Cyber Crime Costs UK £27 Billion A Year

Cyber crime costs the UK economy £27 billion annually, according to a new report written by the Office of Cyber Security and Information Assurance and information intelligence experts Detica.

“The Cost of Cyber Crime” report reveals that businesses are by far the worst hit, with an annual cost of £21 billion. The government costs from cyber crime are estimated at £2.2 billion, and the general public is lumbered with a £3.1bn annual cost.

“In all probability, and in line with worst-case scenarios, the real impact of cyber crime is likely to be much greater,” the report warns.

Business Impact

This is the first time the government and the private sector has teamed up to try and understand the overall cost to the UK of cyber crime. And the report also sought to gain a better appreciation of the costs of Intellectual Property (IP) theft and industrial espionage.

IP theft from business, which has the greatest economic impact of any type of cyber crime, is estimated to be £9.2 billion per annum. The report says that the hardest hit sectors are pharmaceuticals and biotech, electronics, IT and chemicals.

Meanwhile industrial espionage has the second greatest impact at £7.6 billion, followed by £2.2 billion from extortion, £1.3 billion from direct online theft, and £1 billion from the loss or theft of customer data.

The £3.1bn annual economic cost of cyber crime to UK citizens includes an estimated £1.8 billion for identity theft and £1.4 billion for online scams.

Security Partnership

“The government recently announced our commitment to working in partnership with the private sector to increase our cyber security,” said the Rt Hon Baroness Neville-Jones, Minister of State for Security. “It is both a national security and commercial priority and both sides need to work together to strengthen our existing resilience.

“This report is an important example of how government and industry are working together to tackle specific threats posed by criminal use of the internet and highlights the opportunity we have to turn this to our advantage and get ahead of the curve to drive our economic growth and prosperity,” said Neville-Jones.

“I am not surprised at the £27 billion figure,” Greg Day, director of security strategy for McAfee, told eWEEK Europe UK. “But I am exceedingly positive that the government is now trying to quantify the scale of problem.”

Expert Reaction

Day cited the government’s security defence review, and the fact that the government has realised there is a problem and is seeking to address it, as very positive moves.

“It is simple military tactics, you have to know the size of your enemy in order to place adequate defences against them,” said Day. “My suspicion is that the real cost is actually higher than £27 billion, because it is easier to quantify the impact and cost of cyber crime on the financial services sector and large business etc, because banks can usually quantify the amount.”

“But we cannot quantify the amount of pick pocketing that is going on,” said Day. “This is where people buy goods online but which don’t turn up. How do you do the maths for that?”

Day said that the security industry is working with government and law enforcement to try and address this issue, and quantify the scale of this problem.

“Governments have been doing work on cyber crime for a long time now, but they have not really kept pace with new developments,” said Day. He felt for example that the scale of investment in policing units has not kept pace with how much society in general now uses the Internet.

Positive Government Action

“A year ago we did research report called ‘Caught In The Crossfire” said Day. “This report found that because of privatisation, most of our critical infrastructure is in the private sector. This means that the frontline is the private sector.”

“The challenge we face is that attackers are dynamic and evolve with new technology changes, whereas government policy tends to be far slower,” Day told eWEEK Europe UK.

But Day insists that overall things are looking up.

“For me this is a positive development and the UK government is taking hugely positive steps in trying to quantify the scale of the problem,” he said. “They are looking at both short term measures, and their long term strategy. I am much more positive in the past year at how the UK is progressing, than compared with previous years.”