Study: Cyber-Crime On Par With Cost Of Narcotics, Counterfeiting

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A McAfee-sponsored study has found that cyber-crime cost the global economy up to $575bn last year, with the capabilities of some crime groups matching those of a nation-state

A new study has estimated that cyber-crime costs as much as 0.5 percent of the global gross domestic product (GDP), with individuals, companies and governments losing between $375 billion (£223bn) and $575 billion (£342bn) in 2013.

The study, sponsored by McAfee and published on Monday by the Centre for Strategic and International Studies (CSIS), looks at stolen intellectual property, financial crimes and the loss of confidential business information.

Job losses

The study is based on data from reported cyber-crimes and losses in more than 50 countries, analysed using three different methods. Worldwide losses due to online crime had a median value of $445bn for 2013, according to the study, on par with the cost to the global economy of counterfeiting or the trade in illegal drugs.

surveillance cyber crimeSuch damage contributed to more than 200,000 job losses in the US and 150,000 in Europe last year, according to the study.

“Intellectual property is a major source of competitive advantage for companies and for countries,” CSIS stated in the study. “The loss of IP means fewer jobs and fewer high-paying jobs in victim countries.”

Wealthier countries tended to have larger losses as a percentage of GDP, averaging at 0.9 percent, compared to 0.2 percent for poorer countries, the study found.

In absolute terms, China, Germany and the US had the highest losses, with Nigeria, Italy and Japan having the lowest.

Cyber-crime ‘arms race’

The study found that a growing cyber-crime “arms race” has led to the development of 20 to 30 cybercrime groups in the former Soviet Union that have cyber-capabilities on par with those of a nation-state.

“These groups have repeatedly shown they can overcome almost any cyberdefence,” the study reported. “Financial crime in cyberspace now occurs at industrial scale.”

Stock market manipulation is a growing area for cyber-criminals, who use data stolen from companies’ systems to profit from share trading, according to the study.

Such crimes are “exceptionally difficult to detect”, according to the study.

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