Lloyd’s of London chief warns against crippling cyberattack

Cyber should be insurance industry’s top priority, says Beale

Lloyd’s of London chief warns against crippling cyberattack

Insurance News

By Gabriel Olano

Lloyd’s of London chief executive Inga Beale has warned that the financial sector, and other industries, are inadequately prepared to defend themselves against a devastating cyberattack.

Beale, who spoke at the Asian Financial Forum in Hong Kong, said that if a hacker manages to take down a single cloud service provider, losses could exceed US$50 million, or possibly double that amount. She attributed that to the insurance industry’s lack of experience in dealing with massive cyberattacks.

Natural disasters have traditionally been the largest threat to insurers, but Beale said that these have been eclipsed by the threat of successful breaches.

Lloyd’s figures show that only 17% of this new age of business functions can be insured, and that insurers’ estimates of cyberattack damage are quite rough, given their lack of experience dealing with such incidents.

“There are substantial insurance gaps, as a majority of cyber risks are not covered by any form of insurance,” said Beale, as quoted by the South China Morning Post. “Just like natural catastrophes, cyber events such as hacker attack or internet failures can cause severe impact on businesses and economies.”

Beale added that Lloyd’s is currently working with major insurers in coming up with contingency measures for cyberattacks, and that this area should be the insurance industry’s top priority.

However, cyber risks don’t come from just hackers, she said. Sometimes, a company’s own employee can unwittingly expose the firm to a data breach.

“If an employee presses the wrong button, it may bring the whole system down,” Beale said. “Staff training is thus of upmost importance to handle such risks.”

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