Cyber Crime Costs Global Economy $500bn Annually

Cyber crime and espionage costs the global economy $500bn annually and are a main contributor for dragging down economic growth across the world.

According to a study by security firm McAfee and the Centre for Strategic and International Studies (CSIC), the US, the world's largest economy, loses about $100bn (€76bn, £65bn) from cyber crimes and espionage, including loss of key business data and intellectual property.

In the US, the malicious activities are also resulting in the loss of as many as 500,000 jobs in connection with the loss of intellectual property and sensitive business information.

"Extracting value from the computers of unsuspecting companies and government agencies is a big business," said the 20-page report.

"These losses could just be the cost of doing business or they could be a major new risk for companies and nations as these illicit acquisitions damage global economic competitiveness and undermine technological advantage."

The report adds that costs are expected to rise further as the size and intensity of hacking continue to grow.

Revised US Estimates

The study revises Intel-owned McAfee's own previous estimate of $1tn in cyber crime costs for the US.

The previous estimate has been cited widely by analysts and officials to emphasise the negative impact of malicious cyber activities have on already sluggish global growth.

In 2009, President Barack Obama cited the amount in a cyber security speech.

That figure also contrasts sharply with an oft-quoted statement by Gen Keith Alexander, National Security Agency director and head of US Cyber Command, who last year said the losses represent "the greatest transfer of wealth in human history".

The latest estimate is supported by some US intelligence analysts, according to the Wall Street Journal which cited a former US official familiar with intelligence discussions. The new figures are based on models, such as those used to estimate the economic effects of car crashes and ocean piracy, instead of surveys of companies.

"It will always be a range," said James Lewis, a CSIS scholar on cyber security and co-author of the report.

"The data is either sparse or distorted," he noted, admitting possible flaws in the study.

Nevertheless, he noted that the report offers a better comparison of the cost of cybercrime to other risks such as drug trafficking or other types of theft.

"We believe the CSIS report is the first to use actual economic modelling to build out the figures for the losses attributable to malicious cyber activity," said Mike Fey, chief technology officer at McAfee.

Cyber Crime on the Rise

While the vast majority of businesses and other important organisations across the globe took their operations online, the number of crimes related to IT systems also increased.

The International Organisation of Securities Commissions' (IOSCO) research department and the World Federation of Exchanges Office (WFEF) found in a study that 53% of surveyed exchanges experienced a cyber attack last year, where the most common form of attack was Distributed-Denial-of-Service (DDoS).

Major stock exchanges, including the New York Stock Exchange, Nasdaq and NYSE Euronext were reportedly targeted by hackers.

In recent years, major US companies including Google, Facebook, Apple and the New York Times revealed that they have been victims of hacking.