Tuesday 8 March 2011

The cost of IP crime -- but how do we know?

Last month the UK's Cabinet Office published a notice proclaiming its report, "The cost of cyber crime", about which it says
"The overall cost to the UK economy from cyber crime is £27bn per year, according to the first joint Government and industry report into the extent and cost of cyber crime across the UK, launched today by the Office of Cyber Security & Information Assurance in the Cabinet Office and information intelligence experts Detica.

With society now almost entirely dependent on cyber space, developing effective strategies to tackle cyber crime requires a better understanding of its impact. Its breadth and scale have been notoriously difficult to understand and past attempts to set cyber crime policy or develop strategies have been hampered by a real lack of insight into the problem.

"The Cost of Cyber Crime" report reveals that whilst government and the citizen are affected by rising levels of cyber crime, at an estimated £2.2bn and £3.1bn cost respectively, business bears the lion’s share of the cost. The report indicates that, at a total estimated cost of £21bn, over three-quarters of the economic impact of cyber crime in the UK is felt by business. In all probability, and in line with worst-case scenarios, the real impact of cyber crime is likely to be much greater".
The summary records as follows with regard to IP theft:
"With the exception of the well-understood and documented copyright theft issue, the
types of IP most likely to be stolen by cyber criminals are ideas, designs, methodologies and trade secrets, which exist mostly in tangible form and add considerable value to a competitor.

But calculating the impact of this type of less-publicised IP theft is complex. Our approach produced three-point estimates for the economic value of IP by taking published figures for the value added to the economy per year in each sector and estimating the fraction attributable to IP.

Our results show that several business sectors are likely to be affected by IP theft because they either generate large volumes of IP or their IP can be exploited with relative ease. However, although no business sector is likely to be entirely immune from IP theft, the impact of cyber attacks is likely to be much smaller in sectors where relatively low volumes of IP are created".
IP Finance would like to understand more about the mechanism for assessing the cost of cyber crime and IP theft.  If any reader has the time and the inclination to read through these documents and would like to write them up for this weblog, he or she should please let me know.

You can download the summary here and the full report here.

No comments: