Global cyber-attack could be as costly as Hurricane Sandy

Fernando Stephens
July 17, 2017

"This report gives a real sense of the scale of damage a cyber-attack could cause the global economy", said Inga Beale, the chief executive of Lloyd's.

While digitisation is revolutionising business and daily life, it is also making the global economy more vulnerable to cyber-attacks.

That's according to noted banking group Lloyd's of London, which teamed up with risk-modelling firm Cyence to look at several potential cyber-attack disaster scenarios. 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 second-most likely threat stems from attacks on computer operating systems run by a large number of businesses around the world, which could cause losses of up to US$28.7 billion (the "mass software vulnerability scenario").

Lloyd's and Cyence have produced a report that highlights potential economic losses of up to $121 billion from cyber attacks with less than a fifth being covered by re/insurance, revealing a cyber protection gap in the tens of billions of dollars.

The WannaCry ransomware attack that spread across the globe back in May is estimated to have had an economic impact of $8 billion.

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"Because cyber is virtual, it is such a hard task to understand how it will accumulate in a big event", Lloyd's of London chief executive Inga Beale told Reuters. What makes it even more challenging is a lack of historical data on which insurers can base their assumptions.

WannaCry caused about $8bn in damages worldwide, with NotPetya leading to $850m in economic costs, according to Cyence.

The hypothetical model examines the fallout of a hacking operation whereby hackers slip malicious code into a cloud service provider's software. By that time, the malware could have easily spread among the provider's customers, including financial institutions and small businesses, the report claimed, resulting in widespread losses.

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.

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.

Other reports by BadHub

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