Imagine this: Sophisticated hackers plant malware to shut down parts of the U.S. power grid in the northeastern United States, plunging 93 million people into darkness. Seem farfetched? This scenario, while unlikely, is technologically possible.

Understanding the impact of severe events is one of the key requirements for insurers to develop Cyber risk coverage. As such, what are the impacts as outlined by the above hypothetical model? According to Business Blackout, a joint report by Lloyd’s and the University of Cambridge’s Centre for Risk Studies, the scenario could cost the U.S. economy more than $1 trillion.

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