Systemic Cyber-Attack Scenario Envisions $3.5 Trillion Global Loss

A hypothetical but plausible cyber attack on a major financial services payment system could cause widespread disruption to global business and potential global economic losses of $3.5 trillion, according to Lloyd's.

In a newly published systemic risk scenario, Lloyd's said the 3 countries experiencing the greatest 5-year economic losses in the scenario would be the United States with $1.1 trillion in losses, China with $470 billion, and Japan with $200 billion. The recovery time for individual countries or regions depends on the structure of their economy, exposure levels, and resilience, Lloyd's said.

Lloyd's noted that cyber attacks continue to threaten businesses and governments, with costs around maintenance, prevention, and response to attacks increasing yearly.

"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," a Lloyd's statement said.

The cyber-insurance market continues to grow, with just over $9 billion in gross written premiums in 2022 and premiums forecast to reach between $13 billion and $25 billion by 2025, Lloyd's said. "However, this still represents a small portion of the potential economic losses that businesses and society face," the Lloyd's statement said.

More than one-fifth of the world's cyber-insurance premiums is currently placed in the Lloyd's market.

"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," Bruce Carnegie-Brown, Lloyd's chairman, said in the statement.

"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," Mr. Carnegie-Brown said.