Survey: Cybercrime Cost Firms $266M in '99

Computerworld - Cyberattacks cost U.S. companies $266 million last year - more than double the average annual losses for the previous three years, according to a newly published report.
The study, released by the San Francisco-based Computer Security Institute (CSI) and the San Francisco FBI Computer Intrusion Squad, found that 90% of 273 respondents detected some form of security breach in the past year.
Dan Erwin, who conducts information security strategy and planning at The Dow Chemical Co. in Midland, Mich., said he believes that the higher loss figures are a combination of more security intrusions and better reporting. "If an information site is down, how do you quantify loss?" said Erwin. "But if you have a site you are doing sales on and it goes down, then you are losing sales. That's an easier number to quantify and obviously more important."
Based on information from 273 of CSI's members, 70% reported serious security attacks, including theft of proprietary information, financial fraud, systems penetration from outsiders, denial-of-service attacks and sabotage of data or networks. This figure, up from 62% the year before, didn't include data from the most common security problems - those caused by computer viruses, laptop theft and unauthorized Internet access.
Costly Problems
Topping the list of costly security breaches was $66.7 million in losses from theft of proprietary information reported by 66 respondents and $56 million in losses from finan- cial fraud cited by 53 organiza-tions. Sixty-one respondents said they suffered $27 million in damages from sabotage of data or networks, compared with a total of $10.8 million for previous years.
Richard Power, CSI editorial director, said other intrusions, such as the denial-of-service attacks that hit top Web sites earlier this year, were on the increase last year. And because so many firms are conducting e-commerce, these attacks contributed to higher losses. "In 1999, we had 28 incidents of denials of service with a total of $3.25 million in losses, and in 2000 so far we have 46 incidents for a total of $8.2 million dollars," said Power.
According to the report, 74% of the respondents confirmed that they sustained financial losses due to security attacks, but only 42% were willing and able to quantify these costs.
CSI Director Patrice Rapalus said the report indicated that unauthorized access and security attacks are widespread. She said government and private-sector organizations must increase their focus on sound security practices, deployment of defensive technology, and training and staffing of security managers.

Read more about management in Computerworld's Management Knowledge Center.