What is Ransomware?
Ransomware is a type of malicious software that encrypts files on a device and demands payment in exchange for decrypting the files and restoring access. The first ransomware attacks date back to the late 1980s, but ransomware saw a major resurgence starting around 2005 with the emergence of encryption ransomware. Modern ransomware is often spread through phishing emails, compromised websites, and drive-by downloads that install the malware when a user visits an infected site.
Once installed, ransomware encrypts files on the infected device using robust encryption algorithms. Users are presented with a ransom note demanding payment, usually in cryptocurrency like Bitcoin, in exchange for the decryption key. If the ransom is not paid within a short timeframe, the ransom demand increases or the encrypted files may become permanently inaccessible.
By restricting access to personal files and data, ransomware can cause major disruption for individuals and businesses. The FBI estimated that over $1 billion in ransom payments were made globally in 2016 alone in response to ransomware attacks.https://www.lbmc.com/blog/digital-forensics-ransomware-law-firms/
How Ransomware Works
Ransomware is a type of malicious software that encrypts files and data on a computer system, preventing the user from being able to access them. The ransomware then demands a ransom payment, typically in bitcoin, in exchange for decrypting the files and restoring access to the computer system.
Once installed on a computer, ransomware uses cryptography algorithms to encrypt files, making them inaccessible to the user. According to Temasoft, “To encrypt files, ransomware uses encryption algorithms like AES, RSA, DES etc. and generates encryption keys to encrypt all files on the infected computer.”1 The encryption process happens rapidly, encrypting documents, photos, databases and any other files of value.
With the files encrypted, ransomware displays a ransom note demanding payment to decrypt the files. Ransom amounts can range from a few hundred to thousands of dollars, payable in cryptocurrency which is difficult to trace. Payment instructions are provided, often with a deadline. However, even if paid, there is no guarantee files will be restored.
By encrypting critical files and preventing access to the computer system, ransomware can cause major disruption for individuals and businesses. Restoring encrypted files without the decryption key is extremely difficult, if not impossible. This forces victims to either pay the ransom or attempt recovery without access to their files.
Damage to Personal Files
One of the most damaging aspects of ransomware is that it can encrypt personal files like documents, photos, and videos on a computer, making them inaccessible without the encryption key (cite). The encryption applied by the ransomware is usually military-grade, meaning it is essentially impossible for most regular users to crack (cite). This means that once files are encrypted, the only way to recover them is to obtain the decryption key from the attackers, which typically requires paying the ransom they demand. There have been rare instances of security researchers cracking certain ransomware strains to release free decryption keys, but this is not guaranteed.
Losing access to important personal files like family photos can be devastating. According to one survey, nearly half of ransomware victims chose to pay the ransom because the encrypted files were too valuable to lose (cite). However, even paying the ransom does not guarantee the attackers will provide a working decryption key. The FBI estimates that only about 29% of ransomware victims who pay the ransom get their files back (cite).
The best way to avoid permanent damage from ransomware is prevention through comprehensive backups (cite). However, many home computer users do not have adequate backups of their personal files, putting them at risk. The impact of ransomware on personal files makes prevention and mitigation critically important.
Loss of Access
One of the main ways ransomware damages computers is by locking users out of their systems. Ransomware encrypts files which renders them inaccessible to the user, essentially holding the files hostage until the ransom is paid. This disruption completely blocks workflow and business operations.
According to Cybereason, over 86% of businesses reported a loss of productivity as a direct result of a ransomware attack (source). In some cases, entire production lines or services may be halted, causing significant financial losses during downtime. The inability to access IT infrastructure and computer systems hampers most business functions and can bring operations to a standstill.
Beyond productivity losses, being locked out of one’s own systems can disrupt time-sensitive processes like manufacturing, shipping, and customer service. Ransomware is designed to maximize damage until the ransom is paid, but even if paid, there is no guarantee that files and access will be fully restored.
Financial Loss
Ransomware attacks can result in major financial losses for victims. According to a report by the Atlanta Fed, the average reported ransomware payment in 2022 was $4.7 million, a 144% increase from 2020 [1]. Another report by Sophos found that the average ransomware payment nearly doubled from $812,000 in 2021 to $1.5 million in 2022 [2].
The two main financial hits are the cost of the ransom payment itself, and lost revenue due to business disruption and downtime. Victims face a dilemma – pay the ransom and hope to regain access to their data, or refuse to pay but suffer prolonged downtime that hurts their operations and bottom line. According to Sophos, the average bill for rectifying a ransomware attack has risen to $1.85 million, including ransom payments, business disruption, and productivity loss [3]. The financial damage can be severe enough to shut down a business entirely.
Reputational Harm
One of the most damaging consequences of a ransomware attack is the harm it can do to an organization’s reputation. Customers lose trust when their personal data is compromised in a breach. According to a report by IBM and the Ponemon Institute, the average cost of lost business due to reputation damage after a data breach is $4.2 million.
