A systemic risk scenario from Lloyd’s focused on “a hypothetical but plausible cyber-attack”, with the US, China and Japan hardest hit.
Lloyd’s has published a systemic risk scenario that models the global economic impact of a “hypothetical but plausible cyber-attack” on a major financial services payments system.
The scenario resulted in widespread disruption to global business and potential global economic losses of $3.5trn, according to Lloyd’s.
Three countries experienced the highest five-year economic loss from the scenario: the US at $1.1trn; China at $470bn; and Japan at $200bn.
The recovery time for individual countries or regions depends on the structure of their economy, exposure levels and resilience, Lloyd’s said.
Cyber-attacks continue to threaten businesses and governments, with year-on-year costs around maintenance, prevention, and response to attacks increasing, Lloyd’s noted.
The cyber insurance market is estimated at just over $9bn in gross written premiums last year, Lloyd’s highlighted.
The cyber insurance market is forecast to hit between $13bn and $25bn by 2025, Lloyd’s said.
However, this would still only represent a small portion of the potential economic losses that businesses and society face.
“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,” said Bruce Carnegie-Brown, chairman of Lloyd’s.
“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,” he added.