What is Ransomware? How Does It Work?

In 2025, ransomware attacks have become one of the most disruptive and costly threats in the cyber world. Not only have they affected individuals, but their ransomware impact on businesses has been catastrophic, leading to data breaches, operational shutdowns, and long-term financial losses. Knowing how ransomware works, understanding the ransomware stages, and putting ransomware prevention measures in place is now a must for any organization that wants to stay ahead of these relentless cyber threats.

What Is Ransomware Exactly?

Ransomware is a dangerous type of malware that locks you out of your own files or systems and demands money to let you back in. It usually spreads through fake emails or infected websites that trick people into clicking. Once inside, it can shut down entire businesses, holding critical data hostage. Criminals often ask for payment in cryptocurrency and threaten to leak or destroy your information if you don’t pay. That’s why staying alert and having strong cybersecurity measures in place is more important than ever.

How Ransomware Works

Ransomware attacks typically unfold in three key phases, starting with a deceptive email and ending in encrypted chaos.

Phase 1: The Bait

The attack begins when a cybercriminal sends a carefully crafted spam email, often disguised as something urgent or legitimate. This email is designed to bypass basic spam filters and land directly in the user’s inbox. Once opened, the user is tricked into interacting with a malicious link or attachment—sometimes by merely hovering over it.

Phase 2: Infection and Deployment

As soon as the user engages with the malicious element, the malware is activated. It uses tools like cmd.exe and PowerShell to silently copy malicious files to hidden folders like AppData. It also creates registry entries to ensure the ransomware runs each time the system starts. At this point, the victim’s system is compromised, and the malware is ready to execute the next stage.

Phase 3: Encryption and Extortion

The ransomware connects with a remote Command & Control (C&C) server, which provides instructions for encrypting sensitive data. Once the encryption process is complete, the attacker delivers a ransom note demanding payment—usually in cryptocurrency. If the victim refuses to pay, they risk losing their data permanently or having it leaked publicly. The infection can also spread across the network, affecting multiple users and systems inside the organization.

Check out the diagram below to understand exactly how ransomware spreads step by step.

Recent ransomware attacks, like WannaCry, Petya, and the Hive ransomware attack, have shown just how crippling these attacks can be. In a matter of hours, ransomware can bring an entire organization to a halt. And it’s not just big corporations that are being targeted—small businesses and individuals are now on the radar, making it a widespread problem that no one can afford to ignore.

Why Is Ransomware a Major Cyber Threat?

Unlike other forms of malware, ransomware doesn’t just corrupt data or slow systems—it outright locks you out of your files and holds them hostage. This immediate, often public ransomware impact can devastate organizations, paralyzing operations and exposing sensitive data. Ransomware is a type of malicious software that encrypts a victim's files, rendering them inaccessible until a ransom is paid to the attacker. Typically, attackers gain access to a system through phishing emails, exploiting vulnerabilities, or using compromised credentials. Once inside, they deploy the ransomware to encrypt files and then demand payment, often in cryptocurrency, in exchange for the decryption key.

• In 2023, total ransomware payments nearly doubled to $1.1 billion, exceeding the $1 billion mark for the first time ever.
• In June 2024, CDK Global, a major software provider for auto dealers, experienced a ransomware attack that disrupted operations across thousands of dealerships in North America, leading to an estimated financial impact of $12 million to $17 million.
• In June 2024, the Japanese video-sharing platform Niconico suffered a ransomware attack by the Russian-linked hacker group BlackSuit, leading to a significant decline in Kadokawa's stock price by over 20% and disruptions in their publishing business.

What sets ransomware apart from other threats is its dual threat: encrypting data while also exfiltrating it for blackmail purposes. Attackers don’t just demand payment to unlock your data; they might also threaten to release sensitive information unless the ransom is paid, making the decision to refuse even more difficult.

In cases like WannaCry or REvil, the financial consequences were massive, leading to millions of dollars in damage and operational disruption. It’s this ability to combine disruption, extortion, and reputational harm that makes ransomware such a pressing issue today.

2025 Ransomware Statistics and Trends

Understanding the evolving threat of ransomware requires a close look at the latest ransomware statistics, industry reports, and attack patterns. As cybercriminals continue to target organizations of all sizes, new ransomware trends are emerging—ranging from higher ransom demands to a surge in new attacker groups. The figures and facts on ransomware collected from 2024 and early 2025 paint a troubling picture: attacks are more frequent, sophisticated, and financially devastating than ever before.

