Report: Cybercrime Costs Tech Firms

May 9th, 2007

Cybercrime and other forms of economic crime are hitting companies in
all sectors of industry, but telecommunications and IT companies appear to be
among the most targeted,
according
to a survey released Tuesday by PricewaterhouseCoopers.

In its Global Economic Crime Survey 2003, PwC said that 47 percent of
telecommunications and 46 percent of IT companies surveyed reported suffering
from economic crimes, figures only exceeded by the
banking and insurance
industries. The survey covered 3,623 companies from all industry sectors in 50
countries.

PwC warned that the apparent high incidence of economic crime in
high-tech companies may partly reflect the ability of companies in those
well-regulated sectors to detect crime.

“Due to their regulation, those companies have usually developed more
sophisticated control and compliance systems,” PwC said in the report. “The
higher reported levels of fraud in those sectors partly reflect higher
sensitivity to–and detection of–economic crime.”

Economic crime covers many areas, including theft, financial
misrepresentation,
product
piracy, money laundering, bribery and cybercrime.

While asset misappropriation, or theft, was the biggest reported
category, 15 percent of the companies surveyed reported suffering losses from
cybercrime.
The average loss to cybercrime among the companies was $812,000, but over
two-thirds of the companies said they could not put an accurate figure on how
much cybercrime had cost them.

As well as monetary loss, cybercrime had a strong negative effect on
staff morale, business relations and company reputation, PwC reported.

“A failure to tackle — or at least manage the risk of — economic crime
effectively can store up long-term operational problems for any enterprise,”
PwC said in the report.

The companies surveyed said that cybercrime was one of their biggest
fears in the future, with 31 percent of companies saying it represented their
biggest risk of financial loss over the next five years.

“Whilst the effects of cybercrime can be extremely severe for those
companies targeted, it appears that many cyber criminals are extremely
selective in their targets,” PwC said. “Companies that have not yet been made a
target may be breathing a premature sigh of relief.”

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