Worldwide Cost of Cybercrime Estimated at $400 Billion

Experts with the Center for Strategic and International Studies, McAfee look at data loss figures and information from economists and intellectual property experts to come up with the figure.

A new analysis out today found that the global impact of cybercrime adds up to amounts larger than those of the national income in many countries, coming to an estimated total of more than $400 billion. Compiled by the Center for Strategic International Studies (CSIS) on behalf of McAfee with the help of a team of economists and intellectual property experts, the report,
Net Losses: Estimating The Global Cost Of Cybercrime
, found that the cost of cybercrime to the US economy alone equaled approximately $100.4 billion, or 0.64% of the US gross domestic product.
These figures are far larger than other estimates, such as the
FBI Internet Crime Complaint Center report
on 2013 incidents, which pegged US losses at $781.8 million. However, the CSIS reports authors wrote that their goal was to move beyond material losses and recovery costs directly related to breach incidents and broaden the scope to economic impact from impeded innovation due to intellectual property theft and other long-term opportunity costs. Cybercrime is a tax on innovation and slows the pace of global innovation by reducing the rate of return to innovators and investors.
Raj Samani, CTO of McAfee EMEA, says the report should start discussions about the real but unreported impact of cybersecurity on economic growth and the real-world consequences for those who traditionally have little or no awareness of cyberissues.
Unfortunately, today when we look at most cybercrime stories, they focus on three things: Who was the victim, what was the malware used, and where did it come from? Samani says. We need to start to change the discussion and figure out what the actual impacts are going to be to the organization. Are they going to have to make layoffs to cover costs? Are the rates of return they expect going to be less because intellectual property is stolen?
For example, the report stated that, in the US, the losses due to cybercrime could cost as many as 200,000 jobs due to the effect that small changes in the GDP can have on employment. Unlike many cost-of-cybercrime reports that show figures solely based on surveys among information security or compliance personnel, this one employed opinions and analysis from intellectual property lawyers and economists.
Valuing IP is one of the hardest problems for estimating the cost of cybercrime, but it is not impossible, the report said. As cybertheft of IP becomes a recognized part of the business landscape, we can expect merger and acquisition specialists to develop better tools for evaluating both the risk of compromise and risk of successful exploitation by competitors.
Though the experts say that the level of cybercrime impact is still below 1% of global GDP -- less than the impact of the drug trade or car crashes worldwide, for instance -- theyve found that it has a markedly more chilling effect on the Internet economy. According to Samani, its impact on growth in that area is approximately 20%.
Ideas are the currency of the information age and those ideas are being sucked out and taken elsewhere. Entrepreneurs and startups are probably the most vulnerable, because they have high-value information and dont have the skills to protect their data, he says. We are talking about the evolution of crime and how it is impacting our childrens ability to get those jobs within that environment.

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Worldwide Cost of Cybercrime Estimated at $400 Billion