The theft of trade secrets costs between 1 and 3 percent of the gross domestic product of the United States and other advanced industrial economies, according to a new report.
PricewaterhouseCoopers US and the Center for Responsible Enterprise and Trade (CREATe.org) collaborated on the report, “Economic Impact of Trade Secret Theft: A Framework for Companies to Safeguard Trade Secrets and Mitigate Potential Threats,” which leverages multiple studies on illicit economic activity to assess the economic impact of trade secret theft and provides a framework on how to protect company assets.
“The trade secret evaluation methodology provided in this report can … help companies to understand the impact of theft on their trade secrets,” said Pamela Passman, president and chief executive officer of CREATe.org.
The report identifies the main actors known to target and steal trade secrets and describes their motivations. “Malicious insiders, competitors, nation states, hacktivists and transnational organized crime are only a few examples,” it says.
Nation-states “have unmatched resources and capabilities to steal trade secrets” and usually want to acquire them to strengthen their military capabilities and bolster their national companies in the global marketplace, the study said.
Current and former employees who are familiar with a company’s systems, are acquainted with where and how information is stored, and know specific details on the production or use of trade secrets are one of the greatest cybersecurity threats companies face, the study also found.
Competitors, organized crime and “hacktivists”—entities that seek to expose sensitive corporate information to advance political or social agendas—also pose a major threat, the study said.
The report then provides a framework for individual companies to safeguard trade secrets and mitigate potential threats. That framework describes how companies should identify trade secrets, assess threats and possible exposure, rank trade secrets in order of which deserve greatest protection, analyze the economic impact of a trade secret theft event, and enhance the ability to secure its trade secret portfolio.
The study also looks at how several drivers and forces will affect trade secret protection in the next 10 to 15 years. Enhanced global regulation could take hold to increase protection of trade secrets, for example. Or a lack of regulation could make companies more vulnerable to theft. What type of balance is achieved between “cyber offense and defense” will have an impact, as will the degree of openness of the Internet and the pace of innovation, the report said.
“The challenge of trade secret theft is too large for any one government, company or organization to deal with alone,” said Passman, who added that the report is a first step in a larger collective effort to improve trade secret protection.