Global cyber attack could spur $53 billion in losses: Lloyd's of London

Lloyd's of London believes the global cyber market is worth between $3 billion and $3.5 billion in terms of premiums

Lloyds said the figures are the average in the scenario, but that because of the uncertainty around aggregating cyber losses this figure could be as high as United States dollars 121 billion or as low as USD 15 billion.

The warning is contained in a report published today (17 July), titled Counting the cost: Cyber exposure decoded, by Trevor Maynard, head of innovation at Lloyd's and George Ng, a founder and chief technology officer at Cyence.

Lloyd's estimated that the uninsured gap could be as high as $45bn for the cloud services scenario and $26bn for the vulnerability scenario, with the vast majority of economic losses not covered by insurance.

Published two months after a ransomware cyberattack that hobbled National Health Service hospitals and hit almost 100 countries, a 56-page report from the world's oldest insurance market says the threat posed by such global attacks has spiraled and poses a huge risk to business and governments over the next decade.

It comes as insurance firms attempt to grasp the potential damages of a cyber-related attack. Reuters notes most companies lack information frameworks they can rely on to assess their clients' risk profiles and make base assumptions, a significant problem for an industry which thrives on data. The financial and reputational cost in terms of business interruption and remediation can be substantial.

"Because cyber is virtual, it is such a hard task to understand how it will accumulate in a big event", said Lloyd's of London Chief Executive Inga Beale in an interview with Reuters.

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In June, an attack of a virus dubbed "NotPetya" spread from infections in Ukraine to businesses around the globe.

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

According to Lloyds and Cyence, average economic losses from a major attack on cloud services could be about $53 billion. Meanwhile the "NotPetya" malware is said to have caused $850 million in economic damages, according to Cyence.

As the cyber threat grows so the demand for cyber insurance increases.

This is the average estimate, but because of the uncertainty around calculating cyberlosses it estimates the figure could be as high as US$121 billion or as low as US$15 billion.

Finally, around $45 billion of this amount may not be covered by cyber policies due to underinsuring of companies, the study finds.

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