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3rd July 2022
Physical infrastructure at growing risk of geopolitically motivated cyber-attacks-Lloyd's
Lloyd’s has published a new report highlighting the risk of cyber-attacks which could inflict significant physical damage on national infrastructure and privately owned assets. It focuses on the importance of effective risk management and the role of insurers in helping customers build resilience to cyber-attacks. As malicious attacks increase in frequency, cyber represents a key opportunity for insurers to support businesses and societies through the products and services they provide.
The report examines three hypothetical scenarios involving politically motivated cyber-attacks intended to cause damage to physical environments. Both critical national infrastructure and privately owned assets are highlighted as potential targets of attacks from criminals or state-sponsored actors. The report goes on to outline the potential material impacts on businesses if risk managers are not aware of the risks associated with protecting their physical infrastructure from cyber incidents, including fire, explosion, flooding, or bodily injury.
Whilst most cyber-attacks are digital, physical cyber-attacks–defined as virtual attacks which trigger physical disruption–are becoming increasingly commonplace. The rise of state-sponsored cyber-attacks is a significant focus for businesses and governments, driven by an evolving geopolitical landscape in the wake of Russia’s invasion of Ukraine. The origin of cyber-attacks are difficult to trace, which means that nation-states can remain anonymous, adding to the complexities for customers and insurers.
Shifting powers: Physical cyber risk in a changing geopolitical landscape is the third in Lloyd’s ‘Shifting powers’ series of reports produced in partnership with the Cambridge Centre for Risk Studies.
Lloyd’s will continue to work with customers and risk managers to educate them on the complexities of cyber risk and further innovate to create new solutions. The report concludes that, although the existing market for cyber physical cover is small and specialised, there are opportunities for the insurance industry to develop ‘affirmative physical damage offerings’ and ‘business interruption and contingent business interruption products’.
Patrick Tiernan, chief of Markets at Lloyd’s, comments “The Lloyd’s market has a proud history of innovation, including underwriting the first cyber policy. Our market now writes around one fifth of all global cyber premium. With that position comes a responsibility to look beyond the immediate market dynamics and provide effective leadership as the market matures.
“We understand the complex and potentially systemic risks in the cyber class and are committed to supporting a resilient and sustainable cyber market in the years ahead. This report is another step in working with our stakeholders to facilitate the solutions that can help protect customers from a risk that has reached the highest level of priority in boardrooms around the world.”
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Cyber Trends(1294 mentions in Insurance Newslink)