Ever since major ransomware attacks against critical infrastructure started making headlines in 2021, the sums hackers demand have only gotten higher. However, the true cost of a ransomware infection includes many factors beyond the ransom itself.
In previous years, ransomware attackers may have been content with a few hundred or a few thousand dollars, but the landscape is changing, and seven-figure sums are becoming the norm. According to BlackFog’s The State of Ransomware in 2022 report, the average ransom payout has now reached more than $258,000 – an increase of 13 percent in just six months.
Additionally, a newly industrialized ransomware-as-a-service economy has popped up to support the attackers, providing them with tools and technologies that help them deliver malware and reach their goals.
The unfortunate reality is that a ransomware victim who chooses to pay often lose more than money. In many cases they end up committing serious resources to ransomware recovery projects that can cost more than the original ransom itself!
Paying the Ransom is Only the Beginning
Organizations that pay a ransomware demand do not absolve themselves of the difficulties associated with this type of cyberattack. Many find themselves in a position similar to Lincoln College, a rural private college which made headlines following a cyberattack in December 2021.
The college made a ransom payment of $100,000 to get its data decrypted, but immediately ran into bigger problems rebuilding its systems. It estimated it would take $50 million to reopen, which, combined with the lingering impact of the pandemic, eventually proved too much for the institution. It closed its doors for good in May 2022, bringing to an end a 157-year history.
According to IBM’s latest data breach report, the average cost of a ransomware breach was $4.54 million in 2022 – but this figure does not include the cost of the actual ransom itself. It is a combined cost that includes many different factors that play in ransomware recovery. Firms that suffered ‘destructive’ attacks, where cybercriminals sought to use malware to destroy data, saw even higher expenses, at $5.12 million.
In fact, one report from 2022 estimated that ransomware payment’s themselves represent only 15% of the total cost of an attack. The remainder comes from downtime, reputational damage and investments in new security implementations, to name just a few of the extra expenses to take into account.
The true recovery cost of ransomware involves many factors, and cyber insurance can often only go so far towards covering them. We’ve collected data on three of the most important ones below:
According to Statista, The average company experiences almost three weeks of downtime when successfully targeted by a ransomware incident. What’s more, in the US alone, companies saw total costs of $159.4 million due to ransomware downtime in 2021, making this the most expensive part of the process.
From the moment ransomware gangs encrypt files, business essentially grinds to a halt. This makes collecting revenue near impossible and can also drag productivity down to zero. If your business processes rely on a complex supply chain, there is a real risk of losing access to resources that get diverted to other companies (or your competitors).
Once you recover your encrypted data – either by paying for a decryption key or through other methods – it rarely means your business gets back up and running instantly. Forcibly shutting down complex business operations almost always comes with additional costs that are difficult to predict and even harder to compensate for.
Backups have proven to be a reliable method of limiting the damage of a successful ransomware attack, but they incur expenses as well. Even a small organization might have thousands of transactions occurring on a daily basis. If you create daily backups of your mission-critical business systems, you may still lose thousands of transactions as a result of ransomware.
This data loss compounds the downtime costs associated with the attack. For the impacted customer accounts, your company is essentially offline. They cannot meaningfully derive value from working with you, so the overall effect is almost the same as actual system-wide downtime.
Being the victim of ransomware can severely impact the way users and customers perceive your brand. When people know you have been targeted by hackers, they may choose to distance themselves (and their personal data) from your organization for months or years after the fact.
This is understandable behavior, and it’s difficult to control. Organizations have to report ransomware attacks to the authorities, and they’re obliged to inform users and customers about those attacks. Failure to do so leads to even more significant reputational damage on top of fines and legal consequences, depending on your jurisdiction.
Every individual who entrusts your organization with their personal details – whether it’s their phone, credit card, or social security number – expects you to have strong data protection and do everything in your power to keep it out of the hands of any threat actor. They expect you to protect their confidentiality no matter how many millions of dollars it may cost. Breaking that trust through poor network security carries long-term consequences that are difficult to quantify. Class action lawsuits, such as the one recently filed by customers of cloud computing firm RackSpace in December 2022, are another risk facing organizations that fail to keep customer data secure.
The current era of ransomware variant tactics that trend towards double extortion attacks (where hackers demand ransoms from organizations and extort money from the individuals whose sensitive data they’ve stolen at the same time) makes reputation even more important. Your customers may be impacted by ransomware attacks even if your organization successfully avoids paying the ransom.
According to a PricewaterhouseCoopers report, almost nine out of every ten consumers say they’ll take their business elsewhere if a data breach occurs. People are cognizant of security risks and will take decisive action if their needs are not met.
The way your security team addresses ransomware risk is an important part of your brand’s core values. If your customers believe you will sell their data to hackers in order to save your own business, they are unlikely to continue doing business with you for very long.
New Security Implementations
Disaster recovery is just one aspect of the ransomware defense playbook. You still have to build better and more robust infrastructure after the fact to prevent future attacks. When an organization suffers a cybersecurity incident, it generally responds by investing significantly in its security technologies and personnel. These investments tend to be made in haste, with little time or effort spent on carefully optimizing security deployments according to the organization’s risk profile.
This is understandable but it drastically heightens the cost of implementing security solutions after a ransomware attack. If the attack exposed critical weaknesses in your IT infrastructure, you may need to rebuild significant elements of your system and the associated costs this comes with.
In order to optimize new security deployments, you’ll have to conduct a thorough investigation of the ransomware attack itself. You’ll need to glean insight from that investigation and use it to create a security solution that will prevent many different types of attacks from occurring in the future.
This entire process can be prohibitively expensive when undertaken in a rush to meet leaders’ expectations and reassure stakeholders that the company is still in good standing. It is crucial that companies invest adequately and treat the problem as a serious threat. Attacks like the one at Wyandotte County are becoming all too familiar. Management refused to believe they would be attacked, even after several warnings from experts that they had insufficient technology and personnel.
Prevention is Much Easier Than Recovery
Ransomware protection is critical to business continuity in today’s threat landscape. Organizations can’t continue to simply pay ransom demands and hope to escape the repercussions that inevitably follow. The true cost of ransomware goes way beyond the ransom itself and recovering from an attack is an incredibly difficult and costly process. Therefore, ransomware prevention is the best form of defense.
Using best-in-class data exfiltration protection to prevent ransomware attacks is a much more efficient way to guarantee business uptime, control your reputation, and give yourself room to make intelligent investments. Speak to a data exfiltration expert about prevention-based solutions for your organization today.
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