Global economy could suffer potential $3.5tr cyberattack losses: Lloyd’s

A new systemic risk scenario from Lloyd’s has warned that the global economy could suffer a loss of $3.5 trillion if a major financial services payments system is hit by a cyberattack.  

According to Lloyd’s “hypothetical but plausible” scenario, the three countries that experience the highest five-year economic loss are the US $1.1 trillion, followed by China $470 billion and Japan $200 billion. The recovery time for individual countries or regions depends on the structure of their economy, exposure levels and resilience.

Cyberattacks continue to threaten businesses and governments, with year-on-year costs around maintenance, prevention, and response to attacks increasing. Cyber remains a risk that has the potential to affect all areas of society, as it is both a complex and connected risk impacting areas such as supply chains and geopolitics.

Cyber insurance is a growing market, estimated at just over $9 billion in gross written premiums last year, and forecast to hit between $13 billion and $25 billion by 2025. However, this still represents a small portion of the potential economic losses that businesses and society face, Lloyd’s said.

With over a fifth of the world’s cyber premium being placed in the Lloyd’s market, according to the marketplace, Lloyd’s is seeking to support the growth of the class “thoughtfully and sustainably” – while also enabling innovation for new products through the Lloyd’s Lab.

In September, Lloyd’s Futureset held its first Cyber Innovation Forum, connecting customers with representatives from technology, government, and insurance sectors to discuss global cyber risk and the collective steps needed to respond.

Bruce Carnegie-Brown, Lloyd’s chairman said: “We are committed to building resilience around systemic risk and the risk scenario released today highlights the important role of insurance in supporting and protecting customers against the potential threat 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.”