A cyber attack which shuts down parts of the United States’ power grid could cost as much as $1 trillion to the US economy, according to a report published on Wednesday.
Company executives are worried about security breaches, but recent surveys suggest they are not convinced about the value or effectiveness of cyber insurance, Reuters reported.
The report from the University of Cambridge Center 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 US 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 US electricity grid since 2000, the report said, citing US energy department data.
The US Industrial Control System Cyber Emergency Response Team said that 32% 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% of the global market.
