Lloyd's, the world's foremost insurance and reinsurance marketplace, has unveiled a systemic risk scenario that exposes the global economy's vulnerability to a plausible major cyber attack on a critical financial services payments system. This hypothetical scenario could lead to widespread disruptions in global business operations, potentially resulting in staggering economic losses totaling $3.5 trillion.
Over a five-year period, the scenario projects that the United States would incur the highest economic loss at $1.1 trillion, followed by China at $470 billion and Japan at $200 billion. The recovery period for affected countries or regions would be contingent on their economic structure, exposure levels, and resilience.
The persistent threat of cyber attacks continues to loom over businesses and governments. Year after year, the costs related to cyber attack prevention, maintenance, and response continue to rise. Cyber risk is a multifaceted and interconnected threat, with the potential to disrupt various aspects of society, including supply chains and geopolitical stability.
The cyber insurance market is on the rise, with Gross Written Premiums exceeding $9 billion last year, and projections estimating it could reach between $13 billion and $25 billion by 2025. Nevertheless, this still represents only a fraction of the potential economic losses that businesses and society could face.
Bruce Carnegie-Brown, Chairman of Lloyd's, stresses the crucial role of insurance in safeguarding customers against the perils of cyber threats. He emphasizes the need for a collaborative approach, as the global interconnectedness of cyber risk necessitates shared knowledge, expertise, and innovative solutions across government, industry, and the insurance sector to enhance society's resilience against this formidable threat.
With Lloyd's underwriting over 20% of the world's cyber insurance premium, the organization is dedicated to promoting the sustainable growth of this sector, fostering innovation through initiatives like the Lloyd's Lab. Lloyd's Futureset recently hosted its first Cyber Innovation Forum, uniting customers with representatives from the technology, government, and insurance sectors to collectively address the measures required to effectively counter cyber threats.