Risky Business: Cybercrime in the New Economy
Cybercrime has increased tremendously in the digital economy. “According to the American Society for Industrial Security, American businesses [are] losing $250 billion a year from intellectual property theft since the mid-1990’s.”1 There is a clear and growing threat of Chinese industrial espionage targeted at American companies. In a recent case, a Michigan couple was accused of stealing $40 million worth of trade secrets from General Motors and selling them to a Chinese car maker. Aside from hackers, the threat also exists within organizations from insiders. A recent study commissioned by Cisco found that “[i]n the hands of uninformed, careless, or disgruntled employees, every device that accesses the network or stores data is a potential risk to intellectual property or sensitive customer data.”
According to the Ponemon Institute, a privacy and information management research firm, incidents of data breach costs U.S. companies $204 per compromised customer record. This can quickly escalate to the millions of dollars, not including penalties and other fees that may be imposed by federal and state regulatory authorities. The high cost of a security breach can have a profound effect on an organization’s profit and loss, market presence and competitive advantage. It can also result in damage to brand and reputation. In light of the above, American companies need to exercise increased vigilance to protect their trade secrets and other valuable intellectual property (IP) that are strategic to organizational success and competitive advantage.
President Obama, recognizing the increasing toll of cybercrime on U.S. commerce, on May 29, 2009 issued a very strong statement titled “On Securing Our Nation’s Cyber Infrastructure.” He warned: “every day we see waves of cyber thieves trolling for sensitive information—the disgruntled employee on the inside, the lone hacker a thousand miles away, organized crime, the industrial spy and, increasingly, foreign intelligence services… . It’s been estimated that last year alone cyber criminals stole intellectual property from businesses worldwide worth up to one trillion dollars. In short, America’s economic prosperity in the 21st century will depend on cybersecurity.”
Stay tuned for an upcoming post on the Fifth Annual Gibbons E-Discovery Conference, where privacy and legal practitioners tackled the subject of cybersecurity . . . .
1 Hazlewood, Sara. “Tech Firms Watching Trade Secret Trials,” Business Journal Serving San Jose & Silicon Valley, May 14, 1999, 17:2, p. 7.