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Cyber crime's cost pegged at $445 billion worldwide

A Washington think tank has estimated the likely annual cost of cyber crime and economic espionage to the world economy at more than $445 billion — or almost 1 percent of global income.

The estimate by the Center for Strategic and International Studies is lower than the $1 trillion figure cited by President Barack Obama, but it still puts cyber crime in the ranks of drug trafficking in terms of economic harm.

"This is a global problem, and we aren't doing enough to manage risk," said James Lewis, a senior fellow at the center and a co-author of the report, released Monday.

The report, funded by the security firm McAfee, which is part of Intel Security, represents one of the first efforts to analyze the costs, drawing on a variety of data.

"The more that governments understand what those costs are, the more likely they are to bring their laws and policies into line with preventing those sorts of losses," said Stewart Baker, a former Department of Homeland Security policy official and a co-author of the report.

The report says the most advanced economies suffer the greatest losses. The United States, Germany and China together accounted for about $200 billion of the total in 2013. Much of that was due to theft of intellectual property by foreign governments.

The report does not break out a figure for that or name countries behind such thefts. The U.S. government has named China as the major perpetrator of cyber economic espionage against the United States.

McAfee and the Center for Strategic and International Studies estimated that the United States lost about $100 billion. Germany was second with $60 billion, and China followed with $45 billion.

In the United States and China, the losses represented about 0.6 percent of their economies, while Germany's loss was 1.6 percent.

The report breaks the harm into three categories, without giving figures. The largest is intellectual property theft. The second is financial crime, or the theft of credit card and other types of data largely by criminal rings. The third is theft of confidential business information to gain an advantage in deals.

Cyber crime's cost pegged at $445 billion worldwide 06/09/14 [Last modified: Monday, June 9, 2014 9:47pm]
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