European businesses underestimate 'slow-burn' effects of cyber attacks, say Lloyd's of London

Businesses need to prepare more fully for a loss of customers, a fall in share price and other potential consequences

'There is a lack of understanding as to what cyber attacks can mean,' Lloyd's chief executive Inga Beale told Reuters (Reuters)

Businesses in Europe underestimate the “slow-burn” effects of cyber attacks and need to prepare more fully for a loss of customers, a fall in share price and other potential consequences, Lloyd's of London said in a report on Wednesday.

The risk of cyber attacks is rising and slow-burn effects are additional to short-term costs such as notifying customers, paying ransoms or public relations expenses, the report, written with consultants KPMG and law firm DAC Beachcroft, said.

“There is a lack of understanding as to what cyber attacks can mean,” Lloyd's chief executive Inga Beale told Reuters.

“Businesses need to prepare for the full costs of a cyber attack.”

Lloyd's has a 20-25 per cent share of the $2.5bn (£1.95bn) cyber insurance market, Ms Beale said.

British broadband company TalkTalk suffered a data breach in 2015 which caused a one-off cost of $52mn, but also led to slow-burn costs of more than $44m, including an estimate for lost revenue, the report said.

Ransomware attacks are on the increase, the report said, such as the Wannacry attack which infected 300,000 computers in more than 150 countries last month.

A major ransomware attack this week hit computers at Russia's biggest oil company, the country's banks, Ukraine's international airport as well as global shipping firm AP Moller-Maersk.

Cyber crimes where attackers masquerade as chief executives to email finance staff and trigger fraudulent payments are also rising and causing “significant financial losses”, the report added.

Reuters