the deficit of insurance which may reach up to 45 billion dollars in the first scenario and $ 26 billion in the second, details the study.

Vanessa Coleman

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