Financial Costs of a Ransomware Attack and Breaking the Attack Chain Ransomware is a form of malware that usually uses encryption to block or limit access to data until a ransom is paid.
For businesses that suffer from a ransomware attack, the collateral damage to revenue is often worse than the size of the ransom and whether to pay it or not. The financial damage can be wide-ranging and go far beyond the amount of the ransom.
The ransom
Experts recommend that companies do not pay ransoms as it gives cybercriminals a motive to continue. Companies that do end up paying the ransom are often disappointed with the results.
- The data they recover is damaged.
- The attackers demand more money.
- The attackers vanish, and they don’t recover their data.
Recent studies by Sophos and Pao Alto put the average ransomware attack costs at between $570,000 and $812,360.
As cybercriminals now use asymmetric encryption methods, being able to decrypt the data is highly unlikely. If you don’t want to pay the ransom, you will either have to recover the data from replicas or backups or lose it altogether.
When you experience a ransomware attack, it is better to cut your losses and follow your incident response plan. If you have an effective recovery plan in place, you may be able to recover your data with minimal disruption, and you won’t need to pay the ransom. A recovery plan usually involves five steps: assess, mitigate, respond, communicate, and retrospect.
Prevention is always better than trying to deal with the extensive damage a ransomware attack can cause. Find out more about how to reduce the risk of becoming a ransomware victim in the first place at Perception Point.
Downtime and labor costs
While your systems are down, you will suffer financial losses. Most organizations take at least a week and often much longer to recover data. Until it is restored, your whole operation is likely to be crippled. Customer data is crucial to running a business smoothly, and without it, you will battle to sell products, service clients and much more. A typical productivity loss can be up to 20% during downtime.
In a 2021 ransomware attack, the Kaseya attack, about 1,500 managed service provider customers were affected. This shows how supply chain attacks cause more widespread damage than attacks against single individuals.
IT teams often have to work overtime to restore systems, and there is usually a backlog of work throughout an organization due to a lack of access to data. Extra consulting or specialist support may be needed to resolve data issues.
The cost to brand reputation
A damaged brand reputation is hard to repair, and this can have an extensive financial impact. Any negative publicity about a data breach can affect the relationship not only with customers but with employees, investors and other stakeholders. Research from the National Cyber Security Alliance indicates that about 60% of small to medium businesses go out of business within six months of experiencing a data breach.
Legal expenses
There’s a growing trend for cybercriminals to threaten to expose sensitive data they exfiltrate prior to encryption. Where the data is mission critical, such as in hospitals, government or emergency call centers, this can cause catastrophic harm.
In some industries, clients can claim direct compensation for a data breach. Scripps Health, retail giant Target, and gas company Colonial Pipeline are just some of the companies that have faced class-action lawsuits.
Most cases are settled out of court as companies don’t want to face protracted court battles. Regulatory and legal fines can be particularly high for the leaking of personal health data, financial information like credit card details, and personally identifiable information.
Data loss and collateral damage
You may lose some data completely due to a ransomware attack. The loss of data may represent hundreds of hours of work. Even if you can restore files from backups, there’s a chance they were not backed up completely or correctly. Today there are ransomware variants that also target backup systems so you can’t restore data.
You will need to find out how cybercriminals gained access to your systems. There are many ways they can do so, from sending out phishing emails and setting up fake websites to directly attacking software vulnerabilities.
Infected machines may have to be completely reformatted, and software reinstalled. You will probably need added protection to make sure another data breach does not occur.
In the current economic situation with inflation and recession, all the expenses of a ransomware attack may cause a significant financial setback. In 2020 various reports indicated that the average cost of cleaning up after a ransomware attack could be up to $1.85 million. If you don’t clean up your data and fix any underlying issues, you could risk another attack.
How to prevent ransomware attacks
- Having security systems in place, employee training, and robust configuration management are some of the ways to prevent ransomware attacks.
- It is very important to stay up to date with the latest operating software.
- Make sure you have complete and up-to-date backups as they can help you to recover data.
- Keep your computer systems up to date, and don’t forget to apply security patches.
- Continuously check security to make sure you have the right measures in place.
IT professionals need to take a preventative approach as once hackers get inside your organization, it can be hard to minimize the damage. You need to securely protect every channel, with email often being one of the most vulnerable ones.
Cybercriminals continue to use ever-more sophisticated techniques to deliver ransomware via email. You need to look for advanced email security solutions that use fast and effective dynamic scanning. Solutions should also have the ability to detect threats buried deep inside content.
Conclusion
Ransomware can be financially damaging to businesses in many different ways, including ransom costs, downtime costs, labor costs, reputation damage and legal costs. Organizations need to take a holistic look at their cybersecurity defenses. Identifying and dealing with potential risks and channels, such as email and cloud collaboration tools, can help to mitigate ransomware attacks.
