Major cyber attack could cost global economy $53bn

Joanna Estrada
July 17, 2017

In the mass software vulnerability scenario, the average losses range from $9.7 billion for a large event to $28.7 billion for an extreme event.

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.

Lloyd's of London has warned that a serious cyberattack could cost the global economy more than US$120 billion - as much as catastrophic natural disasters, such as Hurricanes Katrina and Sandy.

The total figure could range between $4.6 billion (£3.5 billion) and $121 billion (£93 billion) depending on the severity of an attack, the report's authors calculated.

With an uptick in cyberattacks across the world, from WannaCry to Petya ransomware, a new report from banking heavyweight Lloyds of London warns just how vulnerable the USA economy could be in the event of an extreme attack.

The WannaCry fiasco, which infected a large number of computer systems in over 100 countries recorded a loss of around $8 billion, according to Cyence. What makes it even more challenging is a lack of historical data on which insurers can base their assumptions.

Co-written with risk-modelling firm Cyence, the report examines the hypothetical losses from hacking of a cloud service provider combined with an attack on computer operating systems used by businesses across the world. The financial and reputational cost in terms of business interruption and remediation can be substantial.

In the scenario of an imaginary cloud service attack in which hackers inject a malware into a cloud provider's software. NotPetya was significantly less costly - globally, it cost organizations US$850 million.

Lloyd's chief executive Inga Beale said underwriters needed to consider cyber cover and ensure premiums kept pace with the reality of the threat to technology systems.

In recent weeks, several massive waves of cyber attacks in the rançongiciel have hit multinational corporations, companies and services in western Europe, the United States, Ukraine or even in Russian Federation.

The findings also reveal that, while demand for cyber insurance is increasing, the majority of these losses are not now insured, leaving an insurance gap of tens of billions of dollars.

As much as $45 billion of that sum may not be covered by cyber policies due to companies underinsuring, the report said.

Other reports by Click Lancashire

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