Insurers Grapple with Economic Costs of Cyber Attacks

Lloyd’s of London partnered with risk-modeling firm Cyence to publish a report examining the potential economic losses which would be incurred from a major hack of a cloud service provider or a cyber-attack on computer operating systems which are used by business across the planet.

The report estimated that a major, global cyber-attack could result in an average of $53 billion in economic damage. That figure is on par with the cost of mega-disasters of the recent past, like Superstorm Sandy of 2012 and other unprecedented natural disasters.

“Because cyber is virtual, it is such a difficult task to understand how it will accumulate in a big event,” Lloyd’s of London chief executive Inga Beale stated.

The economic costs of an attack on a cloud provider could make the $8 billion in damages of the “WannaCry” ransom attack look like peanuts. That attack, which occurred this past May, spread to 100 countries.

The economic costs typically include interruptions in business plus the cost of fixing computers damaged in the attacks.

The report from Lloyds comes on the heels of a US government warning to industrial companies to be aware of a hacking campaign which could target the nuclear and other energy sectors.

In June a virus labeled “NotPetya” spread from infected computers in Ukraine to businesses all over the world. It worked by encrypting data on infected computers, thus causing them to be unusable. The attack interfered with activity at ports, factories and law firms. “NotPetya cost the world $850 million in economic losses.

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