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Cybercrime costs world economy about $445b, group projects

WASHINGTON — The likely annual cost of cybercrime and economic espionage to the world economy is more than $445 billion — or almost 1 percent of global income, according to estimates from a Washington think tank.

That figure is lower than the eye-popping $1 trillion figure cited by President Obama, but it nonetheless puts cybercrime in the ranks of drug trafficking in terms of worldwide economic harm.

‘‘This is a global problem and we aren’t doing enough to manage risk,’’ said James Lewis, a senior fellow at the think tank, the Center for Strategic and International Studies, and cowriter of the report.


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.

‘‘Cybercrime costs are big, and they’re growing,’’ said Stewart Baker, a former Department of Homeland Security policy official and a coauthor of the report. ‘‘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.’’

According to the report, the most advanced economies suffered the greatest losses. The United States, Germany, and China together accounted for roughly $200 billion of the total in 2013.

Much of that was due to theft of intellectual property by foreign governments.

Though the report does not break out a figure for that, the US government has publicly named China as the major perpetrator of cyber economic espionage against the United States.

The Chinese government has accused the United States of being one of the biggest perpetrators of cyber-espionage, but the US government has insisted it does not steal intellectual property and hand it to its own industries.

The Washington center and McAfee estimated the United States lost about $100 billion. Germany was second, at $60 billion, and China followed with $45 billion.


Japan, the world’s fourth-largest economy, reported losses of $1 billion, which researchers thought was extremely low and not credible.

The report stated that countries appear to tolerate cybercrime losses as long as they stay at less than 2 percent of national income. If losses rise above 2 percent, ‘‘we assume it would prompt much stronger calls for action as companies and societies find the burden unacceptable,’’ it said.

The report breaks the harm into three categories, without giving figures. The largest, it said, 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 commercial negotiations or business deals.

In 2009, McAfee issued a news release that pegged global economic losses at more than $1 trillion. The figure was cited by the White House and then-National Security Agency director General Keith Alexander. But this year’s report concluded it was unlikely cybercrime cost more than $600 billion.