Cybercrime is on the rise, but the economic impact is difficult to measure. Like other illegal activities – think of drug smuggling or insider trading – the effects of cybercrime are hardly visible at the economy’s surface. But, two recent studies illustrate that the harmful consequences become readily apparent when you bore down into the recesses of the economy, particularly as relates to job loss.
Cutting Into Revenues
Cybercrime costs the U.S. at least $100 billion in annual losses, according to a new study from the Center for Strategic and International Studies (CSIS) and the computer security firm McAfee. Moreover, more than 500,000 Americans have lost jobs because of malicious cyber activity, the researchers note. In the study, “Estimating the Cost of Cybercrime and Cyber-Espionage,” the authors compared cybercrime to other economic losses regularly endured by business—piracy and pilfering. They found that cybercrime, far from being noteworthy or unusual, is now a recognized part of doing business. In fact, it has become so common that many businesses accept the inevitability of cyberattacks and do not invest in defenses against them.
The repercussions of malicious cyber activity are many, including the loss of intellectual property or sensitive business information, opportunity costs related to service disruptions, and reputation damage to a hacked company. The economic impact of the damage inevitably causes a ripple effect as relates to job losses, the authors note.
“Using figures from the Commerce Department on the ratio of exports to U.S. jobs, we arrived at a high-end estimate of 508,000 U.S. jobs potentially lost from cyber espionage,” said James Lewis, director and senior fellow, Technology and Public Policy Program at CSIS and a co-author of the report. He added, “As with other estimates in the report, however, the raw numbers might tell just part of the story. 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.”
Damaging the Bottom Line
Indifference is not a viable strategy in the face of cybercriminality. The many billions lost because of cybercrime are taken from every individual’s pocket and from every company’s bottom line, according to the Ponemon Institute’s 2012 Cost of Cyber Crime Study: United States. The report found that the average annualized cost of cybercrime for the organizations they analyzed was nearly $9 million per year. Some of the organizations in the Institute’s study suffered annual losses to cybercrime in excess of $40 million.
What is perhaps most troubling in the Ponemon Institute’s report is that the costs associated with cybercrime appear to be increasing. Cybercrime now costs businesses 6 percent more than it did just a year ago. There is a reason for this: cyber attacks are becoming increasingly common. Each company Ponemon studied reported 1.8 successful cyber attacks per week. Companies are reporting 42 percent more attacks per week than they were just last year.
Protection Against Cyberattacks
Although the novelty of cybercrime may have worn off, cybercriminals are an ever-growing threat to businesses or individuals. We must remain vigilant against cybercrime if we are going to contain it. Fortunately, as the authors of the Ponemon study make clear, the costs and associated job losses related to cybercrime “can be substantially reduced by deploying certain security technologies and by advancing good governance practices” throughout an organization. Cybercrime cannot be eliminated, but businesses and individuals have it within their power to halt its growth.
For a thorough analysis of the risk of cyberattack to your business, call (703) 946-4922 or contact us online to schedule a consultation.
