Effects of Cyber Attacks in today's highly technological world
Businesses are still not taking strong enough measures to defend themselves against serious cyber attacks, said Lloyd's Chief Executive Inga Beale at the Asian Financial Forum last week, cited in the South China Morning Post (SCMP).
She noted that Nat CATs are no longer the largest threat to insurers; instead, successful cyber attackers are. Ms Beale said a malicious hacker who takes down a single cloud service provider for example, could result in losses well above US$50 billion, while attacks on computer operating systems run by a large number of businesses around the world, could end up causing companies losses of US$30 billion, leaving big business or even governments highly exposed. And these costs, she said, remain on the conservative side.
Yet losses could be much higher as the industry still does not have sufficient experience of dealing with the high costs of cyber attacks. Figures suggest, though, that only about 17% of the new age of business functions can be insured, reported the SCMP.
However, Ms Beale noted that instead of tackling the problem head-on, too few companies have yet to take action against countering these mystery attackers, and the insurance industry itself is still very much in its infancy in developing cyber products.
“There are substantial insurance gaps, as a majority of cyber risks are not covered by any form of insurance. Just like natural catastrophes, cyber events such as hacker attack or internet failures can cause severe impact on businesses and economies,” she said.
While the insurance sector has centuries of experience in covering Nat CATs, cybersecurity issues and massive technology failures have only really come along in the past few years, added Ms Beale.
She said that Lloyds is already working directly with major insurance companies on ways to counter cyberattack, and believes this is now the sector’s most pressing priority.
And as cyber risk is not always from hackers, but often involve a company’s own employee, staff training is thus of “upmost importance”, she said.
Ms Beale also said Asia remains its “focus of expansion as the region has strong economic growth,” especially when the numerous projects expected for China's Belt and Road initiative come on stream, reported SCMP.