Major Cyber-Attack Could Cost World Economy $121.4bn

Cyber-attack as costly as Hurricane Sandy Lloyd’s

Cyber-attack as costly as Hurricane Sandy Lloyd’s  18 Jul 2017- 0:16

As highlighted by the Lloyd's and Cyence report, the potential economic and insured loss from a cyber event is huge and appears to be growing, and cyber scenarios such as this could help market players to better understand the potential impacts and costs of large and extreme cyber attacks.

The report's hypothetical cloud service provider attack involves hackers injecting malicious code created to trigger system crashes among victim systems a year later.

The Lloyds of London / Cyence hypothetical cyberattack looks like this: hackers inject a piece of malicious code into a cloud provider's software.

These hypothetical figures easily dwarf the amount of damage caused by Hurricane Katrina in 2005, which was estimated at $108 billion.

The report notes that attacks fluctuate dramatically around that average - in the extreme cloud event that averaged $53.1 billion in damages, attacks might do as little as $15.6 billion or as much as $121.4 billion.

It comes as insurance firms attempt to grasp the potential damages of a cyber-related attack.

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In response to the impact of WannaCry on NHS trusts and the Caldicott review of data security in the healthcare sector, the United Kingdom government has announced that it will boost investment in NHS data and cyber security above the £50m identified in the Spending Review to address key structural weaknesses, such as unsupported systems.

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

"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.

"Cyber risk has moved up in the business agenda and businesses are taking measures to prepare themselves", said Matthew Martindale, a cyber security practice director at KPMG.

According to the report, the average cost of such an attack could range anywhere from US$4.6 billion to US$53 billion, depending on the size of the event.

WannaCry, a global ransomware attack that held hostage more than one million computers in more than 150 countries, started spreading in May and hit everything from major corporations to hospitals and even stop lights.

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