A Q&A with Winston Krone of Kivu Consulting
There’s no doubt that ransomware attacks are on the rise and they’re becoming more insidious. I spoke with Winston Krone, global managing director of Kivu Consulting about what the latest version of ransomware looks like and what risk managers should do if it strikes their organization.
What is ransomware?
Ransomware is a type of malware that can infect any device where the malware is opened—typically through a link in an email, but we’re seeing variants where it’s seeded on a computer and activated remotely. Either way, it’s designed to infect other devices or hosts such as servers that the original device is connected to. Its real danger to organizations is its ability to spread across systems for two reasons:
- It can compromise vast amounts of data—once it jumps from a desktop to a server, you’re talking terabytes of data compromised rather than gigs.
- It can jump into backups and destroy the ability to restore the system. This issue has been made worse by the recent trend of synchronized backups—though regulated organizations still require long-term backup capability. If the only backup goes back a day or two and it gets lost, you don’t have earlier versions to rebuild the system.
best case scenario, you come back online in several days—the worst case scenario is that you never come back online.
How does it impact companies?
In the best case scenario, you come back online in several days—the worst case scenario is that you never come back online. Ransomware attacks affect just about every type of organization. While many have already designed systems with multiple backups so they can get back online immediately following an attack, some organizations, particularly law firms, accounting firms and manufacturing companies, haven’t developed systems for safely keeping backups.
Either way, organizations need to decide whether to pay the ransom or to try to rebuild the data themselves from other areas such as employee laptops or old computers that were offline (and thus, not hit by the malware). The do-it-yourself approach turns into a significant amount of work—many hundreds of hours of labor and business downtime—and it’s rarely less than the $5000 to $20,000 ransom. Some organizations have an aversion to paying criminals and that’s a legitimate concern, but there’s a danger in trying to rebuild the data yourself. We have seen situations where organizations try to do this and then realize later that they can’t and want to pay the ransom—in the meantime, they have overridden the encrypted data and when they pay the ransom and get the decryption key it doesn’t do them any good.
Many organizations don’t include ransomware in their incident response plans or they underestimate its significance. The ones that do include it need to update the plan on a quarterly basis, at the very least. Over the last year we have seen major paradigm shifts with new types of ransomware occurring every two weeks, in terms of the attack vector, seriousness of the attacks and how they’re launched.
Can you explain how the negotiations between the perpetrator and the attacked organization work?
In the most basic ransomware, you’re simply steered to a URL and there’s really no way to communicate with the attacker. In this situation, it’s usually a relatively small amount for the ransom, probably less than $5000. In a second variant, they supply a URL but there’s some degree of communication such as a comment field and some type of handshake where they let you test a small amount of data to prove that they actually have a decryption key and it works. In the third type, there’s direct communication by email, and these are the most expensive ransoms. In these cases, they’re open to negotiation—not about the price but about the time needed to pay the ransom or to figure out how the decryption works. In larger attacks we see a new variant whereby the basic ransom goes up by the amount of computers infected. In those cases, you can pay by individual computer affected or with a blanket global license upwards of $20,000 and they’ll give you all the keys needed. In those types of attacks, the attacker is incentivized to negotiate with you more. In general, the negotiations are not for the fainthearted—we have negotiated dozens of these cases with foreign language speakers set up with multiple identities around the world and on the dark web. Our role is to make sure the negotiations go smoothly while masking the identity of our clients to the extent that we can.
Anonymity is important. We highly recommend cloaking the identity of the attacked organization because of their ability to increase the ransom. In most cases the criminals don’t know who they’re attacking and they don’t care. However, this is something that we expect to change in the next six months or so—we think attackers will go after regulated businesses or other businesses where data is important, or choose organizations that they know carry insurance so they are more likely to get paid.
How can a company set up a bitcoin wallet in order to actually pay the ransom?
Organizations can set up their own bitcoin wallet but it is very difficult and among the lawyers and risk managers I’ve met who offer advice on this topic, almost none of them have ever actually done it themselves. It’s relatively straightforward to get a small amount of bitcoins but it’s very difficult to get a significant amount of money. Most bitcoin exchanges cap the amount of money you can get within a given time period. You can start an account and usually it takes a week to get it going and build up enough transactions to call down tens of thousands of dollars’ worth, and it’s expensive—with charges of over 15 percent per transaction. Off the exchanges, you’re dealing with sketchy people and you’re opening yourself up to getting ripped off. Unless you already have an account and a reserve of $10,000-$20,000 you’re not readily prepared to deliver a ransom.
What are some common pitfalls in this situation?
Assuming you have money lined up and you’re ready to pay the ransom, there are still a number of things that can go wrong. You have to make sure you’re paying the right people. We’re seeing increasing examples of serious criminals getting involved in the ransom business. It’s the equivalent of thieves ripping off drug dealers. We’re also seeing organizations who have been hit by multiple attacks at the same time which can interfere with the remediation process. In some cases, the decryption key doesn’t work or the IT people don’t know how to use it properly. We have also seen instances where the decryption key itself is an attempt to get additional malware on the system.
How might a forensic expert play a role here?
We can help in every step of the process, including assisting the client with the response before paying the ransom, assisting with paying the ransom (we offer the service of paying on behalf of the client with our own bitcoins), making sure all communications are anonymous and verifying that the decryption tools themselves work and don’t contain more malware. We can also determine if the ransomware is actually a cloak or cover for an actual theft of data. In those cases, the $20,000 cost of ransom is dwarfed significantly by the cost of a data breach. We’ll make sure that the encrypted data isn’t destroyed during remediation. In the newest cases of ransomware that gets set off remotely by a hacker, forensic analysis can be required by state and federal data breach regulations to determine whether confidential data has been compromised since the hackers clearly obtained some access to the network to plant the ransomware.
What else should risk managers be aware of with regard to the threat of ransomware?
We’re seeing a lot of antivirus companies that claim to be developing tools that can spot ransomware and stop it, or vaccinate computers against it, but we caution people to be very skeptical about these claims. These tools might be able to stop poorly designed ransomware but the fact is, it’s getting more sophisticated all the time—the hackers are figuring out how to outsmart us by masking the malware and the attack vector. What organizations really need to do is go back to the basics—designing a sound infrastructure for computer systems so that if there’s infection it won’t spread, and prepare for an encounter with ransomware with a detailed incident response plan.
We want to thank Winston for his granular insights into this threat, which seems to be impacting cyber liability insurance clients on a weekly basis these days. We also think it’s important for a risk manager to see that there are many challenging and nuanced steps involved in resolving this type of cyber risk. An organization should not undertake resolution without the guidance of a Breach Coach® lawyer and forensic/security expert who has experience with extortion. Mr. Krone is a frequent speaker at NetDiligence® Cyber Liability Conferences. See him inside your eRiskHub® at: