The cost of cyber espionage: ‘A rounding error’

How serious is intellectual property theft and cyber crime against U.S. businesses? It depends on who you ask. When Jim Lewis of the Center for Strategic and International Studies gave someone he would only describe as one of the "gods of economics" his initial estimates about the cost of cyber espionage, this is what happened:  ...

U.S. Air Force
U.S. Air Force
U.S. Air Force

How serious is intellectual property theft and cyber crime against U.S. businesses? It depends on who you ask.

When Jim Lewis of the Center for Strategic and International Studies gave someone he would only describe as one of the "gods of economics" his initial estimates about the cost of cyber espionage, this is what happened: 

"I said, ‘I apologize, we're at a very preliminary stage of our research, there's an embarrassing range and we hope to narrow it over time, but I would say the minimum might be $20 billion dollars a year and the maximum might be $100 billion dollars a year,' noting that there's all sorts of problems, it's a very preliminary estimate," Lewis recounted during a forum on cyber security at The George Washington University last week. "He looked at me and he said, ‘100 billion dollars!? That's a rounding error in a $15 trillion dollar economy!' And he's right, it's a rounding error."

How serious is intellectual property theft and cyber crime against U.S. businesses? It depends on who you ask.

When Jim Lewis of the Center for Strategic and International Studies gave someone he would only describe as one of the "gods of economics" his initial estimates about the cost of cyber espionage, this is what happened: 

"I said, ‘I apologize, we’re at a very preliminary stage of our research, there’s an embarrassing range and we hope to narrow it over time, but I would say the minimum might be $20 billion dollars a year and the maximum might be $100 billion dollars a year,’ noting that there’s all sorts of problems, it’s a very preliminary estimate," Lewis recounted during a forum on cyber security at The George Washington University last week. "He looked at me and he said, ‘100 billion dollars!? That’s a rounding error in a $15 trillion dollar economy!’ And he’s right, it’s a rounding error."

More recent estimates have put the cost of theft as high as $338 billion per year, but Lewis’ anecdote puts the fear of cyber espionage in perspective.

Still, Lewis admitted that the blatant theft of U.S. economic and defense secrets is "very disturbing" and needs to be addressed

John Reed is a national security reporter for Foreign Policy. He comes to FP after editing Military.com’s publication Defense Tech and working as the associate editor of DoDBuzz. Between 2007 and 2010, he covered major trends in military aviation and the defense industry around the world for Defense News and Inside the Air Force. Before moving to Washington in August 2007, Reed worked in corporate sales and business development for a Swedish IT firm, The Meltwater Group in Mountain View CA, and Philadelphia, PA. Prior to that, he worked as a reporter at the Tracy Press and the Scotts Valley Press-Banner newspapers in California. His first story as a professional reporter involved chasing escaped emus around California’s central valley with Mexican cowboys armed with lassos and local police armed with shotguns. Luckily for the giant birds, the cowboys caught them first and the emus were ok. A New England native, Reed graduated from the University of New Hampshire with a dual degree in international affairs and history.

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