Below are some of the most critical ransomware statistics and trends that highlight the scale and urgency of this global cybersecurity threat:

• 72% of organizations reported an overall rise in cyber risks over the past year, with ransomware emerging as a top concern according to Global Cybersecurity Outlook 2025.
• 45% of organizations identified ransomware attacks as their primary cyber threat according to Global Cybersecurity Outlook 2025 .
• Ransomware attacks continue to rise globally, though with some shifts in frequency and targets. In 2024, there were over 5,400 known ransomware attacks on organizations worldwide – an 11% increase compared to 2023​. Despite law enforcement crackdowns on major ransomware gangs, the ecosystem fragmented and active ransomware groups actually grew (95 groups in 2024, up 40% from 2023) as new entrants filled the void​ (Source)
• The financial toll of ransomware is enormous and growing. Total ransom payments peaked recently and then saw a decline: victims paid out over $1 billion to ransomware gangs in 2023​. (Source)
• Nearly 63% of ransom demands in the past year were for at least $1 million, and about 30% exceeded $5 million​.
• In one high-profile case, hackers even demanded $70 million from a semiconductor company’s contractor (the 2023 TSMC supplier breach)​.

These figures underscore the urgent need for robust cybersecurity measures to mitigate the growing threat of ransomware.

Step-by-Step: What Happens During a Ransomware Attack

Ransomware attacks don’t happen all at once—they unfold in a series of calculated steps designed to trick users, gain access, and cause maximum damage. From the creation of the malicious software to the moment your files are locked and a ransom is demanded, each phase plays a critical role in the success of the attack.

Below is a step-by-step visual breakdown that shows exactly how a ransomware attack is carried out—from infiltration to encryption and extortion:

Ransomware is designed to silently take over your system, locking your important files behind encryption before you even know it's there. It follows a simple but effective process that leaves you with few options once it strikes:

• Infiltration: Attackers get in through phishing emails, malicious links, or unpatched software. You might not even notice it happening.
• Encryption: The ransomware silently encrypts your files, making them inaccessible.
• Ransom Demand: A message appears, demanding payment for a decryption key. You either pay up or lose access to your data.

By the time you see the ransom note, the damage is already done.

What Are the Types of Ransomware?

Ransomware comes in different forms, each with its own way of forcing you to pay. Some types lock you out of your files, while others threaten to expose your personal or company data. Knowing the different kinds of ransomware helps you better prepare for how they attack and how to stop them. We will delve into each of these in the following sections.

Encrypting Ransomware

This is the most common type. Encrypting ransomware locks your data using complex encryption methods. Once your files are encrypted, only the attacker can decrypt them—assuming they choose to do so after you pay.

Locker Ransomware

Instead of encrypting files, locker ransomware locks you out of your entire device or system. You won’t be able to access anything, making your machine completely useless until the ransom is paid.

Leakware or Doxware

This form of ransomware doesn’t just threaten to withhold your data—it threatens to publish sensitive information online unless the ransom is paid. This is especially dangerous for businesses with confidential customer information.

Scareware and Fake Software

Scareware tries to trick you into believing your computer is infected with a virus, prompting you to pay for fake software to "remove" it. It’s less dangerous than other types, but still annoying and often convincing enough to lead to ransom payments.

Wipers

Unlike most ransomware types, wiper ransomware aims to destroy your data rather than hold it for ransom. Once the files are wiped, they cannot be recovered, even if you’re willing to pay.

Stages of a Ransomware Attack

A typical ransomware attack unfolds in distinct stages, each designed to gain and maintain control over your systems. Understanding these ransomware stages is important to intercepting the attack before it does too much damage.

Initial access

In the initial stage of a ransomware attack, attackers typically enter your system through phishing emails or by exploiting unpatched vulnerabilities in outdated software. These phishing emails often look legitimate, tricking employees into clicking harmful links or downloading malicious attachments. Attackers can also take advantage of security flaws that haven’t been addressed. During this stage, their goal is to remain undetected, allowing them to prepare for the next steps without alerting your security defenses.

Post-exploitation

After gaining entry, attackers work to escalate their privileges—gaining access to critical parts of the system, such as administrator accounts. In this ransomware stage, they might disable security measures like firewalls and antivirus software to maintain control over the network. Their main objective is to establish persistence, ensuring they can stay within the system for as long as needed, even if the breach is discovered. Attackers may also set up backdoors for easy re-entry in the future, making the ransomware attack harder to remove.

Understand and expand

Once they have control, attackers begin exploring the network to identify valuable data and critical systems. In this ransomware stage, they look for databases, backups, and other high-value assets that will give them more leverage during the ransom demand. They often expand their reach to other connected systems, increasing the scope of the attack. The wider the impact, the more challenging and costly the recovery becomes for the victim, amplifying the ransomware impact on the organization.

Data collection and exfiltration

Before encrypting data, many attackers will steal sensitive information. This data—such as financial records, customer information, or intellectual property—is often used as extra leverage in the ransomware attack. Attackers might threaten to release the data publicly if the ransom isn’t paid, adding a layer of pressure. This data is sometimes sold on the dark web, meaning the attackers profit even if you choose not to pay the ransom, increasing the ransomware impact on both individuals and businesses.

