Major cyber attacks in motion – how exposed are we?
Major cyber attacks in motion – how exposed are we? | Insurance Business New Zealand
Cyber
Major cyber attacks in motion – how exposed are we?
Risk scenario outlines hypothetical damage from huge disruptions on the digital front
Lloyd’s has unveiled a systemic risk scenario that models the potential worldwide economic repercussions of a hypothetical but plausible cyber attack targeting a major financial services payments system. This envisioned disruption would result in extensive global business disruptions and could trigger global economic losses amounting to $3.5 trillion.
The scenario anticipates the highest five-year economic losses to be borne by three countries: the United States ($1.1 trillion), followed by China ($470 billion) and Japan ($200 billion). The recovery time for individual countries or regions is contingent on the configuration of their economy, exposure levels, and resilience.
Continued cyber threats pose significant risks to businesses and governments, with annual costs related to maintenance, prevention, and response to attacks consistently escalating. Cyber threats encompass a multifaceted and interconnected risk that has the potential to impact various sectors of society, including supply chains and geopolitics.
While cyber insurance is a burgeoning market, estimated at slightly over $9 billion in gross written premiums last year, it is projected to reach between $13 billion and $25 billion by 2025. However, this remains a relatively small fraction of the potential economic losses faced by businesses and society.
Lloyd’s place in the cyber market
Given that over a fifth of the world’s cyber premium is placed in the Lloyd’s market, the hub also underscored its dedication to fostering the thoughtful and sustainable growth of the cyber insurance sector. Innovation is also being promoted for new products through initiatives like the Lloyd’s Lab.
In a recent development, Lloyd’s Futureset conducted its inaugural Cyber Innovation Forum in September, bringing together customers, representatives from technology, government, and insurance sectors to deliberate on global cyber risks and formulate collaborative strategies to address them.
Lloyd’s chairman Bruce Carnegie-Brown said that the market remains committed to bolstering resilience against systemic risks. He also said that insurance is vital in safeguarding customers from the looming threat that cyber poses to businesses and society.
“The global interconnectedness of cyber means it is too substantial a risk for one sector to face alone and therefore we must continue to share knowledge, expertise and innovative ideas across government, industry and the insurance market to ensure we build society’s resilience against the potential scale of this risk,” Carnegie-Brown said.
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