The $400bn economic impact of Cybercrime

Cybercrime is an increasingly serious issue, especially with the rise of vital services and devices being connected to networks. Look no further than Ubisoft’s recently-released console title, Watch_Dogs, to see a portrayal of the devastation which can be caused when such systems are taken advantage of. The UK is taking the issue seriously, with a recent Queen’s speech focusing on implementing life sentences for serious cybercriminals whose actions “result in loss of life, serious illness or injury or serious damage to national security, or a significant risk thereof.”

The internet security experts over at McAfee have highlighted the $400 billion approximate damage to worldwide economies by cybercrime and how stopping it can not only positively improve their outlook, but also improve employment rates. The research itself was conducted by the Center for Strategic and International Studies (CSIS) and shows how it has an impact on approximately 200,000 jobs in the US, and around 150,000 jobs within the EU.

“Cybercrime is a tax on innovation and slows the pace of global innovation by reducing the rate of return to innovators and investors,” said Jim Lewis of CSIS. “For developed countries, cybercrime has serious implications for employment. The effect of cybercrime is to shift employment away from jobs that create the most value. Even small changes in GDP can affect employment.”

The damage to the economy from cybercrime comes primarily from its effect on trade, competitiveness, innovation, and global economic growth. Whilst the internet-based economy generates around $2 trillion – $3 trillion per year overall, it is thought that cybercrime extracts around 15 – 20% of the value created by the growing industry.

Retailers are, perhaps unsurprisingly, the biggest target for hackers. The United States notified 3,000 companies in 2013 that they had been hacked. Back in the UK, retailers are thought to have lost more than $850 million to hackers.

Personal information breaches, which have been seemingly gaining in popularity, could reach costs of about $160 billion. It’s not always the breach itself which is costly, but the post-hack recovery efforts. In Italy hacking losses totalled $875 million, whilst clean-up costs reached $8.5 million. This is a near ten-fold increase over the breach alone.

“It’s clear that there’s a real tangible economic impact associated with stopping cybercrime,” said Scott Montgomery, chief technology officer, public sector at McAfee. “Over the years, cybercrime has become a growth industry, but that can be changed, with greater collaboration between nations, and improved public private partnerships. The technology exists to keep financial information and intellectual property safe, and when we do so, we create opportunities for positive economic growth and job creation worldwide.”

Critics would look at this renewed focus on cybercrime as a direct result of Edward Snowden’s NSA revelations which damaged the reputation of the US government and brought a heightened awareness of user privacy to the wider-public through exposing the security agency’s intrusive mass spying efforts. The idea of lifetime sentences may put-off any future Edward Snowdens…

Similarly, it would put off many security researchers. Those looking for the recent Heartbleed bug, which left a vast number of websites open to attack, could have been charged under British hacking laws, said Trey Ford, global security strategist at penetration testing firm Rapid7. “It’s concerning that the law designed to protect people from cybercrime also penalises activity designed to identify areas of cyber risk,” he said.

What do you think we should do about cybercrime to reduce its economic impact? Let us know in the comments.

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