Cost of cyber-attack on global payments system $3.5 trillion

Lloyd’s has published its latest systemic risk scenario that models the global economic impact of a hypothetical (but plausible) cyber-attack on a major financial services payments system.

According to the model, such an attack is posited would result in widespread disruption to global business and potential global economic losses of $3.5 trillion.

The three countries that experience the highest five-year economic loss from the scenario are the United States at $1.1 trillion, followed by China $470 billion and Japan at $200 billion. The recovery time for individual countries or regions depends on the structure of their economy, exposure levels and resilience.

Lloyd’s added that cyber-attacks continue to threaten businesses and governments, with year-on-year costs around maintenance, prevention, and response to attacks increasing. Cyber remains a risk that has the potential to affect all areas of society, as it is both a complex and connected risk impacting areas such as supply chains and geopolitics.

However, it added that cyber insurance is a growing market, estimated at just over $9 billion in GWP last year, and is forecast to hit between $13 billion and $25 billion by 2025 – though this still represents 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 Lloyd’s chairman Bruce Carnegie-Brown.

“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.”