“Historically, . . . [trade secret protections] have been viewed as a cost, not an investment.” CREATe.org and PwC recently released a report titled “Economic Impact of Trade Secret Theft: A framework for companies to safeguard trade secrets and mitigate potential threats.” If you read this blog, you should read the report.
Next week, I will be interviewing for this blog one of CREATe.org’s principals responsible for the report. (CREATe.org is a non-profit “dedicated to helping companies and their suppliers and business partners reduce counterfeiting, piracy, trade secret theft and corruption.”)
The report seeks to change the mentality described in the above quote. It starts by estimating the cost of trade-secret theft, and concludes (based on a review of various proxies for trade-secret theft) that economic losses based on trade-secret theft amount to between 1 and 3 percent of GDP. Hopefully, numbers like this draw greater attention to the real risks companies face.
It next outlines of categories of “threat actors” — those who seek to steal trade secrets. These include nation states, malicious insiders (including current and former employees, third-party consultants, and suppliers), competitors, transnational organized crime, and hacktivists (who try to use corporate information for political or social purposes).
Regarding employees, the report notes that “cultural and technological factors may heighten the insider threat in coming years . . . The nature of U.S. employees’ loyalties to their employers is changing because of the much higher rate of lifetime job changes.” The report also identifies “bring your own device” policies as an increased risk.
The report presents a framework for companies to identify and evaluate their trade secrets, audit their current protections, and make value-based improvements to these protections based on measuring ROI. This approach involves key stakeholders, educates them about the risks of trade-secret theft, and helps make the business case for protections.
While I have some issues with the framework (which, if handled improperly, could create documents that may undermine litigation efforts, and would likely need to be altered for many small mid-sized businesses), it provides a comprehensive, incredibly useful starting point and roadmap.
Next week, I’ll examine the report in greater depth when I interview CREATe.org.