Fintech playbook for ransomware attacks

Ransomware attacks are an increasing threat to businesses of all sizes, but fintech companies are particularly vulnerable due to the sensitive customer data they hold, the substantial funds they manage, and their operation in an ever-expanding digital environment.

In 2023, 64% of financial institutions globally reported being hit by a ransomware attack. Fintech companies face a unique mix of cyber risks, notably social engineering and hacking damage, at higher rates than traditional financial institutions. For example, the 2019 Capital One data breach exposed the personal information of over 100 million customers, highlighting the need for robust security measures.

In another incident, a leading payment processing company was hacked in 2020, resulting in the theft of millions of dollars and temporary service disruption. These incidents underscore the urgent need for enhanced security protocols in the fintech industry. This playbook provides a comprehensive guide to help fintech companies prevent, detect, and respond to ransomware attacks.

Understanding ransomware

Ransomware is malicious software that prevents access to a computer system or data. Attackers commonly encrypt files, making them inaccessible without a decryption key, and demand a ransom payment for its release. Victims face a difficult choice: pay the ransom and hope to recover their data or risk permanently losing it.

Ransomware attacks have evolved to include double-extortion and triple-extortion tactics. Double extortion involves stealing sensitive data and threatening to leak it online if the ransom is not paid. Triple extortion adds the threat of using the stolen data to attack the victim’s customers or business partners. These tactics increase the pressure on victims to pay the ransom, even if they have backups.

How ransomware works

Ransomware attacks typically unfold in a multi-phase approach:

• Social engineering: Attackers use social engineering tactics, such as phishing emails with malicious attachments or links, to infiltrate an organization’s network. They may also impersonate legitimate entities or individuals to gain trust and trick employees into divulging sensitive information.
• Payload delivery: Once attackers gain access to a system, they deliver the ransomware payload. This may involve exploiting vulnerabilities in software or using compromised credentials to install the ransomware.
• Impact: The ransomware encrypts files, disrupts services, or steals data, causing immediate disruption to the organization’s operations. Attackers then demand a ransom in exchange for restoring access or preventing data leaks.

A ransomware attack can also be described in the following stages:

• Initial access: Attackers gain initial access to a system through various methods, including phishing emails, exploiting vulnerabilities, and compromising remote access protocols like RDP.
• Post-exploitation: Once inside the system, attackers may deploy tools to establish a stronger foothold, escalate privileges, and move laterally within the network.
• Encryption: The ransomware encrypts files, rendering them inaccessible without the decryption key.
• Ransom demand: Attackers display a ransom note demanding payment, usually in cryptocurrency, in exchange for the decryption key.

The impact of a ransomware attack

A ransomware attack can have a devastating impact on a fintech company, with potential consequences including:

• Operational downtime: Ransomware can halt operations, preventing transaction processing, customer service, and business activities. This leads to lost revenue, missed payments, and penalties. For a fintech company processing high volumes of daily transactions, the financial impact of downtime can be substantial.
• Reputational damage: Attacks can erode customer trust and confidence. Nearly 60% of customers avoid businesses that have experienced breaches. Rebuilding trust after an attack can be a long and challenging process.
• Regulatory penalties: Fintech companies operate under strict regulations, and failing to protect sensitive data can result in significant fines. Non-compliance with data protection laws like GDPR can lead to substantial financial penalties.
• Post-attack recovery costs: Recovering from an attack involves significant expenses, including ransom payments (if paid), system remediation, data recovery, legal fees, and cybersecurity enhancements. The average cost of a ransomware attack can reach $5.13 million.
• Loss of competitive edge: Prolonged downtime and reputational damage can give competitors an advantage, allowing them to capture market share and attract dissatisfied customers.

Regulatory requirements for ransomware preparedness and response

Ransomware prevention is not just a best practice but a regulatory requirement in the financial industry. Regulators are increasingly focused on cybersecurity measures to ensure financial institutions can prevent, detect, and mitigate ransomware attacks. Key regulatory requirements include:

• Data protection laws: Regulations like GDPR and CCPA mandate the protection of customer data.
• Industry-specific standards: PCI DSS requires robust security measures for handling cardholder data, while GLBA mandates the protection of non-public customer information.
• State and federal guidance: FFIEC and EBA provide guidelines on cybersecurity measures, emphasizing ransomware defense strategies. NYDFS Cybersecurity Regulation requires incident response plans, risk assessments, and data encryption.
• Ransomware payment ban: There are proposals to ban ransomware payments by public sector bodies and critical national infrastructure organizations. While the implications for fintech companies are still evolving, this highlights the increasing regulatory scrutiny of ransomware attacks and the need for robust prevention and recovery strategies.

Best practices for ransomware prevention, detection, and response

Fintech companies can take proactive steps to mitigate the risk of ransomware attacks. A multi-layered approach that combines traditional and advanced security measures is crucial.

