Company executives are worried about security breaches, but
recent surveys suggest they are not convinced about the value or
effectiveness of cyber insurance.
The report from the University of Cambridge Centre for Risk
Studies and the Lloyd's of London insurance market outlines a
scenario of an electricity blackout that leaves 93 million
people in New York City and Washington DC without power.
The scenario, developed by Cambridge, is technologically
possible and is assessed to be within the once-in-200-year
probability for which insurers should be prepared, the report
said.
The hypothetical attack causes a rise in mortality rates as
health and safety systems fail, a drop in trade as ports shut
down and disruption to transport and infrastructure.
"The total impact to the U.S. economy is estimated at $243
billion, rising to more than $1 trillion in the most extreme
version of the scenario," the report said. The losses come from
damage to infrastructure and business supply chains, and are
estimated over a five-year time period.
The extreme scenario is built on the greatest loss of power,
with 100 generators taken offline, and would lead to insurance
industry losses of more than $70 billion, the report added.
There have been 15 suspected cyber attacks on the U.S.
electricity grid since 2000, the report said, citing U.S. energy
department data.
The U.S. Industrial Control System Cyber Emergency Response Team
said that 32 percent of its responses last year to cyber
security threats to critical infrastructure occurred in the
energy sector.
"The evidence of major attacks during 2014 suggests that
attackers were often able to exploit vulnerabilities faster than
defenders could remedy them," Tom Bolt, director of performance
management at Lloyd's, said in the report.
Lloyd's syndicates offer cyber insurance but only 160 million
pounds ($246.82 million) in cyber insurance premiums are written
through London, which amounts to more than 10 percent of the
global market.
(Reporting by Carolyn Cohn, editing by Louise Heavens)
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