Insurance companies' understanding of cyber liability is under-developed compared with other insurance types, which could lead to insurers underestimating the potential loss to a customer from a cyberattack.
A serious cyberattack that caused a cloud service disruption could cost the global economy as much as US$53 billion and could even be as high as US$121.4 billion, depending on the organisations involved and how long the disruption lasts, according to the Lloyd's Class of Business team's "Counting the costs - decoding cyber insurance" report.
The report also said the insurance industry is underestimating the the potential loss resulting from a cloud security attack by US$4 billion, for a large loss, and US$45 billion, for extreme loss, in terms of the cloud services scenario.
The study is designed to provide realistic and plausible scenarios to help quantify cyber-risk aggregation for risk managers whose businesses are exposed to either a hack that takes down their cloud-service provider or an attack that causes the failure of a particular operating system across their own company, customers, suppliers and/or business partners.
To combat these threats researchers recommend risk managers gain a better understanding of the affects cyber-attacks might have on their core business processes, and plan what actions they could take to mitigate these risks