Geopolitical volatility driving up cyber physical threat

Critical national infrastructure and privately-owned assets face mounting cyber threats against the backdrop of an increasingly tense geopolitical landscape.

Effective risk management and insurance are vital for asset owners in building resilience to virtual attacks that trigger physical disruption, which a new Lloyd’s report shows is becoming increasingly commonplace.

The rise of state-sponsored cyber attacks is a significant focus for businesses and governments, driven in part by Russia’s invasion of Ukraine. The origin of cyber attacks are difficult to trace and often anonymous – adding to the complexities for insureds and insurers.

Produced in partnership with the Cambridge Centre for Risk Studies, the Lloyd’s report examines three hypothetical scenarios involving politically-motivated cyber attacks intended to cause damage to physical environments.

The authors of Physical Cyber Risk in a Changing Geopolitical Landscape assert that, although the existing market for cyber physical cover is small and specialised, there are opportunities for the insurance industry to develop affirmative physical damage offerings and business interruption and contingent business interruption products.

Patrick Tiernan, chief of markets at Lloyd’s, commented: “The Lloyd’s market has a proud history of innovation, including underwriting the first cyber policy. Our market now writes around one fifth of all global cyber premium. With that position comes a responsibility to look beyond the immediate market dynamics and provide effective leadership as the market matures.

“We understand the complex and potentially systemic risks in the cyber class and are committed to supporting a resilient and sustainable cyber market in the years ahead. This report is another step in working with our stakeholders to facilitate the solutions that can help protect customers from a risk that has reached the highest level of priority in boardrooms around the world.”

Property damage as a consequence of cyber attack is often excluded from standard property policies, but as the industrial internet of things expands, so, too, do the risks. In this podcast, CIR's editor, Deborah Ritchie, speaks to Georgie Furness-Smith, senior underwriter, cyber; and Sharif Gardner, head of training and advisory services, Axis Insurance about the evolving threat landscape.

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Deborah Ritchie speaks to Chief Inspector Tracy Mortimer of the Specialist Operations Planning Unit in Greater Manchester Police's Civil Contingencies and Resilience Unit; Inspector Darren Spurgeon, AtHoc lead at Greater Manchester Police; and Chris Ullah, Solutions Expert at BlackBerry AtHoc, and himself a former Police Superintendent. For more information click here

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CIR's editor, Deborah Ritchie speaks with Giorgio Baldasarri, global head of the Analytical Innovation & Development Group at S&P Global Market Intelligence; and James McMahon, CEO of The Climate Service, a S&P Global company. April 2023