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Cyber crimes could cost billions annually

New report estimates cyber crimes could cost the US up to $100B and more than 500,000 jobs every year

Cyber crime could cost the US economy as much as $100 billion and 508,000 US jobs annually, according to a new report from McAfee and the Center for Strategic and International Studies (CSIS).

Estimating the annual loss from malicious cyber activities is a difficult task as some companies could conceal their losses, while others don’t even know what’s been taken, states a CSIS release. To help measure the real loss from cyber attacks, CSIS enlisted economists, intellectual property experts and security researchers to develop the report, “Estimating the Cost of Cybercrime and Cyber Espionage.”

Read: More than half of US Fortune 500 companies would face “serious harm” from a cyber attack

“We believe the CSIS report is the first to use actual economic modeling to build out the figures for the losses attributable to malicious cyber activity,” said Mike Fey, executive vice president and chief technology officer at McAfee, in a press release. “Other estimates have been bandied about for years, but no one has put any rigor behind the effort. As policymakers, business leaders and others struggle to get their arms around why cyber security matters, they need solid information on which to base their actions.”

CSIS classified malicious cyber activity into six areas: the loss of intellectual property; cybercrime; 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.

Read: The B2B of IT

“Put these together and the cost of cybercrime and cyber espionage to the global economy is probably measured in the hundreds of billions of dollars,” states the report. “To put this in perspective, the World Bank says that global GDP was about $70 trillion in 2011. A $400 billion loss—the high end of the range of probable costs—would be a fraction of a percent of global income.

“This seemingly trivial amount begs several important questions about the full benefit to the acquirers and the damage to the victims from the cumulative effect of continuous losses in cyberspace,” states the report.

The report states that malicious cyber activity slows the pace of innovation, distorts trade and brings a spate of social costs associated with crime and job loss. A second CSIS report will look at the broader ramifications of cyber security losses.

To view a copy of the full report click here.