Business Blackout (4.10 MB, pdf)
The research estimates the economic and insurance impacts of a severe, yet plausible, cyber attack against the US power grid. While the analysis focuses on the USA, we believe that it provides a framework for thinking about severe cyber attacks anywhere in the world. The key findings of the report are:
- The attackers are able to inflict physical damage on 50 generators which supply power to the electrical grid in the Northeastern USA, including New York City and Washington DC.
- While the attack is relatively limited in scope (nearly 700 generators supply electricity across the region) it triggers a wider blackout which leaves 93 million people without power.
- The total impact to the US economy is estimated at $243bn, rising to more than $1trn in the most extreme version of the scenario.
- Insurance claims arise in over 30 lines of insurance. The total insured losses are estimated at $21.4bn, rising to $71.1bn in the most extreme version of the scenario.
- A key requirement for an insurance response to cyber risks will be to enhance the quality of data available and to continue the development of probabilistic modelling.
- The sharing of cyber attack data is a complex issue, but it could be an important element for enabling the insurance solutions required for this key emerging risk.