Lloyd’s of London warns major cyber attack on payments could cost world $3.5 trillion
A major hack of a financial services payments system could cost the world $3.5 trillion, Lloyd’s has found, as demand for cyber insurance booms.
A “hypothetical but plausible cyber attack” would cause “widespread disruption to global business”, according to a together with the Cambridge Centre for Risk Studies.
The US would take the biggest hit within the scenario by losing $1.1 trillion over five years, followed by China and Japan with $470bn and $200bn respectively.
“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,” said Bruce Carnegie-Brown, chair of Lloyd’s.
The UK economy would suffer five-year losses of $165bn.
Some business leaders have called on the UK government to extend its terrorism reinsurance scheme Pool Re to cover state-backed cyber attacks, according to the Financial Times.
Research from the international law firm RPC last month found cyber security breaches for UK financial services companies increased threefold from 2021 to 2023.
The number of breaches increased from 187 to 640, with the biggest rise being seen in the pensions sector.
A spokesperson for UK Finance, which represents banking and financial services firms, told City PM the sector was well prepared for cyber threats.
“The financial services industry invests billions in advanced technology to protect customers,” they said. “Firms also work collaboratively and share intelligence about emerging threats through the Financial Sector Cyber Collaboration Centre.
“The industry will continue to work closely with regulators and government to protect the UK’s financial system, institutions and customers.”
Cyber insurance saw more than $9bn in gross written premiums last year and is predicted to increase to between $13bn to $25bn by 2025, according to Lloyd’s.
However, the firm noted that this figure “represents a small portion of the potential economic losses that businesses and society face”.