Deployment and sending the note

In the final stage, the ransomware is deployed, encrypting the victim’s files and locking them out of their system. A ransom note then appears, demanding payment in exchange for a decryption key. This is the most visible part of how ransomware works. The note often includes a deadline, with threats of increasing the ransom or destroying the data if the payment isn’t made in time. At this point, the victim must decide whether to pay the ransom or risk losing their data permanently.

How Ransomware Affects Individuals and Organizations?

Ransomware doesn’t just lock up data—it disrupts lives and operations in very real ways. For individuals, an attack can mean losing years of personal photos, documents, and financial records in an instant. Most people aren’t prepared for that kind of loss, and paying the ransom doesn’t guarantee recovery.

For businesses and organizations, the impact runs even deeper. A successful ransomware attack can halt operations, lock down critical systems, and lead to days—or even weeks—of downtime. Sensitive customer data might be exposed, regulatory fines can follow, and the reputational damage can take years to rebuild. On top of that, organizations often face enormous pressure to pay the ransom quickly, just to get back to work.

In both cases, the emotional and financial toll is heavy. That’s why building awareness, securing systems, and training people to recognize threats is more important now than ever.

Best Ways to Protect Against Ransomware Attacks

Protecting yourself or your organization from ransomware isn’t about a single solution—it’s about building a solid, layered defense. This means combining smart technology with ongoing education and proactive security habits. Here are some of the most effective ways to stay protected:

Back Up Your Data—Often and Securely

Make regular backups of important files and store them in locations that are offline or isolated from your main systems. This way, even if ransomware hits, you can recover without paying a ransom.

Keep Systems and Software Updated

Cybercriminals love outdated software. Installing the latest updates and security patches reduces your chances of being exploited through known vulnerabilities.

Educate Your Team

Many ransomware attacks start with a simple phishing email. Ongoing employee training can help your team recognize suspicious links, fake attachments, and social engineering tricks.

Use Trusted Security Tools

Protect your systems with reliable antivirus, anti-malware, and firewall solutions. These tools act as your first line of defense by detecting and blocking threats before they spread.

Enable Multi-Factor Authentication (MFA)

MFA adds a crucial extra step when logging in—making it much harder for attackers to break into accounts, even if passwords are compromised.

Shield Your Digital World from Ransomware with Keepnet Human Risk Management

Technology alone isn’t enough to stop ransomware—because behind every successful attack, there’s often a human mistake. That’s why Keepnet takes a different approach. Our Human Risk Management platform focuses on the people behind the screens, equipping them with the knowledge, habits, and instincts needed to recognize and block ransomware before it causes damage.

With Keepnet, you get more than just tools—you get a full ecosystem designed to reduce human error and build long-term resilience. From realistic phishing simulations and security awareness training to behavior tracking and instant feedback, every feature is built to turn your workforce into a strong first line of defense.

Whether you’re running a small business or a global enterprise, Keepnet helps you stay ahead of today’s most dangerous ransomware threats—without overwhelming your team or your budget.

Don’t wait for an attack to reveal your weak spots. Start building a human-centric defense strategy with Keepnet today.

Please look at the full product video and see how you can protect your business from Ransomware attacks.

Further Reading on Ransomware

1. Petya Ransomware Attack - A deep dive into the Petya ransomware, its methods, and the significant impact of its attacks on organizations.
2. What is Hive Ransomware? - An overview of Hive ransomware’s operation, encryption mechanisms, and its impact on businesses.
3. What is Hive Zeppelin Ransomware? - An overview of Hive ransomware’s operation, encryption mechanisms, and its impact on businesses.
4. Ransomware in 2025: Lessons from Locky and Modern Defense Strategies - Insights drawn from Locky ransomware and advice on preparing defenses for future attacks.
5. Conti Ransomware - A technical breakdown of Conti ransomware along with expert strategies for protection and response.w
6. Why SMEs Are Prime Targets for Ransomware & How to Protect Against Attacks - Discusses why small and medium-sized enterprises are vulnerable to ransomware and offers tailored protection strategies.
7. How to Protect Your Business Against Ransomware? - Key tactics and best practices for defending your business from ransomware threats.
8. Global Impact of Bad Rabbit Ransomware: Social Engineering Tactics and Prevention - This blog details how Bad Rabbit leveraged social engineering tactics to cause widespread disruption.
9. Ransomware Attacks Rise Again: What’s Fueling the Surge? - An analysis of the factors contributing to the resurgence of ransomware attacks and strategies to combat them.

Editor's note: This article was updated on April 8, 2025.