The $120bn threat: Cyber-attack could cost the global economy as much as Hurricane Katrina

A serious cyber attack could cost the global as much as natural disasters like Hurricanes Sandy and Katrina, according to Lloyd's of London.

In a report published on Monday (17 July), the world's oldest insurance market warned that the most likely scenario would see a cyber attack launched on a cloud service provider, which would result in losses of approximately $53bn (£40.5bn).

However, Lloyd's highlighted the figure was an average estimate and that because of the difficulties in accurately estimating cyber losses, the figure could be as low as $15bn or as high as $121bn.

The former figure is higher than the $108bn damage inflicted by Hurricane Katrina in 2005, which included $80bn worth of insured losses. Seven years later, the cost of Hurricane Sandy was estimated to have been between $50bn and $70bn.

"This report gives a real sense of the scale of damage a cyber-attack could cause the global economy," said Inga Beale, chief executive of Lloyd's.

"Just like some of the worst natural catastrophes, cyber events can cause a severe impact on businesses and economies, trigger multiple claims and dramatically increase insurers' claims costs.

"Underwriters need to consider cyber cover in this way and ensure that premium calculations keep pace with the cyber-threat reality."

Coordinated attacks on computer systems ran by large businesses around the world represent the second-most likely scenario and could lead to losses of $28.7bn.

However, the majority of losses in both cases are unlikely to be insured, which would leave governments and businesses open to hemorrhaging losses. Lloyd's estimated the uninsured gap could be as high as $45bn in the event of an attack of a cloud services provider and as as high as $26bn should the latter example materialise.

The report comes two months after a worldwide cyber attack hit NHS hospitals and GP practices across England and Scotland.

The UK's health service was thrust into chaos after a strain of ransomware dubbed "WannaCry" spread through its systems, locking down computers and demanding cryptocurrency. This was part of a global breakout that eventually spread to more than 150 countries.

The ransomware was super-powered by a number of computer exploits developed by the US National Security Agency (NSA), leaked online in April by a mysterious hacking group known as The Shadow Brokers. Later, analysts claimed the malware's code indicated links to North Korea.

The outbreak spread quickly by targeting unpatched Windows systems.

Trevor Maynard, Lloyd's head of innovation and co-author of the report, warned May's attack proved the threat to cyber security was very real.

"From year to year, risk varies relatively little but climate change in the end will be far larger as a risk," he said.

"It affects the global economic structure, food, water. [It's like] trying to turn a supertanker around – we can't start in 30 years when things are going bad, we have to start now."