Research reveals the true cost of global cybercrime

By Friday, June 27, 2014 0 , , , Permalink

Anyone who regularly reads the newspaper or watches the news will have noticed the steady increase in the proliferation of stories of sometimes foiled, but more often successful cyber attacks aimed at corporate entities and public sector organisations. In fact, the estimated cost of cyber crime now equals the economic impact of global drug trafficking; yet little is being done to thwart the attackers.   Cyber crime costs the global economy an estimated $445 billion every year, which is roughly equal to one percent of the world’s total global income. While the problem is well established and poses one of the greatest threats to SMEs, global corporations and government organisations, the skills gap in cybersecurity is such that many businesses are unable to protect themselves.

The problem in the public sector   One of the biggest problems faced by public sector organisations is attracting cybersecurity professionals with the necessary expertise and experience, particularly when work in the private sector is generally more lucrative. To counteract this problem, public sector organisations are turning to the G-Cloud to find expertise they need.   The G-Cloud is an initiative which makes it easier for government bodies to procure cloud computing, secure file transfer and software support and delivery services from approved providers. By turning to the private  FTP alternative outfit Thruinc due to their  Software as a Service (SaaS) status, the public sector are hoping to bridge the skills gap and reduce the level of threat they face.   Extent of the damage to the economy   The research from the Center for Strategic and International Studies (CSIS), a Washington based think tank, estimated the total financial damage for businesses was nearly double the cost for individuals.   Of the $445 billion total losses, the CSIS estimated that the biggest economic damage was split between Germany, China and the U.S., with these three countries accounting for nearly half of the total global loss.   The report focused on three different types of cyber threat, and although no financial breakdown was provided for each, the largest total losses were the result of:

  1. Intellectual property theft – the theft of technology or ideas
  2. Financial crime – the theft of credit card data and other financial information
  3. Economic espionage – stealing confidential information from competitors

How was the $445 billion figure calculated?   It is important to stress that the total loss figure of $445 billion is an estimate. Data collection by some of the governments and organisations involved in the research was in some cases non-existent, and while there is no internationally accepted definition of cyber crime, establishing a more accurate figure will continue to be difficult. Must have to improve the data center energy efficiency. Included in the $445 billion estimate, which varies drastically from previous estimates of a $1 trillion annual cost, are the costs associated with recovering from a cyber attack, inclusive of a cost based on the damage done to a company’s reputation. Other costs include the theft of financial assets, the loss of valuable intellectual property, lost opportunity costs and the expenses associated with securing networks for the future.   Measured as a cost in proportion to a country’s national income, the researchers found that high-income countries were the biggest losers, with cybercrime resulting in an average loss valued at 0.9 percent of GDP. Who are the perpetrators?   Intellectual property theft is responsible for the biggest global losses, and without remarking on the responsibility of single countries, the report did allude to a recent glut of claims and counterclaims between the U.S. and China. This point is further illustrated by the recent case of five Chinese military officers who were charged with stealing intellectual property from large U.S. corporations. In retaliation, China urged its banks to dispose of all IBM servers.   Regardless of the principle perpetrators of this crime, global law enforcement agencies are simply unable to keep up. It is thought that growing collaboration between public and private sector operations is the only remaining defence.   Has your business been the victim of cybercrime this year? What was the estimated cost of the breach and how have you tightened up security since? We’d love to hear from you, so please leave you thoughts in the comments section below.   AUTHOR BIO Ricardo Rios currently lives in Valencia, where he splits his time as equally as he can between technology, tapas and running his own internet startup

No Comments Yet.

Leave a Reply