How Much Does A Ransomware Attack Cost The Average MSP

A new report titled The Economic Costs of Cyber Risks released by the Foundation for Defense of Democracies Center on Cyber and Technology Innovation revealed that a ransomware attack on one managed service provider could cause as much as $80 billion in economic losses affecting hundreds of small businesses.
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How Much Does A Ransomware Attack Cost The Average MSP

A new report titled The Economic Costs of Cyber Risks released by the Foundation for Defense of Democracies Center on Cyber and Technology Innovation revealed that a ransomware attack on one managed service provider could cause as much as $80 billion in economic losses affecting hundreds of small businesses.

There has been no shortage of ransomware attacks of late. More managed service providers and businesses are suffering constant attacks that cause them to lose access to data and have to pay hefty sums to get it back. Large companies such as Colonial Pipeline Co., Electronic Arts, and Bose are good examples that cybercriminals are indiscriminate in whom they target.

However, to truly understand the cost of the damage caused by ransomware, we must look at the specific harm it causes to service providers and businesses.

How Ransomware Attacks Work

Ransomware is a small piece of code designed to infect a computer and run in the background. Primarily delivered through phishing emails, these pieces of code are designed to execute fast and spread through a network and any connected devices. Once an employee is fooled into clicking a malicious link, the malware will exploit various security vulnerabilities to access storage devices and system resources.

Some malware is written to be logical bombs that may lie low in a computer and only run and wreak havoc at a specified time. These malware are often among the most dangerous as they can gain access to many more devices, including backup servers. Some malware starts encrypting files at the backup level, forcing the companies to negotiate with the criminals to get their data back.

The COVID-19 pandemic and the shift to remote working in 2020 contributed to the proliferation of malware. Criminals took advantage of employees' ineptness and attempt to connect to corporate networks via remote access tools to choreograph phishing campaigns and remote attacks.

The Economic Devastation of Ransomware

On July 2, 2021, a coordinated ransomware supply chain attack against Kaseya, in the process affecting over 1,500 businesses. The attack was sophisticated in many ways. The malware initially spread to some related managed service providers before encrypting their data. Estimates show that the economic damage this single attack may have caused is as much as 17 percent more devastating than the economic damage of Hurricane Sandy.

Chris Nolan and Annie Fixler, the authors of The Economic Costs of Cyber Risk, point out that a single managed service provider with inadequate security could cause a lot of harm to the US government, the clients that depend on their services, company shareholders, and the public.

The authors noted that the American public is still largely ignorant of the scale of the risk that poorly managed technology and ransomware pose to the economy and their wellbeing.

Why MSPs are Most Vulnerable to Ransomware

Managed Service Providers have become a hot target for cybercriminals looking to cause the most damage. Their role in operating and securing the digital assets and infrastructure on behalf of third parties makes MSPs and CSPs invaluable to criminals looking for the most valuable data to hijack. Moreover, as the gatekeepers to a myriad of critical systems, these companies are responsible for laying the groundwork for essential security measures that keep businesses safe from malware and hackers.

Criminals also use MSP platforms as a pad to launch multi-faced ransomware attacks targeting hundreds of entities. The more clients an MSP serves, the more damage a successful ransomware attack could cause. For example, an attack may target an MSP's multiple critical infrastructure, clients in specific industries, or essentially take down the entire services platform. Such an attack could cause losses running into hundreds of billions of dollars as well as lost jobs and productivity.

Effective MSPs' Defense Options Against Ransomware

Managed Service Providers must be proactive in protecting their systems and infrastructure against ransomware attacks. The most important measure these companies must take is ensuring that all vulnerabilities in their security software are patched promptly and continuously.

However, patching vulnerabilities is just one part of multi-layered security to stay safe from ransomware. Here are the five layers of security every MSP must consider implementing today.

1. Training the End-Users on Security Awareness

Hackers, scammers, and cybercriminals often exploit human weaknesses in security setup to get malware code into a computer system or network. The most secure MSPs are those that go the extra mile to train their staff and contractors to spot phishing attempts and avoid clicking on links from unknown sources.

2. Understand the Clients' Security Setups

Computer security is not a one-off event but an ongoing process that demands continuous assessment and improvement. In some industries, security postures can change as frequently as hourly. New vulnerabilities are discovered every day, and MSPs are at a greater risk of them than ever before. The most secure MSPS incorporates continuous client security assessment to ensure high customer security at all times.

3. Multi-layered Security Beyond an Antivirus

On top of the reasons why ransomware is so damaging is that it is polymorphic. This means the code mutates fast and can do a lot of damage long before antivirus software detects it. Therefore, the best form of security to protect against malware is multi-layered with Advanced Threat Protection technologies, network and email protection, and file protection, among other layers of security.

4. Continuous Backup and Disaster Recovery

Ransomware works by locking away the important data the victim needs. One way to skirt around having to deal with the damages of ransomware is to use advanced tools to continuously back up important data in more than two remote locations. The backup system must be dependable enough to periodically test and verify that the backups are working and out of reach of malicious software.

5. Automation of Security

Forward-looking MSPs automate as much of their security services as possible to eliminate the human element that is almost always the weak link. Automation goes a long way to quickly identify and isolate anomalies, update any security patches, and recover customer data promptly in case of an attack to minimize outage.

Make Ransomware Data Disappear Like Magic

Managed service providers have become a major target for cybercriminals using ransomware. As their methods become more sophisticated, a business must seek out a service provider with proactive security.

Before you choose a managed service provider, you must scrutinize the company's cybersecurity readiness and ensure that they have the right tools and expertise to prevent and fight off cybercriminals. Contact Velocity IT and book your free consultation to discover how well an MSP needs to be prepared to deal with modern ransomware.

Kenny Riley

We hope you enjoyed reading this blog post.

If you want our team at Velocity IT to help you with all or any part of your business IT, cybersecurity, or telephone services, book a call.
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