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Nov 01, 2023 670

Payments system cyber attack could cost the world $3.5 trillion

#Fintech

"Insurance marketplace Lloyd's of London is warning that a major cyber attack on a systemic payments system could cost the world economy $3.5 trillion. "

With cyber attacks continuing to threaten businesses and governments, insurance is a growing market, estimated at just over $9bn in Gross Written Premiums last year, and forecast to hit between $13bn and $25bn by 2025.

Lloyd’s has published a systemic risk scenario that models the global economic impact of a hypothetical but plausible cyber attack on a major financial services payments system, resulting in widespread disruption to global business and potential global economic losses in the trillions.

The three countries that experience the highest five-year economic loss from the scenario are the United States $1.1trn, followed by China $470bn and Japan $200bn. The recovery time for individual countries or regions depends on the structure of their economy, exposure levels and resilience.

The risk of a cyber-attack is the most cited risk in the latest Bank of England's Systemic Risk Survey for the second half of 2023, with 80% of firms mentioning it. This is the highest proportion of respondents citing cyber risk ever recorded in the survey.

“We are committed to building resilience around systemic risk and 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," says Bruce Carnegie-Brown, Lloyd’s chairman. “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.”