Extreme global cyberattack could cost as much as $121 billion, Lloyd’s says

A major global cyberattack could trigger as much as $121 billion of economic losses, according to Lloyd’s of London’s latest report. (Reuters)
Updated 17 July 2017
0

Extreme global cyberattack could cost as much as $121 billion, Lloyd’s says

DUBAI: A major cyberattack could potentially trigger up to $121 billion (SR453.75 billion) losses in the global economy, comparatively bigger compared with the damage caused by the US catastrophic natural disasters such as hurricanes Katrina and Sandy.
Lloyd’s of London, in a joint research with risk-modeling firm Cyence, studied two scenarios and their potential economic impact: a malicious hack that takes down a cloud service provider, and cyberattacks on computer operating systems run by major businesses around the world.
“For the cloud service disruption scenario, average economic losses range from $4.6 billion from a large event to $53 billion for an extreme event,” the world’s oldest insurer said in its 56-page report.
“Because of the uncertainty around aggregating cyber losses this figure could be as high as $121 billion or as low as $15 billion,” depending on factors such as the different organizations involved and how long the cloud service disruption continues.
Lloyd’s said economic damage from a massive cyberattack would be higher than the $108 billion caused by hurricane Katrina in 2005, and the $70 billion in losses from hurricane Sandy in 2012.
In comparison, the WannaCry ransomware attack in May, which infected more than 230,000 computers in over 150 countries, was estimated to have cost the global economy at least $4 billion.
Inga Beale, chief executive of Lloyd’s, said: “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.”


In 2016, cyber-attacks were estimated to cost businesses as much as $450 billion a year.
Lloyd’s has estimated that the uninsured gap could be as much as $45 billion for the cloud services scenario, meaning that less than a fifth of the economic losses are actually covered by insurance.
Meanwhile, the insurance gap could be as high as $26 billion for the mass vulnerability scenario, meaning that just 7 percent of economic losses are covered.
Cyber cover is a relatively new type of insurance that has emerged in the last few years, of which Lloyds’s accounts for about a quarter of global premiums, and is harder to model and understand than natural catastrophe cover.
Consulting firm PwC estimates that annual gross written premiums are to increase from around $2.5 billion today to about $7.5 billion by the end of the decade.


US probing Huawei for possible Iran sanctions violations

Updated 26 April 2018
0

US probing Huawei for possible Iran sanctions violations

  • Huawei is accused of shipping phone parts to Iran and other countries in breach of US export and sanction laws
  • Huawei and smartphone manufacturer ZTE are also accused of creating technology to spy on the US

NEW YORK/LONDON: US prosecutors in New York have been investigating whether Chinese tech company Huawei violated US sanctions in relation to Iran, according to sources familiar with the situation.
Since at least 2016, US authorities have been probing Huawei’s alleged shipping of US-origin products to Iran and other countries in violation of US export and sanctions laws, two of the sources said.
News of the Justice Department probe follows a series of US actions aimed at stopping or reducing access by Huawei and Chinese smartphone maker ZTE Corp. to the US economy amid allegations the companies could be using their technology to spy on Americans.
The Justice Department probe is being run out of the US attorney’s office in Brooklyn, the sources said. John Marzulli, a spokesman for the prosecutor’s office, would neither confirm nor deny the existence of the investigation. The probe was first reported by the Wall Street Journal on Wednesday.
Huawei, the world’s largest maker of telecommunications network equipment and the No. 3 smartphone supplier, said it complies with “all applicable laws and regulations where it operates, including the applicable export control and sanction laws and regulations of the UN, US and EU.”
The probe of Huawei is similar to one that China’s ZTE Corp. says is now threatening its survival. The United States last week banned American firms from selling parts and software to ZTE for seven years. Washington accused ZTE of violating an agreement on punishing employees after the company illegally shipped US goods to Iran.
ZTE, which sells smartphones in the United States, paid $890 million in fines and penalties, with an additional penalty of $300 million that could be imposed.
US authorities have subpoenaed Huawei seeking information related to possible export and sanctions violations, two sources said. The New York Times last April reported the US Treasury’s Office of Foreign Assets Control subpoena, issued in December 2016, following a Commerce Department subpoena that summer.
Both companies also have been under scrutiny by US lawmakers over cybersecurity concerns.
In Beijing, foreign ministry spokeswoman Hua Chunying said China opposed countries imposing their own laws on others, when asked whether Huawei violated US sanctions related to Iran.
“China’s position opposing nations using their own domestic laws to impose unilateral sanctions is consistent and clear,” she told a daily news briefing.
“We hope that the United States will not take actions that further harm investors’ mood toward the business situation there.”
In February, Senator Richard Burr, the Republican chairman of the US Senate Intelligence Committee, cited concerns about the spread of Chinese technologies in the United States, which he called “counterintelligence and information security risks that come prepackaged with the goods and services of certain overseas vendors.”
Huawei and ZTE have denied these allegations.
Republican Senators Marco Rubio and Tom Cotton have introduced legislation that would block the US government from buying or leasing telecommunications equipment from Huawei or ZTE, citing concern that the Chinese companies would use their access to spy on US officials.
In 2016, the Commerce Department made documents public that showed ZTE’s misconduct and also revealed how a second company, identified only as F7, had successfully evaded US export controls.
In a 2016 letter to the Commerce Department, 10 US lawmakers said F7 was believed to be Huawei, citing media reports.
In April 2017, lawmakers sent another letter to Commerce Secretary Wilbur Ross asking for F7 to be publicly identified and fully investigated.
The US government’s investigation into sanctions violations by ZTE followed reports by Reuters in 2012 that the company had signed contracts to ship millions of dollars’ worth of hardware and software from some of the best known US technology companies to Iran’s largest telecoms carrier.
Reuters also previously reported on suspicious activity related to Huawei. In January 2013, Reuters reported that a Hong Kong-based firm that attempted to sell embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator has much closer ties to China’s Huawei Technologies than was previously known.