Cybercrime Takes a Byte Out of Banks’ Profits

cybercrimePZ(Ping! Zine Web Hosting Magazine) –According to a new report from the Center for Strategic and International Studies, (CSIS), from 2010 through 2013, cyber-crime cost the US economy $100 billion annually. Each year, over 500,000 American jobs were lost and there’s no end in sight. Even these figures might be low.

The figures are higher than reported in the 2013 FBI Internet Crime Center report which listed total US losses at just over $781 million annually. The CSIS report includes costs directly related to the incidents such as monies spent on recovery from cyber-attacks.

Estimating the annual loss from cyber-crime is challenging. Some businesses conceal their losses and others don’t even know what has been taken. To assist in measuring the real cost of cyber-crime, CSIS enlisted the aid of economists, intellectual property experts and security researchers.

Arkady Bukh, a recognized cybercrime attorney, who assisted in the report says, “We believe the CSIS report is the first to use precise economic modeling to find the figures for losses attributed to malicious cyber activity.”

CSIS divided malicious cyber activity into six areas:

1. Loss of intellectual property

2. Cyber-crime

3. Loss of sensitive corporate information

4. Service disruptions

5. The additional cost of securing networks

6. Damage to the reputation of the hacked company

When these six pieces of the puzzle are assembled, the actual cost of cyber-crime probably measures in the hundreds of billions of dollars globally, according to the report.

American financial institutions aren’t alone in watching the bottom-line suffer because of cyber-criminal activity.

Worldwide Cost: $400 Billion

The report indicates the global impact of cyber-crime may total more than the national income of many countries.

The report concludes:

“Cyber-crime is a tax on innovation and slows the pace of global innovation by reducing the rate of return to innovators.”

Two other countries given their own section in the report are Australia and Brazil

Australia Isn’t Immune

The number one economic crime affecting Australian businesses and banks is the computerized theft of assets or funds according to a recent survey by PricewaterhouseCoopers’ (PwC) Global Economic Crime Survey. PwC is the umbrella under which PricewaterhouseCoopers member firms operate and provide services. Together they form the PwC network.

Almost 50 percent of Australian enterprises reported a minimum of one incident during 2013. Sixteen percent of the businesses responding to the survey reported losses exceeding $5 million.

“Cyber-crime is the largest increasing threat to businesses. It comes with low cost and high rewards.” said Malcolm Shackell, PwC partner.

Brazil and World Cup Kept Cyber crooks Busy

While hundreds of thousands of people descended on Brazil for the recently completed 2014 World Cup, cyber crooks were busy at work.

Brazil is the fifth most populous country with 201 million people. The South American country also boasts one of the largest cyber crook communities.

Until 2003, hackers in Brazil were focusing on defacing websites and seldom attacked the users. Over the past 11 years, hackers have become more professional and sophisticated.

Seventy-five percent of Brazilians do the majority of their financial housekeeping online. According to a survey commissioned by the Brazilian Banks Federation, the banking industry lost $1.5 billion to phishing, online theft, online scams and credit card fraud.

During the World Cup, spam email was targeted towards Internet users announcing that the user was the lucky winner of a two ticket lottery for the final match of the World Cup. Brazilians are passionate soccer fans and it was tempting to click on the link. When an unsuspecting user followed the link, they were taken to a website that placed malware onto their computer. The malware used key-logging to capture personal information which would allow access to private banking information.

As 2014 enters its final months, the total amount of losses for the current year are not yet available.  Many observers feel though that the increase in lost profits will continue to trend upward.