Ransomware is a type of malicious software designed to block access to a computer system until a large sum of money is paid, and it has emerged as a significant threat across various sectors.

Given its crucial role in the global economy and handling vast amounts of sensitive data, the financial services industry has become a particularly attractive target for ransomware attacks.

Ransomware attacks have become more sophisticated over time, with cybercriminals employing advanced techniques to carry them out. They have added measures such as pre-emptive early data exfiltration to pressure victims into paying the ransom.

Common ransomware attack vectors

Cybercriminals typically demand a ransom in a ransomware attack by encrypting the victim’s computer system or data and then demanding a ransom payment in exchange for providing a method to decrypt it. They may also copy the victim’s data during the attack and threaten to sell or publish it if the ransom is not paid.

Ransomware attacks have evolved to include additional tactics such as pre-emptive early data exfiltration, where cybercriminals steal data before encrypting it, and then use it.

Phishing emails are the primary way ransomware is delivered. They are designed to trick users into executing actions without realising the malicious intent. Phishing emails can usually be sent to many recipients simultaneously, making it a cost-effective method for cybercriminals to target a wide range of individuals and organisations. This increases the chances of someone falling victim to the phishing attempt. Cybercriminals capitalise on the lack of awareness among targeted users to make their attacks more successful.

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Cybercriminals continuously evolve their phishing tactics to stay ahead of security measures. They adapt their techniques, use new social engineering tactics, and create more convincing email templates to bypass security filters and deceive recipients.

The rise in attacks in recent years

The number of ransomware attacks has been on the rise. According to GlobalDatas 2024 Cybersecurity report, in 2023, one in every 10 organisations worldwide was targeted by attempted ransomware attacks, marking a 33% increase from the previous year. Organisations worldwide experienced an average of over 60,000 attacks each, highlighting the scale of the problem.

In late March 2021, CNA Financial, one of the largest commercial and casualty insurance companies in the US, was hit by a ransomware attack from a group called Phoenix. The attackers used Phoenix Cryptolocker ransomware to disrupt CNA’s network, demanding a $40m ransom. CNA paid the ransom within two weeks after the attackers stole customer data and encrypted the network. In response, CNA deployed endpoint detection and monitoring tools to aid in the restoration process.

Impact on financial institutions

Ransomware attacks can have devastating effects on financial institutions. Operational disruptions are immediate, critical systems are locked, and employees cannot perform essential functions. For instance, during an attack, customer transactions and accounts can be halted, and access to financial data can be lost, severely affecting day-to-day operations and eroding customer trust.

Financial losses are substantial, extending beyond the ransom payment itself. Institutions face costs associated with recovering and restoring data, legal fees, and potential regulatory fines. There are indirect costs, such as lost business opportunities and diminished market reputation. Reputational damage can be long-lasting as customers may lose confidence in the institution’s ability to protect their assets and personal information.