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Cyber crime costs ‘global’ economy $445bn every year Report says industry damages trade, competitiveness and innovation

LONDON, June 9, (Agencies): Cyber crime costs the global economy about $445 billion every year, with the damage to business from the theft of intellectual property exceeding the $160 billion loss to individuals from hacking, according to research published on Monday. The report from the Center for Strategic and International Studies (CSIS) said cyber crime was a growth industry that damaged trade, competitiveness and innovation. A conservative estimate would be $375 billion in losses, while the maximum could be as much as $575 billion, said the study, sponsored by security software company McAfee. “Cyber crime is a tax on innovation and slows the pace of global innovation by reducing the rate of return to innovators and investors,” Jim Lewis of CSIS said in a statement. “For developed countries, cyber crime has serious implications for employment.”

The world’s biggest economies bore the brunt of the losses, the research found, with the toll on the United States, China, Japan and Germany reaching $200 billion a year in total. Losses connected to personal information, such as stolen credit card data, was put at up to $150 billion. About 40 million people in the United States, roughly 15 percent of the population, has had personal information stolen by hackers, it said, while high-profile breaches affected 54 million people in Turkey, 16 million in Germany and more than 20 million in China.

Improved
McAfee, owned by Intel Corp, said improved international collaboration was beginning to show results in reducing cyber crime, for example in the takedown last week of a crime ring that infected hundreds of thousands of computers known by the name of its master software, Gameover Zeus. “The costs of cybercrime is going to continue to go up, barring a miracle,” said Stewart Baker, a former Homeland Security official and co-author of the study. The authors said they believe their economic models produce a good estimate of economic losses but that some things are difficult to measure.

Many of the losses stem from theft of secret business information, or other forms of intellectual property. Lewis said that in some cases, “someone might steal a billion dollars worth of intellectual property but is only able to monetize 10 percent of that.” Yet the report called cybercrime “a tax on innovation” because it reduces the return for new inventions or software, and may discourage some from investing or putting information online or in the cloud. “One estimate puts the total (number of victims) at more than 800 million individual records in 2013,” the report said. “This alone could cost as much as $160 billion per year. Criminals still have difficulty turning stolen data into financial gain, but the constant stream of news contributes to a growing sense that cybercrime is out of control.”

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