Insurers warn of catastrophic cost of port cyber attack threat

Cyber security in shipping is still under development. Credit: GettyImages

The global economy is unprepared for the impact of a cyber attack on Asian ports, according to a report released today.

Lloyd’s insurance market has issued the report, which estimates the cost of an attack on 15 major ports in Asia has the potential to cost USD110 billion in losses. The figure represents half of all losses from natural catastrophes globally in 2018.

Shen attack: Cyber risk in Asia Pacific ports’ was the work of the University of Cambridge Centre for Risk Studies, on behalf of the Cyber Risk Management (CyRiM) project, in partnership with Lloyd’s. The research looked at the extreme scenario of an attack in which a computer virus infiltrated the systems of 15 major ports across China, Japan, Malaysia, Singapore, and South Korea.

Insurers have long highlighted the threat to the global maritime sector of cyber crime. In the latest scenario, a potential attack via a computer virus carried by ships could scramble the cargo database records at major ports and lead to severe disruption. Although the virus would only directly affect ports in Asia-Pacific, economic losses would be felt around the world due to the global inter-connectivity of the maritime supply chain.

An attack of this scale targeted at ports would cause substantial economic damage to a wide range of businesses through reduced productivity and consumption, incident response costs, and supply chain disruption. Lloyd’s said while the scenario may well sound extreme, it is “plausible”.

“We know that the biggest assets for companies are not physical, they are intangible,” explained Lloyd’s CEO John Neal. “This is confirmed by Lloyd’s latest research, which shows that a single severe cyber attack on Asia’s biggest ports could cause roughly the same economic loss as half of all the natural disasters in the world in 2018.

“With the increasing application of technology and automation, these risks will become even more acute. High levels of under-insurance in Asia, which is also home to nine out of ten of the world’s busiest ports, means that these exposures must be urgently addressed.  

“This new research provides new insights on this fast-moving threat to support the creation of new products, services, and mitigation strategies and, in doing so, make businesses and communities more resilient.”

Despite the high costs to business and international trade, the report showed that the global economy is under-prepared for such an attack with 92% of the total economic costs uninsured, leaving an insurance gap of USD101 billion.

The report estimated that productivity losses would affect each country that has bilateral trade with the attacked ports. Asia would be the worst affected region, set to lose up to USD27 billion in indirect economic losses, followed by USD623 million in Europe and USD266 million in North America.

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