Insurance marketplace Lloyd’s of London has issued a warning that a major cyber attack on a systemic payments system could result in economic damages of up to $3.5 trillion globally.
Lloyd’s has released a risk scenario that evaluates the potential economic impact of a hypothetical yet plausible cyber attack on a key financial services payment system. Such an event could lead to significant disruptions in global business operations, with potential financial losses reaching trillions of dollars.
According to the scenario, the United States would face the largest economic loss over five years, estimated at $1.1 trillion, followed by China at $470 billion and Japan at $200 billion. The recovery duration for different countries or regions would vary based on their economic structures, levels of exposure, and resilience.
The risk of cyber attacks is the most frequently cited concern according to the most recent Bank of England’s Systemic Risk Survey for the latter half of 2023, with 80% of firms identifying it as a significant risk. This marks the highest level of concern regarding cyber risk ever recorded in this survey.
As cyber threats continue to pose challenges to businesses and governments, the insurance sector is experiencing growth, having generated just over $9 billion in Gross Written Premiums last year. Projections indicate that this figure could rise to between $13 billion and $25 billion by 2025.
Bruce Carnegie-Brown, chairman of Lloyd’s, stated, “We are committed to enhancing resilience against systemic risks. The scenario released today emphasizes the crucial role of insurance in safeguarding customers from the threats that cyber risks present to businesses and society. The interconnected nature of cyber risks means they are too significant for any single sector to tackle independently. We must foster collaboration among government, industry, and the insurance market to build resilience against this substantial threat.”