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, to which Delta Insurance contributed to via Lloyd’s, one of the founding members.
The report, Bashe Attack: Global infection by contagious malware, published today by the Cyber Risk Management project, paints the scenario where 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. 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 $75bn, with Asia losing $18bn. The rest of the world could lose $8bn.
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/cyrimreport.
Ian Pollard, Group Chairman and Managing Director at Delta Insurance said: “This report further supports the fact that cyber-attacks are one of the most dangerous threats facing all businesses. This research reveals widespread vulnerabilities. The ‘Bashe Attack’ scenario highlights the potential for a devastating broad geographical cyber-attack. The ransomware example featured in this report (alongside distributed denial of service (DDoS) attacks and state-backed cyberwarfare) will continue to provide major threats now and in the future. A host of other threats are now emerging amidst the rise of technology, such as the Internet of Things and artificial intelligence. Despite the severe threat of cyber-attacks worldwide, most businesses remain underprepared. To prevent such attacks, the insurance sector is designing comprehensive insurance solutions for cyber. Getting the right partner in place to provide cyber insurance cover alongside pre- and post-loss risk management solutions ensures businesses can stay ahead of these threats.”
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 can occur from contagious malware attacks. It challenges assumptions about cyber preparedness and the adequacy of security measures that companies have in place. This report is intended to deepen the understanding of cyber risk liability and aggregation risk in the portfolios of insurers. We hope that this contribution will help improve the understanding of cyber risk and lead to better resilience to attacks like these in the future.”