A risk scenario published by Lloyd’s of London shows such an attack could result in potential global economic losses of $3.5tr (£2.8tr)

Cyber insurance represents a “small proportion” of potential economic losses should major financial services payments systems get hit by a major attack.

That was according to Lloyd’s of London, which published today (18 October 2023) a systemic risk scenario that models the global economic impact of a hypothetical, but plausible, cyber incident.

It found that such an attack on a major financial services payments system would result in widespread disruption to global business and potential global economic losses of $3.5tr (£2.8tr).

However, the cyber insurance market was estimated at just over $9bn (£7.38bn) in gross written premiums (GWP) last year and is forecast to hit between $13bn (£10.7bn) and $25bn (£20.5bn) by 2025.

While it is a growing market, Lloyd’s warned that this “still represents a small portion of the potential economic losses that businesses and society face”.

“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.

Worst hit countries 

Based on Lloyd’s model, the three countries that would experience the highest five-year economic losses were the US at $1.1trn, followed by China and Japan.

The marketplace warned that the recovery time for individual countries or regions depended on the structure of their economy, exposure levels and resilience.

It added that cyber remained a risk that had the potential to affect all areas of society, as it was both a “complex and connected risk impacting areas such as supply chains and geopolitics”.

Carnegie-Brown added: “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.”