Cyber attacks targeting critical infrastructure assets such as national energy grids are on the rise, a new Lloyd’s report produced with the Cambridge Centre for Risk Studies says.

The number of such attacks increased to nearly 400 in 2020 from less than 10 in 2013, according to the report.

“This is a growing threat,” the report says. “As well as the increase in frequency, the complexity of attacks is evolving, from simply targeting short-term disruption to compromising assets or processes with the intent to cause physical harm or loss of life.”

The report, Shifting powers: physical cyber risk in a changing geopolitical landscape, says the trends have become more apparent during the Covid-19 pandemic and more recently from the still-evolving Russian invasion of Ukraine.

The insurance industry and the world have yet to experience a “truly catastrophic” cyber physical attack but that does not mean it will never happen, the report says.

“Cyber has a short history, and so far there have been no stand-out loss events stemming from a single trigger,” the report says. “The threat is also fast-evolving, which means that historic trends are sometimes not always useful for predicting the pattern of future shocks.”

The report says the potential impacts of a “truly catastrophic” physical cyber attack – which would trigger claims across multiple policies or lines of business – could be significant, crippling entire systems and societies.

It warns the insurance industry, governments and other stakeholders need to plan for the realities of a cyber catastrophe.

“This is not just because of the impact on human lives, but also to ensure capital is in place to manage and fund the rebuilding of the infrastructure, companies and national organisations that could be damaged.”

The report says while an imminent mass-scale cyber-physical attack may be unlikely, the threat is evolving very rapidly.

“Precedents strongly point to continual targeting of strategic industrial sectors. Risk managers and insurers should review the ways in which industries and multinationals have been susceptible to strategic disruption or other forms of political reprisal in the past.”

Click here to access the report.