Industrial espionage is a form of corporate spying that can have a major impact on your business operations. It involves the theft of trade secrets, confidential information and intellectual property, typically for the purpose of gaining a competitive advantage.
Unfortunately, despite being illegal, it is a growing problem that can cause serious financial and reputational harm to companies that fail to protect themselves.
However, while you can’t discourage unscrupulous competitors from resorting to criminal methods, more often than not, industrial espionage doesn’t require any expert knowledge to break a business’s defenses.
Here are some of the most common situations that lead to industrial espionage.
What is Industrial Espionage?
To put it simply, industrial espionage refers to the practice of stealing confidential information or trade secrets from a company so you can gain an unfair competitive advantage. It is very different from collecting information that is readily available, such as monitoring a competitor on social media, for example.
According to the FBI, industrial espionage costs US businesses billions of dollars every year. Individuals and organizations behind these acts can be anyone from organized foreign governments and criminal groups to disgruntled employees.
So what does the practice of industrial espionage include:
- An insider spy, aka an individual who has gained employment within the company for the sole purpose of sharing information
- Cyberespionage, aka hackers accessing digital assets from outside the company
- Property trespassers, aka someone breaking it to steal information or wiretap a location, for example
How does Industrial Espionage Harm your Business?
Corporate or economic espionage, as it is also referred to, can dramatically affect your business. Ultimately, as the purpose is to steal trade secrets and confidential information to gain a market advantage, it is easy to see how the target company can experience serious losses:
The loss of trade secrets can make a business lose its competitive edge. As a result, the growth potential and profitability of the operations are compromised.
When confidential information is stolen and/or leaked, it can seriously damage a business’s reputation in the industry. This can lead to a loss of credibility and trust among suppliers, stakeholders and customers.
Financial loss is also a consequence of espionage, as competitors can use the information to target your customers. This will gradually erode market shares and reduce profits.
Finally, the targeted business could also be legally liable for the damage caused to the customers or suppliers when confidential information is exposed.
Protecting your Business
As mentioned, industrial espionage may not necessarily be an organized crime. In many cases, it is driven by an unexpected opportunity.
For example, if an employee feels disgruntled, they may take revenge by sharing confidential information about the company. More often than not, treating employees and suppliers with respect can help prevent them from acting against the company.
Suspicious employees may choose to reveal information and leave the company. When this happens, businesses need to prove the act and take legal action against the former employee. This can even require looking for them via skip trace collection services, but it is necessary to protect your reputation and recover from the damage.
Most of your competitors are not equipped to wiretap your communication with your customers. But using unencrypted and unsafe communication tools can make it easy for competitors to gain an advantage. So, it’s essential to research your options and pick safe communication apps for your business.
Is industrial espionage a risk for small businesses? The answer is yes, but it is more likely to happen by accident, such as lacking security protocols or pushing employees to the limit. Make sure not to give your competitors an opportunity to steal your secrets!