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Cyber insurance isn’t the answer for ransom payments | #ransomware | #cybercrime


Ransomware remains an ongoing threat for organizations and is the largest single cause of IT outages and downtime as 41% of data is compromised during a cyberattack, according to Veeam.

“Ransomware is endemic, impacting 3 out of 4 organizations in 2023. AI is now enabling the creation of smarter, more advanced security, but it’s also facilitating growth in the volume of sophistication of attacks,” said Dave Russell, SVP, Head of Strategy at Veeam.

“Our report delivers a clear message: ransomware attacks will continue, be more severe than predicted, and the overall impact will cost organizations more than they expect. Organizations must take action to ensure cyber resiliency and acknowledge that rapid, clean recovery matters most,” added Russell.

Cyberattacks stress IT and security teams

Cyberattacks naturally affect an organization’s financial stability, but just as significant is the toll it has on teams and individuals. When a cyberattack strikes, 45% of respondents reported heightened pressure on IT and security teams. Additionally, 26% experienced a loss of productivity, while 25% encountered disruptions to internal or customer-related services.

The report shows that the human impact of cyberattacks cannot be overstated. 45% of surveyed individuals cited increased workload post-attack, while 40% reported heightened stress levels and other personal challenges that are difficult to mitigate on ‘normal’ days. These challenges, coupled with existing organizational struggles, further underscore the importance of effective cyber defense strategies.

Despite increased focus on cyber-preparedness, organizations still face a misalignment between their backup and cyber teams. For the third consecutive year, 63% of organizations find their backup and cyber teams lacking synchronization. Adding to the misalignment challenges in organizations, 61% of security professionals and 75% of backup admins believe that the teams need either ‘significant improvement’ or that a complete system overhaul is required.

Paying the ransom does not ensure recoverability

For the third year in a row, 81% of organizations surveyed paid the ransom to end an attack and recover data. One in three of these organizations that paid the ransom still could not recover even after paying. And also for the third year in a row, more organizations ‘paid, but could not recover’ than those organizations that ‘recovered without paying.’

Contrary to the belief that having cyber insurance increases the likelihood of ransom payments, Veeam’s research indicates otherwise. Despite only a minority of organizations possessing a policy to pay, 81% opted to do so. Interestingly, 65% paid with insurance and another 21% had insurance but chose to pay without making a claim. This implies that in 2023, 86% of organizations had insurance coverage that could have been utilized for a cyber event.

The ransoms paid averages to be only 32% of the overall financial impact to an organization post-attack. Moreover, cyber insurance will not cover the entirety of the total costs associated with an attack. Only 62% of the overall impact is in some way reclaimable through insurance or other means, with everything else going against the organization’s bottom-dollar budget.

The most common component of a cyber preparedness playbook is a “good backup.” While cyber and backup teams may not always be organizationally aligned, when asked about the existence of an incident response team (IRT) and whether that team had a playbook, a mere 2% of organizations lacked a pre-identified team. Additionally, only 3% had teams but without a playbook in place.

Most organizations risk reintroducing infections

Surprisingly, there was no significant variation between how much data was affected within the data center vs. data within remote offices/branch offices or even on data hosted in a public or private cloud. Meaning that all IT infrastructure is just as seamlessly available to the attacker as it is easily accessible to the users.

Alarmingly, 63% of organizations are at risk of reintroducing infections while recovering from ransomware attacks or significant IT disasters. Pressured to restore IT operations quickly and influenced by executives, many organizations skip vital steps, such as rescanning data in quarantine, causing the likelihood of IT teams to inadvertently restore infected data or malware.

As a ‘lesson learned’, respondents of prior cyberattacks now recognize the importance of immutability with 75% of organizations now utilizing on-premises disks that can be hardened and 85% are utilizing cloud-storage with immutability capabilities. In fact, half of their overall backup storage is immutable, highlighting good improvements but with more work to be done.

The Veeam 2024 Ransomware Trends Report surveyed 1,200 respondents — comprised of CISOs (or executives with similar responsibility), security professionals, and backup administrators — whose organizations suffered at least one ransomware attack in 2023 to assess different perspectives in the united fight against ransomware.



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