As per Lloyd’s of London report, a hypothetical cyberattack could cause widespread damage ranging from $4.6 billion to $53 billion, with a significant portion of it being unrecoverable due to companies being underinsured.
A report filed by Lloyd’s of London states that a major global cyberattack could trigger an average economic loss of $53 billion, a figure that is on par with 2012’s superstorm that landed in the United States causing widespread economic damage.
Co-authored with risk-modelling firm Cyence, the report examines the potential economic loss from the hypothetical hacking of a cloud service provider or of a cyberattack on computer operating systems that are run by worldwide by businesses.
With the risk of cyberattacks mounting globally, insurers are struggling to estimate their potential exposure to such risks. One key challenge is the lack of historical data on which insurers can base their assumptions.
“Because cyber is virtual, it is such a difficult task to understand how it will accumulate in a big event,” said Inga Beale, Chief Executive Lloyd’s of London.
This projected economic costs dwarfs the $8 billion cost of the “WannaCry” ransomware attack in May which spread to more than 100 countries, according to Cyence.
Economic costs typically include business interruptions and computer repairs.
The report comes in the wake of a warning by the U.S. government to industrial firms on a possible hacking campaign targeting the country’s nuclear and energy sectors.
In June, the “NotPetya” virus attack had rapidly spread from infections in Ukraine to businesses across the globe.
“NotPetya” caused $850 million in economic costs, said Cyence.
In Lloyd’s of London’s hypothetical scenario, hackers have managed to insert malicious code into a cloud provider’s software that was designed to trigger system crashes among users a year later.
Given the time gap, the malware having become ubiquitous would have set down roots across sectors and industries ranging from financial services to hotels. The average economic loss caused by such a scenario has been computed to range from $4.6 billion to $53 billion, with actual losses as high as $121 billion.
The report goes on to add, businesses may not be able to recover as much as $45 billion of this sum due to underinsuring.
Lloyd’s has a 20% to 25% share of the $2.5 billion cyber insurance market, said Beale in June.