A global ransomware cyber-attack could cost $193bn and affect more than 600,000 businesses worldwide, according to a new report from the Cyber Risk Management (CyRiM) project, the Singapore-based public-private initiative that assesses cyber risks, of which Lloyd’s is one of the founding members.
In the report’s scenario, the attack is launched through an infected email, which once opened is forwarded to all contacts and within 24 hours encrypts all data on 30 million devices worldwide. Companies of all sizes would be forced to pay a ransom to decrypt their data or to replace their infected devices.
The report, ‘Bashe Attack: Global infection by contagious malware’, shows a ransomware attack on this scale would cause substantial economic damage to a wide range of business sectors through reduced productivity and consumption, IT clean-up costs, ransom payments and supply chain disruption.
The scenario estimates that:
- Retail and healthcare would be the most affected ($25bn each), followed by manufacturing ($24bn).
- Regionally, the US would be the hardest hit with $89bn at risk. Europe could lose $76bn, with Asia losing $19bn.The rest of the world could lose $9bn.
- Despite the high costs to business, the report shows the global economy is underprepared for such an attack with 86% of the total economic costs uninsured, leaving an insurance gap of $166bn.
Among the key findings:
- The report challenges assumptions of global preparedness for a cyber-attack of this nature and scale.
- It highlights lessons for the insurance sector in terms of policy, legal and aggregation issues in cyber insurance offerings.
- It also identifies opportunities for insurers to expand their business in insurance classes associated with ransomware attacks.
To read the report visit www.lloyds.com/cyrimreports.
Dr Trevor Maynard, Head of Innovation at Lloyd’s, said: “This report shows the increasing risk to businesses from cyber-attacks as the global economy becomes more interconnected and reliant on technology. Companies must ensure they are better prepared for ransomware attacks, and that includes working with insurers to reduce the risks before they are attacked and ensure they have the right insurance cover in place to respond after the event. The reality for business is it’s not if you get attacked but when.”
Professor Shaun Wang, Director of the Insurance Risk and Finance Research Centre at Nanyang Technological University, added: “We are pleased to collaborate with Cambridge University and CyRiM founding members on this groundbreaking research. Quantifying potential harm caused by cyber threats to corporations and their insurers has been a challenge due to lack of data. The “Bashe attack” report exemplifies a sound methodology of applying expert knowledge in estimating economic losses caused by contagious malware to sweep through many organisations. It sheds light on potential losses to insurers through both affirmative and non-affirmative covers.”
Dr Andrew Coburn, Chief Scientist at the Cambridge Centre for Risk Studies, said “The scenario we have prepared with Lloyd’s, CyRiM and other contributors highlights the potential for loss that