A view on the economic impact of cyber attacks, from US to China

Pierluigi Paganini July 06, 2012

On June 28th, a FBI official declared before a House panel that the phenomenon of cyber espionage is increasing with an alarming trend. We are living a period of great crisis and the intellectual property is becoming a privileged target for cyber attacks.

It has been estimated that the economic espionage in the current fiscal year will impact with a cost superior to $13 billion, the news as made public by Frank Figliuzzi, FBI assistant director, counterintelligence division, during a communication before the House Homeland Security subcommittee on counterterrorism and intelligence.

Figliuzzi declared:

“Foreign nations know that it’s always cheaper to steal U.S. technology than it is to research and develop it themselves,”

The cyber espionage is largely diffused both in private and governments sectors, the opportunity to acquire sensible information in this way could give a great advantage to the attackers. The practice of the cyber espionage could be perpetrated in a long interval of time causing dramatic problems, emblematic the case of Nortel firm that has terminated in bankruptcy.

The repercussion are serious on internal economy, the Commerce Department estimates that due cyber espionage have been lost around 27.1 million American jobs in 2010, 18.8 percent of all employment.

The MI5 chief presented a worrisome scenario, the UK industry suffers both state sponsored cyber espionage and organized cybercrime.

The espionage activities are not new, but the introduction of new technology has amplified the size of the phenomenon, Greg Wilshusen, Government Accountability Office director of information security issues, said:

“use of cyberspace have vastly enhanced the reach and potential impact of such threats,”


The problem of cyber espionage is also targeting businesses and government all over world, the Director General of MI5, Jonathan Evans, has recently declared that “one major London listed company” estimated that it had lost

“some £800m as a result of hostile state cyber attack – not just through intellectual property loss but also from commercial disadvantage in contractual negotiations.”

Why choose to spy on a private firm or government in economic field?

Technological instruments such as malware represents a cheaper, and less risky, solution to steal sensible secrets.

The most active nations in this area are Russia and China but also countries such as Israel, US and Western States.

Lets conclude this rapid view on cyber espionage with a surprising data, China is world’s biggest cyber attack victim according a recent report published by the National Computer Network Emergency Response Coordination Center of China. The situation is critical due an impressive number of attacks that hit the country.

Following some figures on the security status of Chinese business and their exposure to the attacks;

  • Over 98 percent of Chinese business websites had implemented standard protective measures against security threats in 2011, up from 92.25 percent in 2010 and 78.61 percent in 2009, the report said.
  • Compared with 2010, it has been observed a reducion of  39.4 percent for the number of government websites that were targeted by cyber attacks in 2011.The country was hit by a total of 47,000 overseas based Internet Protocol addresses (IPs) were involved in attacks against 8.9 million Chinese computers last year, an increment of 78% respect 2010. Mainly the attacks are originated in Japan, the US and South Korea, the report said.

What will expect from the future?

No doubts, the attacks will increase, in particular the major increments will be registered using cloud and mobile platforms.

Pierluigi Paganini

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