Financial Impacts of Cybercrime
June 20, 2018
Cybercrime has become the new normal and is greatly affecting the financial industry. Every day, crimes are committed against leading companies which were thought to have top security protocols in place. Cybercrime continues to cause serious financial impact to economies -- to the tune of close to $600 billion. According to McAfee and the Center for Strategic and International Studies, when it comes to cybercrime, Europe's economy is truly suffering, as .84% of the region's GDP is affected.
Why is this happening?
The influx of cybercrime on the economy can be attributed to many factors, including easy accessibility of tools used to infiltrate financial systems, new technologies adapted by these criminals, the expansion of new cybercrime centers, and the level of intelligence and sophisticated techniques used by cybercriminals.
McAfee's Chief Scientist, Raj Samani, believes that cybercrime is underreported by at least 95%, which skews the $600 billion assessment and could mean costs are much higher. Financial institutions and systems need to protect themselves at all costs. With intellectual property (IP) being so valuable, it is costly to do business in this digital age while maintaining high privacy levels.
Cybercrime is the evolution of traditional crime in a more sophisticated environment, but one that has greater business risk. Cybercrime has a direct and significant impact on jobs, innovation, economic growth, and investment. Additionally, IP theft makes up at least 25% of cybercrime costs, and has an especially high threat to military technology.
Two areas of cybercrime that are difficult to measure are IP theft and loss of opportunity. These two categories severely impact small and medium-sized businesses, especially in industries that have become more sophisticated. It is easy to access tools and other services that cause financial ruin, such as customized malware, botnet rentals, and exploit kits.
The financial markets continue to suffer, as the level of cybercrime escalates. Cybercriminals have become so sophisticated that they now outsource work to skilled contractors, specifically ransomware-as-a-service.
The world of cryptocurrency
The rapid monetization of cryptocurrency adds to these threats, with over 6,000 criminal marketplaces existing and ransomware-as-a-service becoming more common. Cryptocurrency hacking is the one of the biggest risks for financial institutions, along with fraud.
Although regulators are fighting cybercrime by offering improved standards in threat data and requirements that improve security, banks are still the main targets of cybercriminals. Nation states have major problems in this area, with Russia, North Korea, and Iran being the highest and most active in the hacking of financial institutions and cyber espionage.
What types of cybercrime have the greatest economic impact?
Stolen IP and confidential business information, online fraud, financial manipulation of publicly traded companies, and the cost of securing networks after hacking are some of the most devastating effects to companies right now.
Regulators and authorities can work together to deal with cybercrime, and try to implement a uniform system of security measures and defenses in technology. In addition, working as a team to place pressure on international state sanctuaries that protect cybercriminals is imperative.