Survey: Some U.S. Firms Lost Over $50 Billion In Proprietary Information
A group of U.S. companies lost as much as $59 billion in proprietary information and intellectual property from 2000 to 2001, according to a survey by ASIS International, PricewaterhouseCoopers (PwC), and the U.S. Chamber of Commerce.
Most of that stolen information was resident in companies computer systems, says Jay Ehrenreich, senior manager at New York-based PwCs Cybercrime Prevention and Response Group. “About 80% of intellectual property is estimated to be in a digital format,” he notes.
“While the risk of cyberterrorism is increasing, the theft of intellectual property is where companies are incurring the most losses to date,” says Ehrenreich.
The 10th Trends in Proprietary Information Loss Survey was conducted among CEOs of Fortune 1000 companies and of 600 small and mid-sized companies that belong to the U.S. Chamber of Commerce, says PwC. The firms reported experiencing losses in the July 1, 2000 to June 30, 2001 timeframe.
According to the survey report, 40% of those participating in the survey reported “incidents of known or suspected losses of proprietary information.” The survey defined such information as “information which is not within the public domain and which the owner has taken some measures to protect.”
“In 2001, the companies represented by study respondents are likely to have experienced proprietary information and intellectual property losses of between $53 [billion] and $59 billion,” said the survey report.
On average, the report noted, companies reported two such loss incidents in the surveys timeframe. The largest average dollar value loss per incident occurred in research and development ($404,000), followed by financial data ($356,000), the report said.
Only 12% of the companies in the survey were in the financial sector, and the report noted that the financial industry firms reported the lowest number of incidents among all the survey sectors.
The highest reported incidence rates were in the service industry group and in companies with annual revenues in excess of $6 billion.
The report added, however, that, “It is likely that these and other study data reflect a significant degree of underreporting by responding companies.”
Ehrenreich says the lost information included data on companies proprietary research and development projects. “It could be the schematics of a next generation widget, your customer lists, or the formula for Coca-Cola,” he explains.
This could result not only in loss of revenue, but also loss of competitive advantage, he adds.
According to PwC, many companies dont put a value on intellectual property until they are in litigation of some kind. “Since these assets are not typically tracked in corporate accounting systems, they often are not well protected,” said PwC.