Economic losses from cybersecurity incidents could reach $3.5 billion

MANILA, Philippines — Cybersecurity incidents could cost the Philippine economy $3.5 billion, according to a study from Frost and Sullivan commissioned by Microsoft.

In the study titled “Understanding the Cybersecurity Threat Landscape in Asia Pacific: Securing the Modern Enterprise in a Digital World,” Frost and Sullivan said the estimated cost of cybersecurity incidents in the Philippines is equivalent to 1.1 percent of the country’s gross domestic product of $305 billion.

The study said a large-sized organization in the country could incur an economic loss of $7.5 million from cybersecurity incidents, more than 200 times higher than the average economic loss for a mid-sized organization of $35,000.

Frost and Sullivan arrived at the estimates using an economic loss model based on macro-economic data and insights shared by 1,300 business and information technology decision makers from mid-sized organizations and large organizations.

The model factored in three kinds of losses from a cyber breach such as direct or financial losses associated with a cybersecurity incident, indirect or opportunity cost to the organization such as customer churn due to reputation loss, and induced or the impact of cyber breach to the broader ecosystem and economy such as the decrease in consumer and enterprise spending.

Based on the study, more than half of the organizations surveyed in the country have either experienced a cybersecurity incident (18 percent) or are not sure as they have not performed proper forensics or data breach assessment (34 percent).

“Although the direct losses from cybersecurity breaches are most visible, they are but just the tip of the iceberg,” Edison Yu, vice president and head of enterprise for Asia Pacific at Frost and Sullivan said.

“There are many other hidden losses that we have to consider from both the indirect and induced perspectives, and the economic loss for organizations suffering from cybersecurity attacks can be often underestimated,” he said.

Apart from financial losses, cybersecurity incidents are preventing organizations from future opportunities in today’s digital economy as more than half (57 percent) of respondents said they put on hold digital transformation efforts due to the fear of cyber risks.

The study also revealed there are gaps in terms of how organizations protect their data as only 44 percent of those surveyed consider cybersecurity before the start of the digital transformation project.

It likewise showed only 25 percent of respondents see having a cybersecurity strategy as a competitive advantage to help in digital transformation.

While there are gaps, the study showed there are organizations which are ahead as they are now using artificial intelligence (AI) to boost cybersecurity.

In particular, almost four in five (79 percent) organizations in the country have either adopted or are looking to adopt an AI approach to boost cybersecurity.

An AI-driven cybersecurity architecture is seen to allow organizations to fix or strengthen their security posture before problems emerge.

It will also enable companies identify cyberattacks, remove persistent threats and fix bugs much faster.

“The ever-changing threat environment is challenging, but there are ways to be more effective using the right blend of modern technology, strategy, and expertise,” Microsoft Philippines managing director Hans Bayaborda said.

He said Microsoft could help businesses in the Philippines through its secure platform of products and services.