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Cyber Crime Huge Threat to Business: Expert

Industrial espionage now takes place on a huge scale and is a serious problem affecting businesses including investment banks as they lose competitive advantage to fraudsters, Lord John Reid told CNBC.

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"Industrial espionage gives you a competitive advantage on transactions. We've got some investment banks being entered now giving competitors a huge advantage. Reputational damage is also being done, this is a serious problem," Lord John Reid principal at the Chertoff Group, who held various senior positions in the last Labour government, told CNBC Tuesday.

He admitted that the Internet and social media were a double edged sword.

While they could facilitate criminal activities, they were also a force for good, bringing knowledge and information swiftly in a fast-moving globalized world.

"The Internet, electronic communications bring huge opportunities to all of us because of interchange, finance, trade and information, knowledge and education.

It is a huge step forward for the human race. But the interdependence it brings causes huge vulnerabilities. This is a problem for industry and CEOs," Reid added.

GCHQ – part of the UK government's intelligence armory - confirmed earlier in the week to British newspaper the Times that the level of cyber crime afflicting businesses, individuals and government was at a "disturbing level".

Attempts to secure access to data relating to intellectual property, government databases and individuals financial details were being made regularly, the Times report said.

Lord Reid's warnings come ahead of a cyberspace security conference hosted by the UK's Foreign Office in London on Tuesday, where foreign secretary William Hague will host governments, international businesses and organizations to discuss the threats and opportunities of cyberspace.

"For businesses they need to recognize, appreciate and pay attention to the fact that protecting your reputation, information and data is no longer an optional add on.

This is absolutely central, core business now," Reid said.

Reid warned that failure to do so would leave businesses vulnerable to hackers and damage commercial enterprises and reputation.

"This is transnational so what governments should be doing is trying to get support right across governments and international institutions for a serious of principles, a doctrine which could then formulate the basis for a working method on this," Reid said.

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