Published: Mon, July 17, 2017
Culture | By Julio Duncan

Lloyd's report reveals cloud cyber risk gap

Lloyd's report reveals cloud cyber risk gap

Cyence believes that the economic losses stemming from the hacking of a cloud service provider will dwarf the $8 billion impact of WannaCry.

The report, produced in conjunction with risk analytics modelling firm Cyence, also highlighted an "uninsured gap" of $45bn of losses - in other words losses which are not covered by cyber insurance policies. "But actual losses could be as high as $121 billion", the report said.

A major global cyber-attack could mean economic losses of $53 billion (£40bn) on average and up to $121bn, comparable with natural disasters such as Hurricanes Katrina or Sandy, according to Lloyds of London.

Lloyd's research has shown that an extreme cyber attack could cause losses equivalent to a catastrophic natural disaster.

The findings also reveal that, while demand for cyber insurance is increasing, the majority of these losses are not now insured, leaving an insurance gap of tens of billions of dollars.

The report estimated the hit on the economy from such an event could land between $15 billion (£11 billion) and $121 billion (£93 billion) - a wide range that the authors blamed on a lack of historical precedence and quantifiable data, leaving the insurers with a challenge as they tried to accurately forecast the potential fallout of a widespread cyber attack.

"Underwriters need to consider cyber cover in this way and ensure that premium calculations keep pace with the cyber threat reality", she said.

Cybersecurity has made headlines over the last three months since two major attacks were made - the WannaCry ransomware crippled more than 200,000 computers in 100 countries while the NotPetya virus, from Ukraine, spread a malicious piece of malware that rendered various factories, law firms and ports inoperable. And, in the most extreme cases, losses could rise to as much as $121bn.

For a mass software vulnerability scenario, the insured losses range from $762m (£583m) for a large loss to $2.1bn (£1.6bn) for an extreme loss.

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.

"Leveraging Cyence's unique cyber risk platform, we're excited to see insurers providing more capacity, bringing innovative products to market with greater confidence and creating a more robust and sustainable insurance market", he added.

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