Technology economist Frank Bernhard of the University of California at Davis recently completed a study of 3,000 U.S. businesses and determined that security gaps cost them about 5.7 percent of annual revenue in what he calls "economic leakage."

The security problem on the Internet is growing faster than anyone could have dreamed a couple of years ago, Bernhard told NewsFactor Network.

56,000 Viruses

Bernhard said security issues crept up on businesses that were tightly focused on Y2K in 1999 and on establishing a Web presence in 2000.

"This year could make the Y2K scare look innocent, because it is really happening," Bernhard told NewsFactor. "The Internet is not a very secure place."

Fugi Saito of Edmonton, Canada-based ZeroHype Technologies, said there are 56,000 viruses "out in the wild, and thousands of new ones being created every year."

Saito is seizing the opportunity to turn the problem into an advantage for his company by adding day-long hacking sessions to ZeroHype's training seminars.

Cost for the seminars ranges from US$500 to $750, and over $5,000 for more in-depth courses, with the tab generally being picked up by larger corporations that hope to put an end to the costly attacks.

"If they understand the offense, they can build a defense," Saito said.

World Leaders Hacked

Just this week it was reported that computer hackers obtained confidential information in Switzerland -- including private phone numbers and credit card details -- on 27,000 of the world's political and business leaders, including Bill Gates, Bill Clinton and Yasser Arafat.

The information about people who attended the World Economic Forum, staged each year in Davos, Switzerland, was on a CD-ROM shown to a Zurich newspaper, according to published reports.

The attack was led by unnamed campaigners against global trade called "hacktivists," who hacked into the foundation that stages the annual meeting.

No One Responsible

Web use has grown so quickly that so far no one has taken overall responsibility for security.

In the United States, Congress is still bogged down on basic privacy issues and anti-spam legislation -- a far cry from the growing problems presented by hackers and the economic and security damage they are causing, which ranges from theft of sensitive information to loss of credibility.

"We are hoping Congress will take this and other privacy problems seriously this year," analyst Andrew Shen of the Electronic Privacy Information Center in Washington, D.C., told NewsFactor.

Push For Cybercrime Laws

Besides plugging the holes that allow marketing tracking devices and illegal e-mail wiretapping, Shen said there is a push to draft cybercrime laws by governments around the world.

Bernhard says improved Internet security was one of the top priorities at a major technology trade show in December. He expects Internet service providers to respond by beefing up their security offerings.

Until that happens, Bernhard will continue using Yahoo! (Nasdaq: YHOO) for his e-mail, which is reportedly impervious to the new JavaScript software used by Microsoft (Nasdaq: MFST) and Netscape that can allow e-mail wiretaps.