In 2014, CSIS estimated that cybercrime costs the world’s economy almost $500 billion, or about 0.7% of global income. That is more than the income of all but a handful of countries, making cybercrime a very lucrative occupation. Our current estimate is that cybercrime may now cost the world almost $600 billion, or 0.8% of global GDP. (CSIS/McAfee report Feb 2018)
We live in a modern day and age where crime can take place within the vicinity of your own room. According to McAfee and the Center for Strategic and International Studies, nearly 1 percent of global GDP is lost to cybercrime each year and the cost of cybercrime may be as much as US $600 billion. This estimate is just the beginning as it has been seen to exponentially grow throughout every year. The monetization of stolen data has also seemed to have become easier due to steady improvements in cybercrime black markets and the use of digital currencies.
Cybercrime leads to economic loss in numerous ways. However, there are usually three common types of losses that occur;
Direct losses are financial losses that occur from the cybercrime incident itself. This would include; costs of fixing issues, loss of effective productivity and more. Another common type of loss we see are indirect losses; these include the opportunity cost to the organisation for not performing as effectively, the loss of customers due to the breach or also the damage to their reputation, which could impact profits for up to several years due to being classified as unreliable and non trustworthy. The final common type of loss that occurs would be induced losses; these are visible in the wider economic system where we see an decrease in spending from customers and companies in specific sectors.
Australia is estimated to have an economic loss of $29 billion per year due to cybercrime alone. This makes up a staggering 1.9% of the entire country’s GDP. Cybercrime is also extremely prevalent in Australia impacting most businesses. This was further proven in a report by a cybersecurity company Norton where they found out that over half a million small businesses are impacted some way or another by cyber crime. This number could however be a heavy understatement due to companies being willing to lie to lessen indirect losses such as reputational damage.
Cybercrime has become so popular throughout the years due to the risk being less than other forms of crime with the potential reward being much higher as well. As society continues to become more heavily reliant on technology so does our risk increase in being victims to cyber crime. Most companies and government organizations use online databases to store private information. This information however is also easily accessible with the right skills and can be done from anywhere in the world with a wifi connection and a device.
Cybercrimes risk to pay ratio being much higher than any other forms of crime helps to explain as to why we have been seeing such a heavy increase in cybercrime in the past years. An example of this would include some of the biggest cyberattacks which were against Target where no one has been found guilty of yet so far. This helps to prove that if you have the right skills you can make millions of dollars with a very small amount of risk.
Monetization of stolen data has also gone a long way over the past couple years making it much easier to make profit of cyber crime. Financial theft has become much easier to profit off due to online back and digital currencies being used.
The types of cyber crime having the biggest economic impact include;
- The loss of Intellectual property and business-confidential information.
- Online crime occurring through stolen personal identity
- Financial manipulation, using stolen confidential information and selling to other businesses
- Impacting opportunity cost through disrupting production and services
- Cyber Insurance cost to attempt preventing any cybercrime occurring in the first place
- Stock value due to reputational damage
What do we do now?
While this may all seem as nothing but bad news to come ahead we also do have some good news. AI have been getting smarter than ever as they are being programmed to self learn to better identify anything abnormal reducing the risk of a cyberattack. Improved AI has now been seen to be able to keep up with huge databases similar to those found in large companies. Huge strides in the learning of AI have now taken a separate route of instead looking for specific signatures which have been shown to be faulty and easy to get through in the past, instead they have been taught what’s normal for these security systems and been self taught to pick up on anything that sticks out.
Overall, Cybercrime will continue to grow heavily and its impact on the global economy will continue to rise as we continue to rely on technology more and more. We however have also made huge strides in cybersecurity and our prevention techniques which could also be seen to be heavily influential in the future years to come.
bibliography:
https://www.computerweekly.com/resources/IT-project-management
https://www.somethingdigital.com.au/2019/03/economic-impact-cybercrime/
Year 11 MHS Economics 2020 