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ScienceDirect Procedia Economics and Finance 32 (2015) 618 – 621
Emerging Markets Queries in Finance and Business
Financial and non-financial implications of cybercrimes in emerging countries Mihail Antonescua, Ramona Birăub * b
a Spiru Haret University, Faculty of Accounting and Financial Management, Craiova, Romania Constantin Brâncuúi University of Târgu Jiu, Faculty of Economics and Business Administration, Romania
Abstract This article aims to investigate financial and non-financial implications of cybercrimes in emerging countries. In a globalized world, is very difficult to quantify in a precise manner the economic impact of cybercrimes. Nevertheless, there are significant differences among financial and non-financial implications of cybercrime attacks. Despite widespread awareness, the vulnerability of emerging countries regarding cybersecurity surveys is still very high. Published by Elsevier B.V. This an open CC BY-NC-ND license license © 2015 2015 Authors. The Authors. Published by Elsevier B.V.isThis is anaccess open article accessunder articlethe under the CC BY-NC-ND (http://creativecommons.org/licenses/by-nc-nd/3.0/). (http://creativecommons.org/licenses/by-nc-nd/4.0/). Selection and Emerging Markets Queries in Finance and Business local organization. under responsibility responsibilityof ofthe Asociatia Grupul Roman de Cercetari in Finante Corporatiste Selection and peer-review peer-review under Keywords: cybercrimes; intellectual property; business confidential information; identity theft; financial fraud; cybersecurity;
1. Introduction In a globalized economy, the risk of cybercrime attacks is highly significant and for this particular reason it should not be ignored. A current feature of cyber crimes is their accelerated spread in emerging economies. Moreover, financial and non-financial implications of cybercrimes in emerging countries provide a research framework of great current interest in order to identify potential implications for business environment. Technically, the essential idea suggests that certain system vulnerabilities are fraudulently exploited despite the implementation of cyber-security measures.
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2212-5671 © 2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
Selection and peer-review under responsibility of Asociatia Grupul Roman de Cercetari in Finante Corporatiste doi:10.1016/S2212-5671(15)01440-9
Mihail Antonescu and Ramona Birău / Procedia Economics and Finance 32 (2015) 618 – 621
The very concept of cybercrime defines an illegal activity based on internet and information technology, but in a more specific manner. Nevertheless, the evolution of cybercrime in daily life implies an extensive range of forms and manifestations. The negative impact on business is determined by direct consequences of cyber attacks due to unauthorized access to information resources and effective methods of technological manipulation. On the other hand, the process of primary identification, recovery and subsequent detection of cybercrime attacks requires a rigorous analysis as managerial approach considering the fundamental positions of authority. Cybercrime attacks represent a growing challenge, especially in terms of emerging countries. International cyber terrorism is focused on obtaining confidential information in order to take advantage for absolute control and thus considerable benefits. Moreover, emerging countries are characterized by a high level of risk exposure to cyber crimes due to their intrinsic vulnerabilities. The global environment, which includes both financial and non financial dimension, suffers significant changes due to these extreme events. Modern technology provides highly advanced means of tracking which are seemingly untraceable and undetectable. Metaphorically, cyber attacks are based on certain cracks in security system and their approach is identified with a silent stalking (tracking). This criminal activity has extremely harmful consequences for economic and business targets.
2. Approaches to literature review
Broadly defined, cybercrime includes a completely illegal and criminal activity which is carried out by computers and information technology. The effects of cyber crime are widely discussed in the literature, considering the fact that it is a subject of great current interest. The advances in communications technologies and in particular the internet infrastructure provide an conducive environment for illegal activities such as cyber crime. Various authors have analyzed the issue of cyber crime providing fundamental insights in order to minimize the risk of attacks or even to combat this negative phenomenon. Saini, Rao and Panda (2012) examined the impact of cyber threats following issues as economical disrupt, psychological disorder, attacks on national security (defense) in order to conduct significant fraud and major illegal activities. Moreover, the authors identify the following categories of cyber criminals along with the corresponding specifications : cyber terrorists, hackers cyber bulls, salami attackers, career criminals, crackers and pranksters. On the other hand, Van Wilsem (2013) investigated certain online behaviors such as hacking and harassment in order to accurately identify suitable criminological theories for different categories of crime on the Internet. Lagazio, Sherif and Cushman (2014) investigated the effects of cyber crimes on financial sector and revealed certain vulnerabilities regarding the strategic behavior of financial companies such as : increasingly exaggerated expenses on defence and persistent under-reporting of cyber crime incidents. Brown, Edwards and Marsden (2009) investigated complex issues on information security and the exposure to potential cybercrime attacks, given its increased importance to government, corporations and actual society. Yar (2005) discussed the novelty of cyber criminology phenomenon based on the controversial analogy between terrestrial and virtual crimes. Despite some opinions, cyber crime is clearly a distinctive form of crime whose premises are completely different from traditional approach. Kigerl (2012) emphasized the importance of implementing a research at the national level for high cybercrime countries using routine activity theory in order to determine the extent of such online phenomena as spamming and phishing activity.
