Don't be fooled by study's dramatically lower cyberthreat estimate, experts say

A recent study that greatly reduces an often-cited estimate on the economic impact of cybercrime and cyberespionage should not give companies a reason to spend less on security, experts say.

The McAfee-sponsored report, released on Monday, found that Internet-based crime and spying cost the U.S. economy as much as $100 billion a year, not the $1 trillion originally estimated by the Intel-owned security vendor. The study was done in conjunction with the nonprofit Center for Strategic and International Studies.

The analytical approach used in the latest findings is closer to reality than the previous methodology based on notoriously imprecise corporate surveys. McAfee acknowledges that the earlier figure, included in President Barack Obama's 2009 cybersecurity speech, was inflated.

"There were some methodological challenges with the [original] study and we felt that the right thing to do was to work with the top think tank in the world focused on security and come up with a better study to set the record straight," Tom Gann, vice president of government relations at McAfee, said on Tuesday.

But whether the macroeconomic figure is $100 billion, $1 trillion or somewhere in between, it should not affect how much a company decides to spend on security, experts say.

Avivah Litan, an analyst with Gartner, compared security spending to preparing for a natural disaster, such as Hurricane Sandy that devastated parts of New Jersey and New York in 2012. Such events may happen once in decades, but if you are not prepared, the losses could be staggering.

"When you build security defenses, you don't know if you're going to get attacked, and if you're going to wait until you get attacked, then it's too late," Litan said.

[Also see: Markets at risk from cyberattacks on exchanges, report says]

Stewart Baker, a former assistant secretary for policy at the Department of Homeland Security (DHS) and a co-author of the study, said companies should not take comfort in the fact that $100 billion is less than 1% of the U.S. gross domestic product (GDP).

"I'm skeptical about treating [cyberintrusions] as a manageable cost unless a company has done an informed analysis of who wants their data and what the long term consequences of letting them have it might be," Baker said. "If you're not of interest to foreign governments or state-owned competitors, or a target for criminals seeking money, then I think you probably can treat it as a tolerated cost.Ã'Â But that's a big if."

In deciding how much to spend on cybersecurity, a company should first determine how likely it is to be a target of cybercriminals, hacktivists or cyberspies, Baker said. A company should then figure out the worst that can happen if a network is compromised by one of these adversaries.

The study's macroeconomic numbers are most valuable as a description of the broad cybersecurity challenges companies face, which should be helpful in conversations between chief security officers and chief executives, Gann said.

"It creates a more thoughtful kind of dialogue," he said.

In estimating losses, the study considered the cost of cybercrime and service disruptions, the theft of IP and sensitive business information and the damage to reputation. In addition, the report considered the cost of securing networks, insurance and recovery from cyberattacks.

On a worldwide basis, the report found that cybercrime and espionage cost as much 1.4% of the global economy, or between $300 billion and $1 trillion a year.

Read more about malware/cybercrime in CSOonline's Malware/Cybercrime section.

Join the CSO newsletter!

Error: Please check your email address.

Tags Avivaapplicationslegalsoftwareinteldata protectioncybercrimecyberattacksGartnermcafeeData Protection | Malwarecyberthreats

More about GartnerIntelMcAfee Australia

Show Comments

Featured Whitepapers

Editor's Recommendations

Solution Centres

Stories by Antone Gonsalves

Latest Videos

  • 150x50

    CSO Webinar: Will your data protection strategy be enough when disaster strikes?

    Speakers: - Paul O’Connor, Engagement leader - Performance Audit Group, Victorian Auditor-General’s Office (VAGO) - Nigel Phair, Managing Director, Centre for Internet Safety - Joshua Stenhouse, Technical Evangelist, Zerto - Anthony Caruana, CSO MC & Moderator

    Play Video

  • 150x50

    CSO Webinar: The Human Factor - Your people are your biggest security weakness

    ​Speakers: David Lacey, Researcher and former CISO Royal Mail David Turner - Global Risk Management Expert Mark Guntrip - Group Manager, Email Protection, Proofpoint

    Play Video

  • 150x50

    CSO Webinar: Current ransomware defences are failing – but machine learning can drive a more proactive solution

    Speakers • Ty Miller, Director, Threat Intelligence • Mark Gregory, Leader, Network Engineering Research Group, RMIT • Jeff Lanza, Retired FBI Agent (USA) • Andy Solterbeck, VP Asia Pacific, Cylance • David Braue, CSO MC/Moderator What to expect: ​Hear from industry experts on the local and global ransomware threat landscape. Explore a new approach to dealing with ransomware using machine-learning techniques and by thinking about the problem in a fundamentally different way. Apply techniques for gathering insight into ransomware behaviour and find out what elements must go into a truly effective ransomware defence. Get a first-hand look at how ransomware actually works in practice, and how machine-learning techniques can pick up on its activities long before your employees do.

    Play Video

  • 150x50

    CSO Webinar: Get real about metadata to avoid a false sense of security

    Speakers: • Anthony Caruana – CSO MC and moderator • Ian Farquhar, Worldwide Virtual Security Team Lead, Gigamon • John Lindsay, Former CTO, iiNet • Skeeve Stevens, Futurist, Future Sumo • David Vaile - Vice chair of APF, Co-Convenor of the Cyberspace Law And Policy Community, UNSW Law Faculty This webinar covers: - A 101 on metadata - what it is and how to use it - Insight into a typical attack, what happens and what we would find when looking into the metadata - How to collect metadata, use this to detect attacks and get greater insight into how you can use this to protect your organisation - Learn how much raw data and metadata to retain and how long for - Get a reality check on how you're using your metadata and if this is enough to secure your organisation

    Play Video

  • 150x50

    CSO Webinar: How banking trojans work and how you can stop them

    CSO Webinar: How banking trojans work and how you can stop them Featuring: • John Baird, Director of Global Technology Production, Deutsche Bank • Samantha Macleod, GM Cyber Security, ME Bank • Sherrod DeGrippo, Director of Emerging Threats, Proofpoint (USA)

    Play Video

More videos

Blog Posts

Market Place