Keepnet Labs Logo
Menu
HOME > blog > what is ransomware

What is Ransomware? How Does It Work?

Ransomware is harmful software that locks a computer until you pay a ransom. This can hurt a business's reputation, cause major data loss, and interrupt regular work. Knowing how ransomware works and to set up protections is significant. This helps people and businesses fight back and recover from these serious cyber attacks.

What is Ransomware? How Does It Work?

In 2024, 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.

Understanding the Basics of Ransomware

Ransomware is a type of malware that infects a system and encrypts all critical files, rendering them useless until the victim pays a ransom to get them back. Payments are often demanded in cryptocurrencies, such as Bitcoin, which provide anonymity for attackers. What makes ransomware so dangerous is that even paying the ransom doesn’t guarantee you’ll get your data back, and it fuels the continued rise of these criminal attacks.

The_basic_anatomy_of_Ransomware_01984c991f.jpg
Picture 1: The basic anatomy of Ransomware

Recent ransomware attacks, like WannaCry, Petya, and the Kaseya 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.

Wanna_Cry_Attack_ransom_note_4f0ef16482.jpg
Picture 2: WannaCry Attack ransom note

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.

How Does Ransomware Work?

How_Ransomware_Works_8bdbb4a628.jpg
Picture 3: How Ransomware Works

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.

Wiper_Ransomware_v2_207b1fec97.jpg
Picture 4: A sample Wiper Ransomware

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.

Stages_of_a_Ransomware_Attack_5af07a1f57.jpg
Picture 5: Stages of a Ransomware Attack

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.

Stages_of_a_Ransomware_Attack_Initial_Access_19141c68a4.jpg
Picture 6: Stages of a Ransomware Attack - Initial Access

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.

Stages_of_a_Ransomware_Attack_Data_collection_and_exfiltration_a43a381881.jpg
Picture 7: Stages of a Ransomware Attack - Data collection and exfiltration

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.

Stages_of_a_Ransomware_Attack_Deployment_and_sending_the_note_50d3b876a3.jpg
Picture 8: Stages of a Ransomware Attack - Deployment and sending the note

How Ransomware Affects Individuals and Organizations?

Ransomware hits everyone hard—whether it’s individuals or large organizations, the damage can be devastating. For individuals, losing access to personal documents like family photos or financial records can be emotionally and financially crushing. Businesses, however, face even more significant risks, including:

  • Financial Losses: Paying the ransom, downtime during recovery, and damage to customer trust can lead to massive financial hits.
  • Reputation Damage: A ransomware attack that exposes customer or business data can irreparably damage a company’s reputation.
  • Legal Ramifications: Failure to protect sensitive data can result in fines under privacy regulations such as GDPR or HIPAA.

How Ransomware Infects Your System and Device?

There are several ways ransomware can infect your system:

  • Phishing Emails: Attackers send emails that contain malicious attachments or links. One click is all it takes to initiate the download of ransomware onto your device.
  • Malicious Websites: Visiting compromised websites or downloading unverified software can automatically introduce ransomware.
  • Unpatched Systems: Outdated software with known vulnerabilities is an easy entry point for attackers to exploit.

How To Defend Against Ransomware?

Effective ransomware prevention involves a mix of employee education, strong security protocols, and regular system maintenance. Here are the best ways to protect against a ransomware attack:

  1. Regular Backups: Ensure backups are created frequently and stored in isolated environments so they can’t be infected by ransomware.
  2. Update Systems and Software: Always apply security patches and updates to prevent attackers from exploiting known vulnerabilities.
  3. User Awareness: Train employees to identify phishing emails and suspicious attachments.
  4. Security Tools: Use anti-virus, anti-malware software, and firewalls to block malicious software from entering your systems.
  5. Multi-Factor Authentication (MFA): Enforce MFA to add an extra layer of security, making it harder for attackers to gain unauthorized access.

Shield Your Digital World from Ransomware with Keepnet’s Security Solutions

Preventing and responding to ransomware attacks requires more than just basic defenses. Keepnet offers comprehensive solutions that tackle ransomware types at every stage:

  • Incident Response Tools: Keepnet’s Incident Responder allows you to quickly isolate affected systems and prevent ransomware from spreading across your network.
  • Threat Intelligence: Stay ahead of emerging threats with Keepnet’s Threat Intelligence, which identifies ransomware types and compromised credentials before they can be exploited.
  • Phishing Simulations: Test and train your employees with Keepnet’s Phishing Simulator to ensure they can identify and avoid phishing attempts that often lead to ransomware infections.

Train your users to boost awareness by up to 90%. Leverage Keepnet’s tools for continuous training, advanced phishing simulations, and threat intelligence to shield your business from ransomware attacks.

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

Editor's Note: This blog was updated on November 21, 2024.

SHARE ON

twitter
linkedin
facebook

Schedule your 30-minute demo now!

You'll learn how to:
tickRun phishing simulations to teach employees how to spot and avoid Ransomware attacks.
tickImplement microlearning modules focused on ransomware prevention and best practices.
tickMonitor vulnerabilities and track improvements in your organization's ransomware resilience.
iso 27017 certificate
iso 27018 certificate
iso 27001 certificate
ukas 20382 certificate
Cylon certificate
Crown certificate
Gartner certificate
Tech Nation certificate