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3. Dissemination research
The World Bank provides the following classification of countries for the current fiscal year (2015) based on the World Bank Atlas method, using as a criterion the GNI per capita level (2013) : low-income economies ($1,045 or less), middle-income economies (more than $1,045 but less than $12,746), and high-income economies ($12,746 or more). Moreover, lower-middle-income and upper-middle-income economies are differentiated at a GNI per capita of $4,125. In addition, the concept of developing (emerging) countries includes low- and middle-income countries noting that not every country in this category have the same level of development. According to Standard & Poor's Financial Services approach, the global classification of markets includes the following subcategories : developed, emerging and frontier. Likewise, MSCI Country Classification based on the Annual Market Classification Review provides a similar market classification, ie : developed, emerging and frontier. In the following table is presented the nominal classification of emerging markets, such as : Table 1 Emerging markets classification Americas
Europe, Middle East and Africa
Asia
Brazil Chile Colombia Mexico Peru -
Czech Republic Egypt Greece Hungary Quatar Russia South Africa Turkey United Arab Emirates
China India Indonesia Korea Malaysia Philippines Taiwan Thailand -
Source : MSCI Country Classification, Annual Market Classification Review
Generally, cybercrime includes a wide range of illegal activities such as : cyber bullying, cyber terrorism, identity theft, cyber stalking, virtual pornography (via the Internet), cyber espionage (illegally obtaining confidential data), computer hacking, computer fraud, online harassment, phishing, online piracy, blackmailing proceeding, cyber extortion, spam attacks, copyright infringement, computer virus programs (installing malicious software programs such as Trojan horse viruses). Beyond inherent advantages, global liberalization and international integration provide a conducive environment for obtaining reprehensible illegal benefits based on complex activities related to cyber crimes, especially in terms of emerging countries. In the last decade, cybercriminals became increasingly perfectionists due to modern technology and the capacity of computer applications. Moreover, the methods used by cyber criminals are very sophisticated and ingenious, depending on particular skills and final purpose. The major vulnerability is represented by computer or computer system as a whole. Nevertheless, one of the most dangerous scenario involves ignoring the destructive potential of cyber attacks. Theoretically, panic is non-productive but it is quite necessary to treat seriously the impending cybercrime risks in order to avoid potential major losses. The prospective victims often neglect the idea of cyber crime and its extremely varied negative implications. The transmission channels of cyber crimes include certain components of the Internet, ie : e-mails, websites (in particular e-commerce sites), chat rooms, discussion groups, instant messaging (IM), open forums, social networks, messenger or other
Mihail Antonescu and Ramona Birău / Procedia Economics and Finance 32 (2015) 618 – 621
online services. The financial implications of cybercrimes represent a highly sensitive issue in the context of globalized economies. Emerging countries represent a very vulnerable target because of structural and institutional imbalances. Since the increasing use of information technology, the possibilities of fraudulent gains based on cyber crimes have become even more significant. Considering the number of incidents, the damage caused by cybercrime is extremely high, reaching extreme financial losses of hundreds of billions of dollars a year in the case of global economy. Due to cyber attacks, the company performance is affected significantly and also enhance financial losses. Apparently, the cumulative effect of cybercrimes provides a disturbing framework about the fragility of emerging economies regarding any kind of cyber attacks, such as market manipulation and fraudulent obtaining access codes to the bank accounts of customers. However, there is an important advantage related to the poor level of development of emerging economies compared with developed countries. Thus, the use of information technology and consequently the Internet are not very high and extensive for emerging countries, but there is a strong upward growth trend. The non-financial implications of cybercrimes include a number of extremely important issues such as : loss of customer confidence, negative publicity (image scandals, reputational damage), diminishing productivity, business discontinuity, loss of confidential customer or company data (informations), unauthorized access to certain product innovations, loss of intellectual property and so on. Sometimes it is very difficult to accurately estimate the cost of cybercrime attaks considering certain non financial implications. Furthermore, the non-financial implications of cybercrimes are rather difficult to commensurate based on a quantitative approach but undoubtedly it have a very high impact with extremely dramatic consequences. 4. Conclusions The main aim of this research paper is to investigate financial and non-financial implications of cybercrimes in emerging countries. Unfortunately, the phenomenon of cybercrime is an inevitability of modern era due to recent advances in information technology. However, the actual very disturbing insight suggests that cybercrime is a growing industry. Currently, the Internet traffic expands considerably in emerging countries contributing significantly to increased exposure to cybercrime attacks. As an alternative, security and protection strategies must achieve a higher level both in terms of technology and allocated resources. The rigorous measures anti-cybercrime threat should involve companies, forensic departments, government agencies, public institutions and even ordinary people (as Internet users) in order to achieve effective results. References Brown, I., Edwards, L., Marsden, C., (2009) Information Security and Cybercrime, Law and the Internet, 3rd Ed., L. Edwards, C. Waelde, eds., Oxford: Hart Kigerl, A., (2012) Routine Activity Theory and the Determinants of High Cybercrime Countries, Social Science Computer Review, vol. 30, no. 4, pp. 470-486 Lagazio, M., Sherif, N., Cushman, M., (2014) A multi-level approach to understanding the impact of cyber crime on the financial sector, Computers & Security, Elsevier, Vol. 45, pp. 58-74 Saini, H., Rao, Y.S., Panda, T.C., (2012), Cyber-Crimes and their Impacts: A Review, International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622, Vol. 2, Issue 2, pp.202-209 Van Wilsem, J. (2013) Hacking and Harassment—Do They Have Something in Common? Comparing Risk Factors for Online Victimization, Journal of Contemporary Criminal Justice, vol. 29, no. 4, pp. 437-453 Yar, M., (2005), The Novelty of ‘Cybercrime’ An Assessment in Light of Routine Activity Theory, European Journal of Criminology, vol. 2 no. 4, pp. 407-427 *** - http://www.standardandpoors.com/en_US/web/guest/home *** - http://eu.spindices.com/regional-exposure/global/all *** - http://data.worldbank.org/ *** - http://www.msci.com/products/indexes/market_classification.html
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