Major data breaches often result in significant regulatory fines as well. For example, the 2021 data breach at Didi Global resulted in a $1.19 billion fine from Chinese regulators [1]. In the US, Equifax was fined at least $575 million for its 2017 breach that impacted 147 million people [1]. The potential reputational damage from both the loss of customer trust and large regulatory fines can have long lasting impacts on a company.
How to Prevent Ransomware
There are several key ways to help prevent and protect against ransomware attacks. One of the most important is training employees to identify and avoid phishing emails which are a common vehicle for ransomware. According to the Center for Internet Security, phishing emails with malicious attachments or links remain one of the top ways ransomware infiltrates systems (source). Ongoing education for employees can help them spot red flags and report suspicious emails.
Maintaining recent offline backups that are disconnected from the network is also crucial for recovering data in the event of an attack. The Cybersecurity and Infrastructure Security Agency recommends disconnecting backups from the network and testing their integrity regularly (source). This way if ransomware encrypts files, you can restore from clean backups.
Having up-to-date security software with anti-malware and anti-ransomware functions enabled can also help detect and stop threats. Make sure all operating systems and software are patched and updated as well to eliminate vulnerabilities cyber criminals exploit.
How to Recover from Ransomware
There are several steps to take in order to recover from a ransomware attack. The most important step is to restore data from clean backups that existed before the attack took place. According to TechTarget, “the only surefire way to recover encrypted data without paying the ransom is to restore it from backup.”1 Companies should maintain regular backups stored offline or air-gapped from their network so the backups cannot be accessed by ransomware.
It is also wise to consult cybersecurity experts and incident response firms who are experienced in dealing with ransomware attacks. CrowdStrike recommends assembling an incident response team that can “determine the style of ransomware, isolate affected systems to prevent spreading and analyze software vulnerabilities that enabled the attack.”2 These experts can advise on containment, negotiation tactics, and cybersecurity improvements to implement after recovery.
Authorities may be able to assist in identifying the attackers. The FBI recommends promptly reporting ransomware attacks to law enforcement. However, they caution that “paying a ransom doesn’t guarantee an organization will get its data back.”3
Some victims choose to negotiate with hackers, but this is a risky strategy with no guarantee of success. Rubrik notes that skilled negotiators can sometimes lower the ransom demand or convince attackers to share a decryption key.4 However, hackers do not always honor agreements, so organizations must weigh the risks.
Long-Term Impacts
Ransomware attacks can have ongoing disruptions and psychological effects long after the initial infection. According to research from The Long-Term Impact of a Ransomware Attack (https://www.blackfog.com/the-long-term-impact-of-ransomware-attacks/), many organizations report significant disruptions to operations and employee morale lasting months or even years after an attack.
Ongoing disruptions may include needing to rebuild systems and restore data, which can require months of IT work. Businesses may also need to notify customers, partners, and regulators about the attack and deal with the fallout of any stolen or leaked data. These efforts divert focus and resources away from core business operations.
Ransomware also necessitates permanent changes to an organization’s security practices. IT teams must implement new tools, employee training, and data protection processes. While positive, these changes require substantial time and investment. Teams may need to redo work or change procedures, impacting productivity.
Psychologically, employees often feel violated after an attack. There can be a lingering unease about the security of systems and data. Productivity can lag as workers second-guess normal practices. Leadership may blame and distrust the IT team. These human impacts can be difficult to overcome and undermine an organization long after an attack.
By understanding these lasting consequences, businesses can better prepare for and recover from ransomware. Taking steps to back up critical data, train employees, and implement cybersecurity best practices can help minimize the long-term impacts of an attack.
The Future of Ransomware
Experts predict that ransomware attacks will become even more sophisticated in the coming years as threat actors continue to evolve their tactics, techniques, and procedures (TTPs). According to Trend Micro, ransomware groups will likely increase their targeting of critical infrastructure in key sectors like healthcare, finance, energy, and government [1]. Attacks against hospitals, power grids, and other critical systems could enable threat actors to demand exponentially higher ransoms.
In addition, the global cost of ransomware is expected to rise significantly. Cybersecurity Ventures predicts that the annual global cost of ransomware could reach $265 billion by 2031, up from $20 billion in 2021 [2]. More organizations than ever will be impacted by ransomware and the ransoms demanded will increase as threat actors exploit vulnerabilities in IT infrastructure and target high-value organizations.
While security experts expect organizations to continue hardening their networks and adopting better cybersecurity practices, ransomware TTPs are also anticipated to evolve rapidly. Attacks will likely become more tailored, persistent and innovative as threat actors find new ways to infect systems, encrypt data, and pressure victims into paying ransoms.