Brought to you by:
IUA
IUA

Lloyd's-backed study finds $US101 billion cyber gap

Facebook Twitter LinkedIn Google

A new report backed by Lloyd’s shines a light on a large cyber insurance gap at major ports in the Asia-Pacific.

A single cyberattack on Asia-Pacific ports could cost as much as $US110 billion ($160.05 billion), equal to half of all the natural disasters in 2018, yet 92% of the total economic costs are uninsured, leaving an insurance gap of $US101 billion (146.96 billion), says Singapore-based Cyber Risk Management (CyRiM).

The Shen attack: Cyber risk in Asia Pacific ports report analyses what would happen if port and maritime infrastructure were disrupted by a cyber event. The project was produced by the University of Cambridge Centre for Risk Studies in partnership with Lloyd’s, a founding member of CyRiM.

“With nine out of 10 of the world’s busiest container ports based in Asia, and high levels of underinsurance in the region, this exposure must be addressed,” Angela Kelly, Singapore Country Manager at Lloyd’s, said.

The extreme scenario could see a computer virus infect 15 ports across Japan, Malaysia, Singapore, South Korea and China, according to the report. Viruses could scramble cargo database records at major ports and lead to severe disruption, and economic losses would be felt around the world due to the global interconnectivity of the maritime supply chain.

Transport, aviation and aerospace sectors would be most affected, followed by manufacturing and retail.

Asia would be the worst affected region, set to lose up to $US27 billion ($39.29 billion) in indirect economic losses, followed by $US623 million ($906.48 million) in Europe and $US266 million ($387.04 million) in North America.

Business interruption and contingent business interruption insurance coverages would be the main drivers of the insured losses. Non-affirmative cyber, meaning cyber risk that is not explicitly mentioned in an insurance policy, would account for up to 57% of the total insured losses.

Insurance claims would arise from port operators (50% of insured losses), companies along the supply chain (21% of insured losses), and logistics and cargo handling companies (16% of insured losses), the report found.

“Modelling this complexity has been a research challenge but we hope the report highlights opportunities for the cyber insurance market to assist with protection against these vulnerabilities,” Dr Andrew Coburn, Chief Scientist at the Cambridge Centre for Risk Studies, said.