Lloyd’s has released a paper outlining the threats posed by generative artificial intelligence (AI) and implications for the insurance industry.

Rapid advances in the technology and applications of large language models have so far had minimal material impacts on the cyber threat landscape but this is about to change.

As generative AI becomes more accessible, the paper says it will “pose an increasing risk, creating potential opportunities for threat actors to use the tools in malicious ways, leading to harm or damage for people, property, and tangible and intangible assets.

“The impact of generative AI on the cyber landscape is likely to increase the frequency, severity, and diversity of smaller scale cyber attacks, which will grow over the next 12-24 months, followed by a plateauing as security and defensive technologies catch up to counterbalance their impacts.”

The paper says generative AI is reshaping the cyber risk landscape, describing it as having the “potential” to act as an augmentation of threat actor capability.

The technology is capable of enhancing the effectiveness of skilled actors, improving the attractiveness of the unit cost economics, and lowering the barrier to entry to carry out cyber attacks.

“It is likely to mean that there will be more vulnerabilities available for threat actors to exploit, and that it will be easier for them to scout targets, construct campaigns, finetune elements of the attacks, obscure their methods and fingerprint, exfiltrate funds or data, and avoid attributability,” the paper says.

“All these factors point to an increase in lower-level cyber losses, mitigated only by the degree to which the security industry can act as a counterbalance.”

Click here for the report.