Ransomware is any type of malicious software that infects a computer. It generally either prevents the computer from working as it should or prevents access to certain files until the user pays a ransom. Typically, the hackers behind the ransomware demand bitcoin—a type of digital currency that is difficult for police to trace.

Research indicates the damage caused by global ransomware will exceed $5 billion in 2017, according to Cybersecurity Ventures. Up from $325 million in 2015, the costs represent not just the amount of the ransom, but also the costs of downtime and lost productivity.

Businesses of all sizes have become targets of ransomware, as it can infect not only personal computers, but also entire networks and servers.

 

How Ransomware Can Spread

There are different ways that ransomware can spread, including the following:

  • Visiting fake or unsafe websites
  • Opening emails or email attachments from unknown sources
  • Clicking on suspicious links in emails or on social media

 

What Ransomware Does to Your Computer

There are two main types of ransomware that can hold computer systems hostage:

  • Lock-screen ransomware works by displaying a window on the computer’s lock screen that attempts to prevent access to the computer. The message on the lock screen may even claim to come from the federal government, accusing the user of violating a law and demanding a fine.
  • Encryption ransomware works by keeping the computer available but encrypting certain types of files, thus making them unreadable. The files most commonly affected are those that include sensitive information. The hacker often assumes those to be of the most value. When people try to access the files, they then see a pop-up screen that instructs them to buy a private decryption key that can decrypt the scrambled files.

 

How to Respond

Some operating systems provide instructions for responding to lock-screen ransomware, although they cannot guarantee the results. In contrast, encryption ransomware has no quick fix without an encryption key, which only the hackers typically have access to.

Regardless of the type of ransomware, experts recommend against paying the ransom. After all, there is no guarantee that you will regain access to your computer, network or files after you pay. Furthermore, by paying the ransom, you could be encouraging future cyber crimes. If your business is affected by ransomware, take the following steps:

  • Report the event to your local FBI office.
  • File a complaint with the Internet Crime Complaint Center.
  • Restore file backups, if you have them.
  • Check your insurance coverage to see if it covers the costs of ransom money paid and lost business.

 

What to Do if You’ve Already Paid the Ransom

Without access to essential data, business often comes to a halt. So, the desire to quickly regain access often tempts business owners to pay the ransom. If you’ve paid the ransom, contact your bank and call the police as soon as possible. Credit card companies may be able to block the transaction and refund you if you contact them promptly.

The Federal Trade Commission’s OnGuard Online website is a good resource for more tips on what to do if you’re affected by ransomware or any other type of internet fraud.

 

How to Protect Your Business

Cyber extortion from ransomware is a legitimate threat to all businesses—no matter the size. The best method of prevention is to keep confidential information and important files securely backed up in a remote location that is not connected to your main network.

In addition to backing up your files, taking the following prevention measures can help keep your information secure and prevent you from becoming a victim of cyber attacks:

  • Teach your employees about ransomware and the importance of preventing it.
  • Show your employees how to detect suspicious emails and attachments. For example, watch for bad spelling or unusual symbols in email addresses.
  • Develop a protocol for reporting incidents of ransomware and other suspicious cyber activity.
  • Develop a schedule for regularly backing up sensitive business files.
  • Update your company software as soon as new updates are released. In doing so, you can patch the security vulnerabilities that cyber criminals rely on, and avoid becoming an easy target.
  • Purchase cyber liability insurance that not only helps you respond to threats, but can also help cover the cost of the ransom and any other losses incurred as a result of cyber extortion.

 

Ransomware Insurance

With ransomware attacks on the rise, the role of insurance is becoming more robust. And, although ransomware coverage has been traditionally sublimited within cyber policies, stand-alone cyber policies that cover ransomware are becoming more necessary.

In an attempt to find additional coverage for ransomware, many businesses and carriers have been turning to kidnap and ransom (K&R) policies. K&R policies have traditionally been used by organizations to protect their executives, not to protect against ransomware. Because K&R policies were not designed for ransomware, they may only provide a quick fix. K&R policies tend to be less suitable for ransomware than cyber policies and payouts tend to be lower.

 

Policy Definitions, Terms and Conditions

Since cyber insurance lacks official standards, organizations should review all policy language with a broker before choosing a plan that effectively covers ransomware. Policies can vary significantly in their language and coverage options. Therefore, insurance experts recommend policies that—at the very least—provide coverage for extortion demands and payments as well as lost income resulting from an attack.

Organizations should also take a close look at the following definitions, terms and conditions when choosing a policy:

  • Sublimits and deductibles—Most policies set a sublimit for covering ransomware. It is important to review this limit carefully. Demands may start on the low side, but can increase quickly. Also, since making a ransom payment may make organizations a target for subsequent ransom demands within the policy year, the deductible amount should reflect that risk.
  • Payment terms—Most policies require prior written consent before the insured can pay any ransom. This can result in payment delays and increased demands by the hackers. An organization may pay a ransom in order to resume business. However, without prior written consent by the insurer, there’s a chance that it may not be reimbursed. Therefore, organizations need to be comfortable with a policy’s terms in order to avoid compromising coverage.
  • Definition of extortion—It is important for organizations to fully understand and agree with their insurance company’s definition of extortion, since the definition dictates the trigger for coverage. For example, although hackers may intend to sell or misuse information, the ransom demand may only involve a countdown timer and demand for money. While the combination of the two may seem like an obvious threat to the insured, a carrier could possibly deny coverage on the basis that there was no explicit threat to sell or misuse information—all because of its unique definition of extortion.

What to Look for in a Policy

Companies should look for ransomware coverage that uses broad terminology. It should protect against a wide range of threats. including threats to do the following:

  • Access, sell, disclose or misuse data stored on your network, including digital assets.
  • Alter, damage, or destroy software or programs.
  • Introduce malicious software, including viruses and self-propagating code.
  • Impair or restrict access. Look for policies with broad terms like, “threats to disrupt business operations.”
  • Impersonate the insured in order to gather protected information from its clients, also known as pharming or phishing.
  • Use your network to transmit malware.
  • Deface or interfere with your company’s website.

 

The Importance of Risk Management

Ransomware insurance is most effective when coupled with an effective risk management program. Risk managers should work with an insurance broker to review all applicable options before choosing cyber coverage.

Don’t let ransomware—or any type of cyber exposure—threaten your business.

Contact S.S. Nesbitt & Co., Inc. to ensure you have the proper coverage and the tools necessary to protect against losses from cyber attacks and to learn more about available cyber policies and effective risk management techniques to protect your organization.


This content was abstracted from Zywave’s “Ransomware” and “Ransomware Insurance” articles.