Prevention

• Multi-layered cybersecurity infrastructure: Implement firewalls, antivirus, antimalware, IDR, EDR, MFA, and vulnerability scanners.
• Regular data backups: Back up data regularly and store it in a secure location, ensuring backups are tested and functional.
• Principle of Least Privilege (PoLP): Grant employees access only to the data and systems necessary for their roles.
• Network segmentation: Divide the network into isolated segments to prevent the spread of ransomware.
• Employee education: Train employees on ransomware threats, phishing identification, strong passwords, and reporting suspicious activity.
• System and software updates: Keep all systems and software updated to the latest versions to patch vulnerabilities. The 2017 WannaCry attack, which exploited a vulnerability in outdated Windows systems, highlights the importance of timely updates.
• Multi-factor authentication (MFA): Enforce MFA for all user accounts to add an extra layer of security during login attempts.
• Strong passwords: Require strong, unique passwords and encourage regular password updates for sensitive accounts.
• Golden images: Maintain and regularly update “golden images” of critical systems for quick recovery and redeployment.
• Restrict user permissions: Limit user permissions to prevent unauthorized access and modification of critical systems and data.
• Control local administration: Audit and control local administrator privileges to minimize the impact of compromised accounts.
• Account audits: Regularly audit user and admin accounts for inactive or unauthorized access.
• Immutable storage: Utilize immutable storage for backups to prevent ransomware from modifying or deleting backup data.
• Recovery Point Objective (RPO): Define an RPO to determine the acceptable amount of data loss in case of an attack and design backup processes accordingly.
• Cybersecurity services: Consider specialized cybersecurity services for fintech companies, such as Managed Detection and Response (MDR), Vulnerability Management Services, and Threat Intelligence and Hunting Services. These services can enhance security posture and provide expert support.
• Specialized ransomware protection: Consider implementing specialized solutions with features like AI and ML for continuous monitoring, automated blocking, and data recovery.
• Secure coding practices: Adopt secure coding practices to minimize vulnerabilities in fintech applications.
• Secure infrastructure: Build a secure infrastructure with layered defenses, including firewalls, intrusion detection systems (IDS), and intrusion prevention systems (IPS). 
• AI and machine learning: Leverage AI and machine learning for advanced threat detection and fraud prevention.

Detection

• Endpoint detection and response (EDR): Deploy EDR tools for real-time threat detection and response.
• Regular patching: Establish a regular patch cadence to address vulnerabilities and prevent exploitation by ransomware.
• Attack surface monitoring: Continuously monitor the attack surface to identify and remediate vulnerabilities.
• Proactive threat hunting: Actively search for malicious activity within the network to identify and address threats before they escalate.
• Centralized log management: Use a SIEM tool for centralized log management and analysis.
• Log maintenance and backups: Maintain and back up logs for critical systems for at least one year.

Response

• Incident response plan: Develop a comprehensive incident response plan that outlines the steps to take in case of a ransomware attack. A well-defined plan with clear procedures can significantly reduce downtime and minimize the impact of an attack.
• Immediate Response Checklist:

Ransomware recovery options

Fintech companies have various options for ransomware recovery, each with its own advantages and disadvantages:

• Paying the ransom: This is a common option but carries significant risks. There is no guarantee that attackers will provide the decryption key even after payment. Paying the ransom also funds criminal activity and may encourage future attacks.
• Restoring from backups: This is the most reliable option if clean and updated backups are available. A multi-layered recovery architecture with on-premises, off-site, and cloud-based backups ensures redundancy and minimizes the risk of losing all backups.
• Using decryption tools: Decryption tools can be effective for specific ransomware strains.
• Wiping and reinstalling: In cases where data cannot be recovered from backups or decrypted, wiping affected systems and reinstalling them may be the only option. This is a time-consuming process and may result in data loss.
• Immutable object storage: Consider storage solutions that offer immutable backups and ransomware resilience features . Immutable backups ensure data integrity and provide a reliable source for recovery.
• Comprehensive data recovery platforms: Explore solutions that provide various recovery options, including restoring to original servers or isolated clean rooms . These platforms offer flexibility and advanced security features to streamline the recovery process. 

The role of cyber insurance in ransomware recovery

Cyber insurance is a crucial component of a comprehensive ransomware recovery strategy. It provides financial protection and support in the event of an attack, helping to cover costs related to:

• Ransom payments: Some policies cover ransom payments, but this is not always the case.
• Data recovery: Insurance can cover the expenses of data recovery efforts, including hiring specialists.
• Business interruption: Policies may cover lost revenue and expenses incurred due to business interruption.
• Legal fees: Coverage may extend to legal fees associated with ransomware attacks and data breaches.
• Public relations and reputational damage: Some policies include coverage for public relations and reputation management to mitigate the impact of an attack.

When choosing a cyber insurance policy, ensure it covers ransomware attacks and carefully consider coverage limits, deductibles, and any cybersecurity requirements.

A real-world example highlights the importance of cyber insurance in ransomware recovery. A cloud-only company operating in a sensitive sector suffered a ransomware attack that compromised their Microsoft Entra ID. While their independent cloud backup solutions helped restore data and minimize downtime, the cyber insurance policy covered costs related to incident response, legal fees, and regulatory penalties. This case demonstrates how cyber insurance can provide a financial safety net and support recovery efforts.

Ransomware attacks pose a significant threat to fintech companies. By understanding the evolving nature of ransomware, implementing a multi-layered approach to prevention and detection, and having a robust incident response plan in place, fintech companies can minimize the impact of an attack. Cyber insurance plays a crucial role in providing financial protection and support during recovery. Fintech companies must prioritize proactive ransomware preparedness and response to safeguard their operations, customer data, and reputation in the face of this growing threat.