Cybercrime soars. (Up Front: news, trends & analysis).

Cybercrime is on the rise and, as a result, so are financial losses, according to a recent FBI report. But businesses aren't reporting breaches, the seventh annual "Computer Crime and Security Survey" found.

The survey consists of 503 security practitioners from corporations, government agencies, financial and medical institutions, and universities. It reports that 90 percent of respondents had detected a security breach within the past 12 months. However, only 34 percent reported the intrusions to law enforcement officials. (In 2001, 36 percent reported.)

Eighty-five percent of respondents said they had been hit with a computer virus. Other serious cyberattacks included Web site defacement and denial-of-service attacks.

But there is much more illegal and unauthorized activity going on in cyberspace than corporations may admit to their clients, business partners, stockholders, and law enforcement, says Patrice Rapalus, director of the Computer Security Institute, which prepared the survey with the FBI's Computer Intrusion Squad in San Francisco.

Many businesses keep quiet because they fear bad publicity and divulging proprietary information to investigators. Regardless of whether they're reported or not, cybercrimes cost business big dollars. The total amount reportedly lost to cybercrime in the past 12 months was $455.8 million, compared with $378 million in 2001 and $265 million in 2000. According to the study, financial losses from cybercrimes most commonly occurred through theft of property--$170 million--and financial fraud--$115 million.

Eighty percent of participating companies acknowledged some type of financial loss due to computer breaches. But 44 percent could not quantify their losses.

The 2002 survey also found that external threats were greater than internal ones. Twice as many respondents reported that their Internet connection was attacked more frequently than their internal systems. But employees are not innocent either. Financial losses due to employee abuses such as inappropriate use of e-mail or accessing pirated software increased to $50 million from $35 million last year.

The tide of cybercrime is expected to keep rising. According to the Computer Emergency Response Team Coordination Center (CERT/CC) at Carnegie Mellon, cybercrime will continue to hit "critical infrastructure" industries such as telecommunications, energy, banking, and finance hard. CERT/CC predicts that the number of Internet security breaks in the United States this year will surpass 40,000--twice the number of 2001 attacks.

What can you do to protect your business? A lot more than you're probably doing now. According to the FBI study, companies and federal agencies have failed to adopt effective security to protect their computers and networks from Internet attacks, despite repeated warnings about the threat posed by foreign governments, terrorists, and hackers.

The FBI says many agencies and companies still do not use passwords properly and some cannot detect intruders. Government systems overall are so porous, specialists say, that hackers can even use an innocuous agency's network to breach other, more sensitive systems via the Internet. And the private sector is just as vulnerable.