Cybercrime can cost economy up to $500B

Summary:Cybercrimes may cost the global economy US$100 billion to US$500 billion, and over 500,000 jobs in the U.S., due to various factors such as reputation damage, consumer losses, and service disruption costs.

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Cybercrimes cost the global economy up to US$500 billion annually, and can potentially result in the loss of 500,000 jobs in the United States alone.

These findings were highlighted in a report released Tuesday by the Center of Strategic and International Studies (CSIS), and commissioned by McAfee. Aimed at measuring real-world losses from cyberattacks, the center enlisted economists, intellectual property experts, and security researchers to develop the report. The researchers also based their estimates on comparisons to real-world analogies such as losses in car crashes, piracy , pilferage and crime, and drugs. 

The generally accepted range for cybercrime losses to the global economy was between US$100 billion and US$500 billion, the report noted. 

The researchers also found it difficult to rely on methods such as surveys cybercrime victims because companies that revealed their cyber losses often were unable to estimate what had been taken, while intellectual property (IP) losses were difficult to quantify.

Malicious cyber activities involve more than the loss of financial assets or intellectual property , as there are costs from  damage to brand and reputation , consumer losses from fraud, opportunity costs of service disruptions and "cleaning up" after breaches, and the cost of increased spending on cybersecurity.

It was also difficult to quantify the cost to national security because the theft of military technology could make nations less secure, by strengthening potential opponents or harming export markets in aerospace, advanced materials, or other high-end products.

"[When it comes to cybercrime], it is often the same actors pursuing a collection plan that targets both military and commercial sources," the report said. "We cannot accurately assess the dollar value of the loss in military technology, but we can say that cyberespionage shifts the terms of engagement in favor of foreign competitors."

The report further estimated a total of 508,000 jobs could potentially be lost in the U.S. alone, due to cyberespionage. The CSIS' commerce department in 2011 estimated US$1 billion in export value was equal to 5,080 jobs, which meant the high end estimate of US$100 billion in losses would translate to 508,000 lost jobs, the report explained.

"If a good portion of these jobs were high-end manufacturing jobs that moved overseas because of intellectual property losses, the effects could be more wide ranging," James Lewis, director and senior fellow of the technology and public policy program at CSIS, and a co-author of the report, said in a statement.

Topics: Security, Government, Malware

About

Elly grew up on the adrenaline of crime fiction and it spurred her interest in cybercrime, privacy and the terror on the dark side of IT. At ZDNet Asia, she has made it her mission to warn readers of upcoming security threats, while also covering other tech issues.

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