Cyberattacks on Asia-Pacific ports could cost US$40.8 billion to US$109.8 billion, according to a new study by London-based (re)insurance market, Lloyd’s together with Singapore-based Cyber Risk Management (CyRiM) project.
In a statement, Lloyd's said a single cyber-attack could even cost US$110 billion, which is roughly equivalent to half of all losses from natural catastrophes globally in 2018.
These losses, the firms noted, could occur in an extreme scenario in which a computer virus infects 15 ports across Japan, Malaysia, Singapore, South Korea and China, according to the report – ‘Shen attack: Cyber risk in Asia Pacific ports’ – produced by the University of Cambridge Centre for Risk Studies, on behalf of the (CyRiM) project and Lloyd’s.
Despite the high costs to business and international trade, the report showed that the global economy is "underprepared for such an attack" with 92% of the total economic costs uninsured, leaving an insurance gap of $101 billion.
An attack via a computer virus carried by ships could scramble the cargo database records at major ports and lead to severe disruption," the report said, adding that although the virus only directly affects ports in Asia-Pacific, economic losses would be felt around the world due to the global interconnectivity of the maritime supply chain.
It said that a cyber attack targeted at ports would also cause substantial economic damage to a wide range of businesses through reduced productivity and consumption, incident response costs, and supply chain disruption.
The report further said that transportation, aviation and aerospace sectors would be the most affected by cyberattacks at US$28.2 billion in total economic losses followed by manufacturing at US$23.6 billion and retail US$18.5 billion.
"Productivity losses would affect each country that has bilateral trade with the attacked ports," it added, noting that Asia would be the worst affected region, set to lose up to US$27 billion in indirect economic losses, followed by US$623 million in Europe and US $266 million in North America.
Singapore, Korea most vulnerable
Other key findings from the report included:
- The transportation sector in Singapore would take the biggest economic hit, followed by the same sector in South Korea;
- ‘Business interruption’ and ‘contingent business interruption’ insurance coverages would be the main drivers of the insured losses (60% of the loss in the most extreme version of the scenario).
- Many traditional marine insurance policies exclude cyber and non-physical events;
The report explained that there are opportunities for insurers to grow their business in relevant insurance classes such as cyber insurance.
"Cyber risk is one of the most critical and complex challenges facing the Asia-Pacific maritime industry today," said Lloyd's Singapore country manager Angela Kelly.
"As this risk grows with the increasing application of technology and automation in the industry, collaboration and future planning by insurers and risk managers is critical."