A new law enforcement report reveals rising cyber attack costs again in 2019. The FBI’s 2019 Internet Crime Report documents internet-facilitated criminal activity reported to the government’s Internet Crime Complaint Center (IC3). More than 467,000 complaints were submitted in 2019, with business losses estimated at $1.7 billion.
Both complaints and costs have risen significantly over the past few years, highlighting the risks businesses face without cyber liability protection. To protect your business, it is imperative to understand the risks posed by cyber criminals and the steps necessary to protect your assets.
New FBI IC3 Data Shows Rising Cyber Attack Costs, Complaints and Losses
In the new IC3 report, both the number of cyber attack complaints received and the cost of illegal internet scams are up. In the last five years, the IC3 has fielded more than 1.7 million complaints.
- 2015— 288,012 complaints received
- 2016—298,728 complaints received
- 2017—301,580 complaints received
- 2018—351,937 complaints received
- 2019—467,361 complaints received
The number of complaints increased 32% in just the last year, with a five-year increase of nearly 62%.
According to the report, losses suffered by victims of cyber crime over the last five years has reached a total of $10.2 billion.
- 2015 losses totaled $1.1 billion
- 2016 losses totaled $1.5 billion
- 2017 losses totaled $1.4 billion
- 2018 losses totaled $2.7 billion
- 2019 losses totaled $3.5 billion
As with the number of complaints, the cost of cyber crime losses is also increasing. From 2018 to 2019, the increase was 29.6%. However, the rate of increase of losses over the last five years is an astounding 218%, meaning that the dollar value of cyber attacks is rising almost 3.5 times faster than the number of attacks reported.
Sophisticated Business Email Compromise Scams Are Costly
For organizations, business email compromise (BEC) scams are one of the greatest threats posed by cyber criminals. According to the IC3 report, businesses reported more than 23,000 BEC scam cyber attacks, with losses of more than $1.7 billion. The threat of BEC scams increased in 2019, as cyber criminals evolve more sophisticated methods of attack.
BEC scams target businesses or individuals performing a transfer of funds facilitated via business email communications. The FBI reports BEC scams became more frequent in 2013, when hackers began compromising or spoofing the email accounts of chief executive officers or chief financial officers to request wire payments be sent to fraudulent locations. The scam’s attack methods have evolved to include:
- Compromised personal email accounts
- Compromised vendor email accounts
- Spoofed lawyer email accounts
- Requests for W-2 information
- Diversion of payroll funds
Experts observed an increase in scams used to steal employee payroll funds. In this form of BEC cyber attack, the hacker sends an email appearing to be from an employee to a company’s human resources or payroll department requesting to update direct deposit information. In the scam, the supplied direct deposit information often routes to a prepaid card account.
Cyber Attack Risks Are Expanding
While BEC cyber attacks present a risk for significant upfront losses for businesses and organizations, these attacks represent only one category of crime. The data does not include the cost to businesses of thousands of other varieties of attacks, such as phishing, non-payment, non-delivery, spoofing, ransomware and data breach attacks. The data is also limited to those attacks reported to the FBI.
Indirect costs of a cyber attack can also be substantial, and may include:
- Loss of income
- Litigation expenses
- Regulatory fines and penalties
- Privacy breach notification expenses
A separate report finds the impact to a small business can be significant, with the average cyber attack now costing over $1 million.
Cyber Liability Insurance Protects Your Business
Each year, the threat of a cyber attack increases, but you can protect your business with coverage from CyberLock Defense. With Cyber Liability Insurance from CyberLock Defense, you receive broad coverage protection, flexible limits with no policy sublimits and access to your full policy limits. Protection extends to protect you from regulatory proceeding costs, voluntary notification expenses, business interruption, data restoration, public relations costs, IT forensics and legal expenses.
Lockton Affinity developed CyberLock Defense to protect you against cyber risks. With BEC scams and other threats, the type of Cyber Liability coverage you choose for your business matters.
Discover more benefits of cyber liability insurance for your business today.