Cybercrime Costs the Economy Much More Than You Think
Business + Economy

Cybercrime Costs the Economy Much More Than You Think

REUTERS/Kacper Pempel/Files

Cybercrimes cost the global economy some $400 billion each year, a number that’s expected to rise quickly in the coming years, according to a new report from the Center for Strategic and International Studies sponsored by Intel-owned McAfee.

According to the report, the actual losses due to cybercrime could be much higher.

“Cybercrime is a growth industry. The returns are great, and the risks are low. We estimate that the likely annual cost to the global economy from cybercrime is more than $445 billion, including both the gains to criminals and the costs to companies for recovery and defense,” the report found. “A conservative estimate would be $375 billion in losses, while the maximum could be as much as $575 billion.”

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The report comes at a troubling time in the fight against cybercrime. The United States is falling behind the countries fighting to prevent crime online, and the criminals set on defeating them.  U.S. plans to catch up are developing slowly, if at all.

It also paints a picture of an online world where crime is more rampant than most people realize. According to CSIS, more than 800 million online records are illegally accessed each year.

“The constant reports of companies being hacked contribute to a growing sense that cybercrime is out of control,” CSIS found.

However, the organization found that it is not people who are most at risk; it’s companies and national economies.

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“Our estimate used data that takes into account the loss of intellectual property, the theft of financial assets and sensitive business information, opportunity costs, additional costs for securing networks, and the cost of recovering from cyber attacks, including reputational damage to the hacked company. Our sources include published data, interviews, and estimates by government agencies and companies around the world,” the report said.

These crimes included 3,000 companies in the United States reporting they had been hacked last year. Two banks in the Middle East lost some $45 million due to cybercrime; one British firm reported it lost $1.3 billion. CSIS determined that more than 308,000 websites in India were hacked between 2011 and 2013.

If CSIS’ numbers are correct, the losses due to cybercrime are far more than previously estimated. The FBI Internet Crime Complaint Center report claims that $781.8 million is lost due to cybercrime annually.

It’s just not money that is being lost. CSIS estimates that up to 200,000 jobs are lost each year due to cybercrime. The poster boy for getting his pink slip was Target CEO Gregg Steinhafel, who resigned from the company after one of the worst hacking attacks ever on a retailer. Before he left, he committed $100 million on new chip and PIN technology in addition to $61 million on other expenses, according to The New York Times. The study found that losses due to cybercrime stop many companies from hiring as robustly as they would otherwise.

Related: Missing in Action: A Strong U.S. Cyber Offense

CSIS also found that the impact of cybercrime on the Internet economy is much larger than previously believe. The organization estimates that cybercrimes shrink economic growth by 20 percent each year. CSIS said that it expects things to get worse.

“As more business activities move online, as consumers around the world connect to the Internet, and as autonomous devices are connected in the emerging Internet of things, the opportunities for cybercrime will grow,” the report found.

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