SOURCE: Insurance Information Institute
Corporate data breaches and privacy concerns may dominate the headlines, but a new report by Allianz Global Corporate & Specialty makes the case that future cyber threats will come from business interruption (BI), intellectual property theft and cyber extortion.
The impact of BI from a cyber attack, or from operational or technical failure, is a risk that is often underestimated, according to Allianz.
It predicts that BI costs could be equal to—or even exceed—direct losses from a data breach, and says that business interruption exposures are particularly significant in sectors such as telecoms, manufacturing, transport, media and logistics.
Vulnerability of industrial control systems (ICS) to attack poses a significant threat, Allianz says.
To-date, there have been accounts of centrifuges and power plants being manipulated, such as the 2012 malware attack that disabled tens of thousands of computers at oil company Saudi Aramco, disrupting operations for a week.
However, the damage could be much higher from security sensitive facilities such as nuclear power plants, laboratories, water suppliers or large hospitals.
Business interruption can also be caused by technical failure or human error, Allianz notes.
For example, in July 2015, stocks worth $28 trillion were suspended for several hours on the New York Stock Exchange due to a computer glitch, and that same month 4,900 United Airlines flights were impacted by a network connectivity issue.
As a result, Allianz believes that within the next five to 10 years BI will be seen as a key risk and a major element of the cyber insurance landscape.
It points out that in the context of cyber and IT risks, BI cover can be very broad including business IT computer systems, but also extending to ICS used by energy companies or robots used in manufacturing.
Allianz currently estimates the cyber insurance market is worth around $2 billion in premium worldwide, with U.S. business accounting for around 90 percent of the market. However, the cyber market is expected to experience double-digit growth year-on-year and could reach in excess of $20 billion in the next 10 years.
The Allianz Cyber Risk Guide is available here.
Check out I.I.I. facts and statistics on cybercrime here.