The nominal global cost of cybercrime may be reasonably estimated at $445 billion, but the overall cost could be much greater. In the United States, for example, the impact of cybercrime on the people who have the personal information stolen is estimated at $160 billion, but those losses could cost as many as 200,000 American jobs, which would reduce U.S. employment by about a third of one percent. In other words, today’s unemployment rate could be 6.0% instead of 6.3%, a significant difference.
According to a new report from the Center for Strategic and International Studies (CSIS) titled, “Net Losses: Estimating the Global Cost of Cybercrime,” the most important costs of cybercrime are its damage to company performance and to a nation’s economy. The report was sponsored by Intel Corp.’s (NASDAQ: INTC) Security division and its wholly owned subsidiary McAfee.
CSIS has tried to estimate direct and indirect costs from data that varies widely in its accuracy and completeness. The headline numbers in the report are pretty dramatic:
In the US, for example, the government notified 3,000 companies in 2013 that they had been hacked. Two banks in the Persian Gulf lost $45 million in a few hours. A British company reported that it lost $1.3 billion from a single attack. … Simply adding up the losses from the known incidents would total billions of dollars, but this provides an incomplete picture.
No company wants to admit that its security was compromised. Thus, as the report notes, “Few of the biggest cybercriminals have been caught or, in many cases, even identified.”
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Rich nations lose more than poorer ones, primarily because the richer nations keep and report better data and because the richer nations typically experience more intellectual property theft that is more difficult to place a proper value on.
Among developed nations, Germany and the Netherlands experienced the highest average losses as a percentage of gross domestic product (GDP), 1.6% and 1.5%, respectively. The loss to U.S. GDP totaled 0.64%, while China’s loss was 0.63%, and Japan’s was 0.32%.
One interesting detail in the report is that countries apparently tolerate malicious activity like cybercrime and drug trafficking as long as the damage to a nation’s income remains below 2%. CSIS estimates the cost of cybercrime to global GDP as 0.8%, or about $576 billion. Total global GDP is around $72 trillion.
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