Strategy & Leadership

Open secrets? Guarding value in the intangible economy

June 09, 2021

Global

Trade Secrets

June 09, 2021

Global
Ailia Haider
Analyst, The Economist Intelligence Unit

Ailia Haider is a Research Analyst in The Economist Intelligence Unit's Public Policy and Thought Leadership practice and has been responsible for delivering both internal and external for clients ranging from public and private sector stakeholders to multilateral organisations. Ailia manages research for a number of programmes focused on the intersection between technology, society and policy, including a recent programme focused on assessing the business case and core considerations for responsible AI.

Open secrets? Guarding value in the intangible economy is a report commissioned by CMS and written by The Economist Intelligence Unit. It explores the extent to which firms identify intangible assets as trade secrets and implement protective measures to safeguard them accordingly.
 
Half a century ago a company’s value was overwhelmingly derived from its physical capital – the assembly lines and buildings it owned, and the products it made. Today’s firms are built on intangible capital, with assets in the form of software algorithms, brand, customer data, business plans, engineering specifications, product formulas and organisational capital accounting for as much as 90% of the S&P 500’s total assets – up from just 17% in 1975.
 
Privileged access and secrecy are inherent to the value of many of these assets, making them by definition “trade secrets”. Whether or not firms identify them as such, these assets are vulnerable to employee leaks, competitor theft and cyberattacks – risks that continue to grow as more business is conducted online and across borders, and as more employees work remotely. Yearly, the cost of trade secret theft reaches up to USD 1.7trn.
 
To better understand the extent to which firms identify intangible assets as trade secrets, and seek to protect them accordingly, The Economist Intelligence Unit (EIU) conducted a survey, supported by CMS, of more than 300 corporate executives based in six countries. Our research finds that the risk to high-value intangible assets is a growing concern which warrants proactive protective measures: firms widely recognise that proprietary information is essential to their organisation’s value, and many have already taken steps to protect it, primarily through targeted cybersecurity measures and increasingly through employee regulation. A majority of respondents report that a breach to trade secrets would have significant financial consequences for their organisations.
 
To learn more, download the report.

Receive forward-looking perspectives from our editors - Subscribe now for our Weekly Digest