One Asia-Pac cyber-attack could cost $110bn: Lloyd’s

A single cyberattack on Asia-Pacific ports could cause $110 billion in damage, according to a new report from Lloyd’s of London. 

The global reinsurance market believes a major attack could cause as much damage as half a year’s worth of losses from global natural catastrophes. 

A new report conducted by the University of Cambridge and Lloyd’s warns an attack on ports in Japan, Malaysia, Singapore, South Korea and China could spell disaster for the region.

The report reveals the global economy is unprepared for an attack of that scale. About 92% of the total economic costs are uninsured – an insurance gap of $101 billion, Lloyd’s says.

An attack via a computer virus carried by ships could scramble the cargo database records at major ports and lead to severe disruption, according to one scenario highlighted in the report.

Lloyd’s says economic losses would have a ripple effect beyond Asia-Pac and into the global maritime supply chain.

According to the report, transportation, aviation and aerospace sectors would be the most affected, with $28.2 billion of economic losses in total. 

Manufacturing would take a $23.6 billion hit, and the retail sector would suffer $18.5bn losses.

Productivity losses would affect countries with bilateral trade agreements with the attacked ports. Asia would be the worst affected region, set to lose up to $27bn in indirect economic losses, followed by $623m in Europe and $266m in North America, Lloyd’s says.

Lloyd’s believes the transportation sector in Singapore would take the biggest economic hit, followed by South Korean transportation. 

‘Business interruption’ and ‘contingent business interruption’ insurance coverages would be the main drivers of the insured losses, the report says.

Non-affirmative cyber, cyber risk that is not explicitly mentioned in an insurance policy, would account for up to 57% of the total insured losses.

Lloyd’s says insurers and policyholders should “expand their view of cyber risks ahead of the next event”.

Angela Kelly, Singapore country manager, at Lloyd’s, said: “Cyber risk is one of the most critical and complex challenges facing the Asia Pacific maritime industry today. As this risk grows with the increasing application of technology and automation in the industry, collaboration and future planning by insurers and risk managers is critical.  

“With nine out of ten of the world’s busiest container ports based in Asia, and high levels of underinsurance in the region, this exposure must be addressed.”