Cybercrime Costs a Business $3.8 Million/Year, Study Finds

A new study of 45 U.S. organizations found that cybercrime — including Web attacks, malicious code and rogue insiders — costs each one of them $3.8 million per year, on average, and results in about one successful attack each week.

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“First Annual Cost of Cyber Crime Study,” conducted by Ponemon Institute and sponsored by ArcSight, entailed seven months of research and visits to each of the 45 organizations. The participating midsize and large organizations (from 500 to more than 105,000 employees) represent a mix of industries and government agencies. Researchers talked to IT security personnel, as well as network, forensics and management staff, to determine the costs of responding to and mitigating cybercrime attacks. The researchers spent about four weeks with each participating organization, according to Larry Ponemon, director of Ponemon Institute.

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The $3.8 million annual cybercrime tally represents an average; organizations reported from a low of $1 million to a high of $52 million per year, according to the study.

The $3.8 million average cost represents not what companies or government might routinely spend each year on say, antivirus software, but the direct cost of coping with the attacks. In the event of a Web-based application attack, such as Web-based SQL injection, “say they bought a Web Application Firewall to respond to that, we’d amortize it,” Ponemon says.

Types of cybercrime reported include: stealing intellectual property, confiscating online bank accounts, distributing viruses and other malware, posting confidential business information on the Internet, and disrupting a company’s infrastructure.

Researchers tallied the time spent responding to attacks, the disruption to business operations, revenue loss, and the destruction of property, plant and equipment. Sometimes cybercrime attacks came in fast waves against an organization, and financial institutions seem to be targets of the stealthiest types of cyberattacks, such as botnets, Ponemon says.

Defense, energy and financial services companies experienced higher costs than organizations in retail, services and education, according to the report.

Ponemon says those organizations that had invested in defensive technologies, including security information event management, and had a chief information security officer on board, appeared to be better prepared to respond and took less time to remediate problems. But only about 40% could be considered to have invested in this way, he adds.

The study found it took 14 days on average to respond to a successful cyberattack, with an average cost to an organization of $17,696 per day. Malicious insider attacks took up to 42 days or more to resolve.

While the number of companies involved in the study is only 45, and thus the data can’t be considered statistically weighty enough to characterize entire industries, the “First Annual Cost of Cyber Crime Study” provides a look at how cybercrime is dragging down U.S.-based companies and government.

“The eye-popping thing we found is a lot of organizations are very disorganized in even understanding the environments they’re dealing with,” Ponemon says. Ponemon Institute intends to do further studies of this kind in the future, he adds.

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