The White House Council of Economic Advisers released a report last Friday that sought to quantify “malicious cyber activity directed at private and public entities”, including denial of service attacks, data breaches, theft of intellectual property, and sensitive financial and strategic information.
The report noted particular concern over attacks on critical infrastructure, including highways, power grids, communication systems, dams, and food production facilities that could lead to negative spillover impacts well beyond the target victims.
It added that losses suffered by the corporate sector as a result of malicious cyber activity extend well beyond the direct losses suffered by those firms that are attacked. These additional costs arise from (1) spillover effects to economically linked firms, (2) increasingly expenses on cyber security defense measures, and (3) a drag on economic growth that cyber threats create.
The report admitted that the government sector is at the highest risk for a cyber incident. The Government Accountability Officer (2017) found that the number of cyber security incidents reported by federal agencies rose from 5,503 in 2006 to 33,632 in 2016.
Malicious cyber activity imposes a drag on economic growth by enabling new means for stealing IP, which can be considered a tax of innovation. The rapidly evolving cyber threats we’re constantly battling slow down our rate of development and adoption of new information and communication technologies and thus lower the efficiency gains that can be achieved with these new innovative technologies.
The White House concluded that that cyber-attacks cost the United States an estimated $57 billion to $109 billion in 2016, but state that the total cost of malicious activities directed at the US is difficult to estimate. Many data breaches simply go undetected, and even when they are detected, most go unreported, or the final cost of the breach is unknown.
To combat this, NNT suggest implementing self-learning Breach Detection technology to understand what normal system activity looks like, and alert you to what isn’t.
But cyber security technologies could have positive spillover effects, too. The report mentions that the cyber security sector contributes significantly to US economic growth and that cyber security could become a reliable source of exports for both products and services for years to come, but this will require educational programs to stimulate students’ interest in cyber security and recruit more women to the cyber security industry.
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