A serious cyber-attack could cost the global economy billions

1 min read

Lloyd’s of London has issued a warning that suggests that a serious cyber-attack on the global economy could cost billions and be as catastrophic as natural disasters, such as Hurricane Katrina which devastated New Orleans.

In a 56 page report the insurance market said that the threat of cyber-attacks had spiralled in recent years and now posed a serious threat to both businesses and governments.

The warning comes just weeks after the global ransomware cyber-attack that affected businesses around the world and the NHS in the UK.

Lloyds suggests that a future global attack could cost the global economy upwards of $120billion.

So, what are the most likely scenarios? Among those identified are a malicious hack taking down a cloud service provider – this could cost anything between $15billion and $121billion. The second-most likely threat stems from attacks on computer operating systems run by large businesses.

Uncertainty around losses associated with cyber-attacks is difficult to calculate so the range of estimates tends to be very wide.

Inga Beale, chief executive of Lloyd’s, said: “This report gives a real sense of the scale of damage a cyber-attack could cause the global economy,” and warned that premium calculations needed to “keep pace with the cyber-threat reality.”

Cyber cover is a new type of insurance and is remarkably hard to model and understand but whatever the challenges, recent events have underlined that in an increasingly connected world industry and governments need to better understand those risks and start to prepare for the consequences of any cyber-attacks now.