Analysis by predictive cyber risk modelling firm, Kovrr highlights the potential for significant insurance and reinsurance industry losses as a result of an email service outage in the UK.
According to statistics, some 290 billion emails are sent every day across the world by around 3.9 billion users. While the numbers are certainly huge, the world’s email ecosystem is facilitated by a fairly small number of providers, including the likes of Google, Microsoft, and Rackspace.
The world is becoming ever more interconnected as technology continues to advance at a rapid pace and industries push to achieve true digitalisation. With this in mind, a cyber attack on an email service provider that lasts for hours, days or even weeks would result in an outage that could result in very significant business interruption (BI) claims and subsequently high losses for re/insurers.
Specifically, for its latest report, Kovrr used a scenario where a cyber attacker is trying to cause a large-scale service shutdown through a targeted attack on an email service provider, via a Distributed Denial of Service (DDoS) attack.
Kovrr leveraged a proprietary Industry Exposure Database (IED) containing data on all businesses that currently operate within the UK.
The analysis and accompanying report puts the economic loss estimate for a cyber attack with a three-day email outage, for the entire active companies in the UK, at just over a staggering $44.5 billion. This represents an economic impact, so ground up loss before terms and conditions, of $4.9 billion, and a gross insured loss of $3.25 billion.
“The constantly growing and evolving nature of cyber risk now affects all lines of insurance. This report illustrates how a cyber catastrophe could cause similarly sized losses to the 2007 UK property flood losses, which cost $4.8 billion. Insurance and reinsurance companies ought to act now to make sure they are properly managing their cyber exposures before a cyber catastrophe happens,” said Kovrr’s Chief Executive Officer (CEO), Yakir Golan.
With the total economic loss estimated to be as high as $44.5 billion, of which less then $3.3 billion would be covered by some form of re/insurance protection, clearly, this protection gap is extremely large and suggests a real need for the risk transfer industry to develop innovative, adequate and affordable solutions.