Lloyd's Systemic Risk Index
Work published by Lloyd's with a university research center, estimating the potential global economic impact of systemic threats, cyberattacks, conflicts, pandemics, catastrophes, to measure the gap between economic and insured losses.
Lloyd's regulatory scenarios measure what its syndicates would lose. Another series of work, carried out with the University of Cambridge Centre for Risk Studies, asks a broader question: what would systemic events cost the world economy, and what share would be insured? Lloyd's has published detailed scenarios, including a major cyberattack on a payment system, a geopolitical conflict disrupting world trade, a pandemic, a critical infrastructure failure, an extreme natural catastrophe, then an index aggregating the potential impact of some twenty threats on global GDP over five years. The figures run into trillions of dollars, and the insured share appears very small for man-made threats, cyber and geopolitical, which are precisely where insurance is least present. The approach has three uses. It informs public policy on the protection gap for non-natural risks. It helps companies rank the scenarios threatening their continuity. And it positions the insurance market as a partner of states on resilience, by showing what it could cover with suitable public frameworks. For AlgoPolis, this work measures exactly the space between cyber and political risk that insurance has not yet occupied.
Hypothetical case: a central bank uses the payment system cyberattack scenario to estimate, in its stress test, its institutions' losses. It finds that less than a tenth of the scenario's economic losses would be covered by insurance, the rest falling under exclusions or no cover at all.
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