- The loss of intellectual property
- The loss of sensitive business information, including possible stock market manipulation
- Opportunity costs, including service disruptions and reduced trust for online activities
- The additional cost of securing networks, insurance and recovery from cyber attacks
- Reputational damage to the hacked company
The cost of malicious cyber activity involves more than the loss of financial assets or intellectual property. There are opportunity costs, damage to brand and reputation, consumer losses from fraud, the opportunity costs of service disruptions, “cleaning up” after cyber incidents and the cost of increased spending on cybersecurity. Each of these categories must be approached carefully, but in combination, they help us gauge the cost to societies.“This report also connects malicious cyber activity with job loss,” said James Lewis, director and senior fellow, Technology and Public Policy Program at CSIS, and a co-author of the report. “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. As with other estimates in the report, however, the raw numbers might tell just part of the story. The effect of the net loss of jobs could be small, but if a good portion of these jobs were high-end manufacturing jobs that moved overseas because of intellectual property losses, the effect could be wide ranging.” This is the first report CSIS is undertaking to help better understand the true cost of cybercrime. This report builds a model to scope the direct losses from cybercrime and cyber espionage. A second report, which is underway, will look at the ramifications of cyber security losses on the pace of innovation, the flow of trade and the social costs associated with crime and job loss. Lewis and co-author Stewart Baker of Steptoe & Johnson LLP, and distinguished visiting fellow at CSIS, point out that as thoroughly as they plan to develop their estimates, the dollar amount might not fully reflect all the damaging effects that cyber espionage and cybercrime have on the global economy. Both activities slow the pace of innovation, distort trade and bring the spate of social costs associated with crime and job loss, according to the report. Lewis and Baker say the larger effect may be more important than any actual number, and it will be the focus of the next report.
To view a copy of the full report click here: http://www.mcafee.com/us/resources/reports/rp-economic-impact-cybercrime.pdf.About CSIS CSIS is a bipartisan, nonprofit organization headquartered in Washington, D.C. The Center’s 220 full-time staff and large network of affiliated scholars conduct research and analysis and develop policy initiatives that look to the future and anticipate change. About McAfee McAfee, a wholly owned subsidiary of Intel Corporation (NASDAQ:INTC), empowers businesses, the public sector, and home users to safely experience the benefits of the Internet. The company delivers proactive and proven security solutions and services for systems, networks, and mobile devices around the world. With its Security Connected strategy, innovative approach to hardware-enhanced security, and unique Global Threat Intelligence network, McAfee is relentlessly focused on keeping its customers safe. http://www.mcafee.com