Lloyd’s (in conjunction with the University of Cambridge) has released the City Risk Index, a comprehensive study of the 18 key risks faced by 301 of the world’s largest cities from 2015 to 2025.
Cyber risk was ranked the 7th biggest risk across all the cities, ranking behind market crash, human pandemic, wind storm, earthquake, flood and oil price shock. However, cyber risk is identified as the 2nd biggest risk faced across Australasia.
The study uses “GDP@Risk” (a measure of the potential impact on economic output) as a metric to set out the potential losses attributable to the risks. Globally, an estimated $US4.6 trillion in GDP@Risk is exposed to the 18 key risks, $US294 billion of which is exposed to cyber risk.
As expected, American and European cities dominate the top 20 list of cities most exposed to cyber risk, with New York and Los Angeles listed as 1 and 2 respectively.
However, Sydney and Melbourne feature as the 12th and 15th most cyber-exposed cities in the world with exposures of $US4.86 billion and $US3.87 billion of GDP@Risk respectively. Cyber risk is also Sydney’s and Melbourne’s second greatest risk overall (after the risk of a ‘market crash’).
Across Australia, there is a combined exposure of $US14.1 billion GDP@Risk to Cyber Risk.
In an Executive Summary to the Index, Lloyd’s CEO Inga Beale recommends a two track approach to tackling all risks: better identifying and quantifying the risks, and enhancing resilience.
In this respect, the Australian Cyber Security Centre and ASIC’s recent 2015-2016 Corporate Plan show an increasing awareness of the seriousness of cyber risk in Australia. Australia is moving to improve its cyber resilience, including by the anticipated introduction of mandatory data breach notification laws. See Insurance Flashlight posts on those topics here, here and here.