Lloyds Bank has warned that the global economy could suffer a loss of US$3.5tn if a global payments system is hit by a major cyber-attack.
As reported by Reuters, Lloyds claim that the United States would suffer losses of US$1.1tn over a five-year period from such an attack, which would inevitably cause widespread disruption to global business, according to a systemic risk scenario developed by Lloyds and the Cambridge Centre for Risk Studies.
In addition, the banking company says that The People’s Republic of China would face US$470bn in losses and Japan would lose US$200bn over the same period.
Will cyber insurance provide adequate cover?
This has ultimately unveiled that both insurers and policymakers are increasingly worried about the threat to essential services as a result of cyberattacks.
Cyber Magazine has previously reported on how the financial services industry is a prime target for cybercriminals, including challenges such as protecting sensitive information (ie. names, addresses, social security numbers, bank account numbers, and credit card numbers), which makes the sector a high-value target.
Cyber insurance is a fast-growing industry as it works to help protect the valuable data of businesses and provide digital reassurance. According to Lloyds, cyber insurance has seen more than US$9bn in gross written premiums in 2022 and this is forecast to grow to US$25bn by 2025.
Reuters has reported that there is concern about the cost of such insurance and whether it will provide adequate cover is deterring some potential customers.
Indeed, cyberattacks of this scale could mean devastating consequences for businesses and essential services. Not ensuring that adequate or up-to-date security measures are in place could result in the vulnerabilities of organisations being exploited by malicious threat actors.
The importance of financial organisations adopting tighter security measures
Dan Middleton, VP UK&I at Veeam, explains how such a crippling economic cost, as proposed by Lloyds, can be avoided if financial organisations adopt measures that would enable them to recover their data from their backup in the event of an attack.
He says: “The crippling economic cost of business downtime and recovery can be avoided if companies can recover from secure, clean backups. Malicious actors know this, which is why 93% of ransomware attacks target backups – with 75% being at least partially successful.
“It is essential that financial organisations have one or more ultra-resilient copies of backup data. This includes data stored in immutable media types, meaning they cannot be changed or deleted. Doing so will give them a huge amount of resilience in the face of mounting cyber threats.
He continues: “The price of a successful cyber-attack can rapidly escalate if businesses are unprepared, from the cost of downtime to the payment of a ransom demand. Cyber insurance has been a hotly debated tool to avoid some ransomware-related costs. While it can be valuable, it doesn’t recover lost data or cover the unseen downtime cost and rising premiums.
“Organisations must, therefore, implement fundamental backup and recovery solutions and strategies. The crucial point is that businesses must plan for a breach and how they will respond to keep their business running – it’s no longer enough to take a defensive approach.”
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