Lloyd’s of London Issues Warning: Global Economy at Risk of $3.5 Trillion Loss Due to Cyber-Attack
Lloyd’s of London, the renowned insurance giant, has released a systemic risk scenario that foresees a cyber-attack posing a severe threat to the global economy, potentially resulting in staggering losses amounting to $3.5 trillion. This scenario envisions a hypothetical yet plausible cyber-attack targeting a major financial services payment system, which could lead to extensive disruptions affecting businesses worldwide.
A Collaborative Effort with the Cambridge Centre for Risk Studies
To delve into the potential repercussions of this systemic risk scenario, Lloyd’s of London joined forces with the Cambridge Centre for Risk Studies. Together, they examined nine hypothetical scenarios that could have a systemic impact, calculating the potential economic consequences across 107 countries using GDP as a central measure.
The researchers divided the projected economic losses into three categories of severity: major, severe, and extreme. These hypothetical scenarios spanned economic damages, ranging from $2.2 trillion in the least severe situation to an alarming $16 trillion in the most extreme case, spread over a five-year timeframe. The weighted average loss across these three severities amounted to a staggering $3.5 trillion.
US, China, and Japan in the Crosshairs
The research findings identified the United States as the country most susceptible to a cyber-attack-induced economic loss over five years, with an estimated $1.1 trillion. Following closely, China faced a potential loss of $470 billion, while Japan was at risk of a $200 billion loss. The research emphasized that the recovery time for various regions would depend on their economic structure, exposure levels, and resilience.
A Warning About the Interconnected World of Cyber Attack
Lloyd’s of London’s analysis underscores the intricate and interconnected nature of cyber risks, with the potential to affect a wide range of areas, including supply chains and geopolitics. The findings serve as a stark reminder of the significant threat posed by cyber risks and the imperative for collaborative efforts to bolster society’s resilience against the potential magnitude of these risks. Lloyd’s Chairman Bruce Carnegie-Brown emphasized the necessity of sharing knowledge, expertise, and innovative solutions across governmental bodies, industries, and the insurance sector to effectively address and mitigate these profound risks.
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