The growing menace of cybercrime is impacting the global economy significantly with estimated annual losses of up to $575 billion, a report by cybersecurity solutions firm McAfee revealed.
The report, Net Losses — Estimating the Global Cost of Cybercrime, by Centre for Strategic and International Studies (CSIS) and sponsored by McAfee also said the cost includes the effect on hundreds of millions of people who had their personal information stolen.
“We estimate that likely annual cost to global economy from cybercrime is more than $400 billion. A conservative estimate would be $375 billion in losses, while the maximum could be as much as $575 billion,” the report said.
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Part of the losses from cybercrime are directly connected to ‘recovery costs’ or the digital and electronic clean-up that must occur after an attack has taken place.
Cybercrime damages trade, competitiveness, innovation, and global economic growth. Studies estimate that the Internet economy annually generates between $2 trillion and $3 trillion, a share of the global economy that is expected to grow rapidly, it added.
Based on CSIS estimates, cybercrime extracts between 15 per cent and 20 per cent of the value created by the Internet.
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Explaining the process for reaching the impact figure, the report said, “If we used the loss by high-income countries to extrapolate a global figure, this would give us a global total of $575 billion.
“Another approach would be to take the total amount for all countries where we could find open source data and use it to extrapolate global costs. This would give us a total global cost of around $375 billion.”
The report further said that a third approach would be to aggregate costs as a share of regional incomes to get a global total.
“This would give us an estimate of $445 billion. None of these approaches are satisfactory, but until reporting and data collection improve, they provide a way to estimate the global cost of cybercrime and cyberespionage,” it added.
Cybercrime costs include effect of hundreds of millions of people having their personal information stolen. Incidents in the last year include over 40 million people in the U.S., 54 million in Turkey, 20 million in Korea, 16 million in Germany and more than 20 million in China, the report revealed.
“One estimate puts the total at more than 800 million individual records in 2013. This alone could cost as much as $160 billion per year,” it said.
Cybercrime’s effect on intellectual property (IP) is particularly damaging and countries where IP creation and IP-intensive industries are important for wealth creation lose more in trade, jobs and income from cybercrime than countries depending more on agriculture or industries of low-level manufacturing, the report found.
Accordingly, high-income countries lost more as a percent of GDP than low-income countries.