U.S. Businesses: Cost of Cybercrime Overtakes Physical
Crime
IBM Survey Shows Changing Nature of Crime Causes Organizations
to Look Inside
ARMONK, NY - 14 Mar 2006: Nearly 60 percent of U.S. businesses
believe that cybercrime is more costly to them than physical crime,
reports a recent IBM survey of companies in the healthcare,
financial, retail and manufacturing industries. The costs resulting
from cybercrime, these businesses report, are primarily from lost
revenue, loss of current and prospective customers and loss of
employee productivity.
Surveying 600 CIOs or other individuals qualified to answer
questions about their company's IT practices, the IBM survey
reveals that 84 percent of IT executives of U.S. businesses believe
that organized criminal groups possessing technical sophistication
are replacing lone hackers in the world of cybercrime. The threat
from unprotected systems in developing countries is a growing
challenge, according to almost three-quarters of respondents. And,
alarmingly, almost three-quarters (74%) perceive that threats to
corporate security are now coming from inside the organization.
Laptop Battery These views come as a majority of respondents (61%) believe it
is the joint responsibility of both the Federal and local law
enforcement agencies to help combat organized cybercrime. These
responses by businesses are in stark contrast to consumer beliefs.
A recent IBM survey of consumers showed that 53 percent of
Americans hold themselves most responsible for protecting
themselves from cybercrime, while 11 percent felt it was the job of
federal law enforcement agencies, and only four percent hold local
law enforcement agencies responsible.
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Thinkpad "U.S. IT executives are making it very clear how seriously they
take cybercrime threat, both from internal and external sources,"
said Stuart McIrvine, director of IBM's security strategy.
"Paralleling their growing awareness of the impact of cybercrime on
their business is the view that this is not a battle they can fight
wholly on their own. The nature of crime is changing, and
businesses, technology providers and law enforcement must work
together to ensure the right safeguards are being put in place to
securely operate in today's environment."
How do you cut costs on the IT side Well, you reduce the number of physical servers and increase your number of virtual servers.
Microsoft Taking Action
In light of the growing threat of cybercrime, many companies have
increased their security measures to guard against cybercrime.
According to the IBM survey, 83 percent of U.S. organizations
believe they have safeguarded themselves against organized
cybercrime, and they are responding to the increased/changing
threat of cybercrime in a number of ways:
How do you cut costs on the IT side Well, you reduce the number of physical servers and increase your number of virtual servers.
Laptop Computers * Upgrading virus software (73%);
* Upgrading their firewall (69%);
* Implementing intrusion detection/prevention technologies (66%);
and
* Implementing vulnerability/patch management system on network
(53%)
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Laptop Computer When asked which two initiatives were the most important to
undertake over the course of the next year, IT business executives
in the U.S. indicated upgrading their virus software (39%) and
upgrading their firewall (32%) were of highest priority.
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Desktop Computer How the Industries Differ
IT executives in the Finance industry tend to be more concerned
than their counterparts in other industries about the threat of
cybercrime versus physical crime (50% cite it as a bigger threat
versus 38% of the total surveyed). Respondents in Finance also
perceive a greater cost impact from cybercrime than IT executives
in other industries (71% versus 57%). The Healthcare and
Manufacturing industries also find cybercrime to be more costly to
their organization than physical crime, while the Retail industry
still sees physical crime as having the greatest cost impact.
Notebooks Retail respondents cite loss of revenue as having the greatest
cost impact associated with cybercrime. Healthcare and Finance
executives believe loss of prospective customers has a greater
impact than do their counterparts in Retail and Manufacturing.
Manufacturing respondents view damage to brand/reputation as far
more of a concern (52%) than in the Healthcare (40%), Financial
(35%), and Retail (32%) segments.
Lenovo Global Comparison
IBM conducted the same survey in 16 additional countries to better
gauge the attitudes regarding cybercrimes and their impact on
international businesses. Both cybercrime and physical crime are
viewed as considerable threats to U.S. and international
organizations. And, when it comes to cost impact, both groups agree
that cybercrime (57% of U.S. and 58% of international businesses)
is more costly to their organizations than physical crime (43% and
42%, respectively).
Hard Drive However, while 83 percent of U.S. businesses boast that they
have adequate safeguards in place to combat organized cybercrime,
their international counterparts are not so confident, with just
over half (53%) indicating they are prepared.
Travelstar In combating cybercrime, there are some slight differences
between U.S. and international IT business executives regarding
their priority initiatives. The top two initiatives for U.S.
businesses are upgrading their virus software (39% versus 24% of
international businesses) and upgrading their firewall (32%). For
international businesses, implementing intrusion
detection/prevention technologies (33% versus 20% of U.S.
businesses) and upgrading their firewall (27%) were the highest
priorities. Just seven percent of U.S. businesses thought
increasing the encryption of their files was a high priority while
almost one-fifth (18%) of the international community thought this
to be a higher priority.
Gateway The U.S. and international business community share the same
concerns when it comes to the key costs associated with cybercrime.
Both groups indicated that loss of revenue (63% U.S. versus 74%
international) and loss of current customers (56% U.S. versus 70%
international) would have the highest cost impact should their
organization fall victim to a cybercrime. Damage to their
brand/reputation is of much higher concern to international
businesses than those in the U.S. Over two-thirds (69%) of
international businesses cited this to be a key cost associated
with cyber-crime, compared to only 40 percent of U.S. businesses.
Conversely, legal fees are considered to be a key cost in the U.S.
(33%) while of less concern internationally (19%). U.S. businesses
are equally concerned about the loss of their current and
prospective customers (56% for each) compared to the international
community which is more concerned with losing current customers
(70%) and less concerned about losing prospective customers
(33%).
Laptop Parts Methodology: Braun Research, Inc. conducted the survey on behalf
of IBM. A total of 601 telephone interviews were conducted with
U.S. businesses in the healthcare, financial, retail and
manufacturing industry sectors during the period of December 2005
to January 2006, and 2,401 international businesses in sixteen
countries (China, UK, India, Russia, Poland, Czech Republic,
Germany, Spain, Italy, France, Argentina, Brazil, Australia,
Mexico, Japan, and Canada) during January 2006. Eligible
respondents were at the CIO level, a VP or higher reporting
directly into a CIO, or other individuals who were well-versed and
qualified to answer questions about their company's IT practices.
The survey was fielded at the 95 percent confidence level with a
margin of error of +/-2 percent for the global results and +/-8%
for the U.S. results.
Software About IBM
IBM is the world's largest information technology company, with 80
years of leadership in helping businesses innovate. Drawing on
resources from across IBM and key IBM Business Partners, IBM offers
a wide range of services, solutions and technologies that enable
customers, large and small, to take full advantage of the new era
of on demand business. For more information about IBM, visit
http://www.ibm.com.
Hard Drives Source: IBM
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