CSIS Study Pegs Median Global Cyber-Crime Cost at $445 Billion

 
 
By Robert Lemos  |  Posted 2014-06-09 Email Print this article Print
 
 
 
 
 
 
 
Cyber-Crime Study

Global cyber-crime costs as much as 0.5 percent of global GDP, according to a McAfee-sponsored study by the Center for Strategic and International Studies.

Global cyber-crime likely cost individuals, companies and governments between $375 billion and $575 billion in 2013, according to a report published on June 9 by the Center for Strategic and International Studies.

The report, sponsored by information security firm McAfee, a subsidiary of Intel--attempts to calculate the losses to the global economy due to stolen intellectual property, financial crimes and the loss of confidential business information.

Using three different analysis methods, and data from reported cyber-crimes and losses in more than 50 countries, CSIS calculated that the costs due to online crime ranged from $375 billion to $575 billion, with a median value of $445 billion.

Rather than focus on the exact figure for damages, however, security professionals and policy experts should allows the number to spur a discussion of the impact of cyber-crime, Raj Samani, chief technology officer for McAfee's Europe, Middle East and Africa division, told eWEEK.

"Everyone will have their own opinion of the $445-billion number," he said. "But we need to focus on other metrics, such as economic growth and job losses."

Cyber-crime could factor into the loss of more than 200,000 jobs in the United States and 150,000 jobs in the European Union, according to the CSIS analysis. While the analyst group underscored that inconsistently collected data on cyber-crime and the ill-understood connection between financial and IP damages and job losses made such estimates difficult, cyber-crime does have a direct impact on employment.

"IP is a major source of competitive advantage for companies and for countries," the report stated. "The loss of IP means fewer jobs and fewer high-paying jobs in victim countries."

The analysis revealed a number of interesting trends. While the average global loss due to cyber-crime was 0.5 percent of gross domestic product (GDP), richer countries tended to have larger losses as a percentage of GDP, according to CSIS. China, Germany and the United States had the highest losses, while Nigeria, Italy and Japan had the lowest losses. In terms of GDP, richer nations had average losses of 0.9 percent, while poorer nations had cyber-crime costs of 0.2 percent.

The high cost of cyber-crime could be seen as an argument for companies and individuals to buy more security products, but economic analysis has found that, on a global scale, paying for security products tends to have a lower return on investment than funding more extensive law enforcement efforts and better policies.

Yet it is not an either-or proposition, said McAfee's Samani.

"They are not mutually exclusive," he said. "Just because the FBI, EUROPOL and the UK NCA [National Crime Agency] team up on a project to take down the Zeus botnet does not actually mean that, OK, I can switch off all my security and my antivirus."

The CSIS analysis concluded that either cyber-crime losses will stay flat or increase for richer nations. There is unlikely to be any scenario where cyber-crime costs decline, the report stated.

 
 
 
 
 
 
 
 
 
 
 
 
 

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