Cybercrime Estimated to Cost More Than $455 Billion Annually

Cybercrime Estimated to Cost More Than $500 Billion Annually

Insurance companies are not going to love the recently released reports which indicates that cybercrime costs the global economy almost $500 billion annually. The report, which was sponsored by Internet security and software firm McAfee, is one of the first reports of its kind that was done to quantify the monetary costs of activities such as cybercrime and cyberespionage. The astounding figure derived from the estimate, issued by the Center for Strategic and International Studies, is much lower than the $1 trillion that was cited by the White House, but still elevates illegal cyber activities to the same levels as drug trafficking and is more than likely to attract criminal elements.

The 24 page report, issued by Intel security, and co-authored by Stewart Baker, who previously worked at the DHS, indicates that the problem is growing, and ironically, the greatest losses are being experienced with the more technologically advanced economies. Approximately $200 billion of the total for 2013 was attributed to Germany, China and the U.S., and much of the responsibility was traceable to activity of foreign governments that appear to be involved in theft of intellectual property.

The report attributes much of the growth in cybercrime which is now estimated to cost almost $500 billion annually, to the fact that the activity is very low risk, with a potential for very high rewards. Social engineering, which hackers use to trick users into giving computer access details, and exploiting vulnerabilities in software codes, are two common techniques that cost nothing and companies often underestimate the costs of damages that can results from the risks, simply because they may be unaware of the risks. The report urges for changes in the situation which appears to offer incentives to hackers as more information is stored and transferred digitally and cautions that growth will continue if some international cooperation is not established.

The comprehensive reports outline the facts that not only are companies vulnerable, but countries are also susceptible to incurring losses that may be much more involved that just monetary. Other likely costs can be a weakening of consumer and business confidence, as well as a perceived weakening of the national security. Some companies now appear to include the associated risks from cybercrime as a part of doing business but it now appears that the losses are becoming unbearable.

According to the report, the losses are cascading, and affecting other areas where theft of intellectual property and financial assets can wreak an unprecedented amount of damage. What can complicate the problem is that cyberattacks are not always perpetrated for monetary gain, but are often used in other ways, such as disruption of services, which further contribute to reducing the value of particular brands.

While no immediate solutions are offered, the report does suggest that losses can be reduced with better technology. The application of internationally agreed upon standards for the enforcement of applicable laws, by internationally recognized organizations such as the World Trade Organization is also encouraged, and all government are urged to pay much closer attention to the costly effects of cybercrime activity which is estimated to cost more than $455 billion.

By Dale Davidson

Sources:

WP

Politico

The Globe and Mail

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