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Ransomware Attack – What is it and How Does it Work?

Ransomware strikes fear into the hearts of individuals and businesses alike, exploiting vulnerabilities across various devices and systems to encrypt valuable data. This malicious software locks away crucial files, demanding payment for their release. 

Whether it’s a computer, smartphone, or even a point-of-sale terminal, no endpoint is safe from the reach of ransomware. These attacks capitalize on human error and weaknesses in software and networks, wreaking havoc on unsuspecting victims. 

In this article, we’ll delve into the details of ransomware attacks, exploring their methods, impacts, and most importantly, strategies that you need to know to defend against them. As a bonus, you would also be getting 7 steps from us on how you can prevent and mitigate ransomware attacks that target your system. 

So, let’s dive right in!

What is Ransomware?

Ransomware is a form of malicious software designed to deny access to computer systems or files until a ransom is paid. It encrypts files or locks users out of their systems, demanding payment, often in cryptocurrency, for the decryption key. Victims are coerced into paying due to the threat of permanent data loss or exposure. 

Ransomware attacks exploit vulnerabilities in various systems, including phishing emails, software vulnerabilities, and remote desktop protocols. 

Recent incidents have caused widespread disruption, impacting hospitals, public services, and organizations, highlighting the threat to the tech industry that ransomware poses.

Types of Ransomware

Ransomware has evolved into various sophisticated forms, each posing unique threats to organizations and individuals. We have included a few of them below.

  • Double Extortion: This ransomware combines data encryption with data theft. Cybercriminals threaten to leak stolen data if the victim refuses to pay the ransom.

  • Triple Extortion: Adding a third extortion technique to double extortion, this tactic may involve demanding ransom payments from the victim’s customers or partners, or launching a distributed denial-of-service (DDoS) attack against the organization.

  • Locker Ransomware: Unlike traditional ransomware, locker ransomware doesn’t encrypt files but locks the victim’s computer, rendering it unusable until the ransom is paid.

  • Crypto Ransomware: This type underscores the use of cryptocurrency for ransom payments, making transactions harder to trace.

  • Wipers: Wipers, while related to ransomware, aim to permanently deny access to encrypted files by deleting the encryption keys.

  • Ransomware as a Service: In this model, ransomware gangs provide affiliates with access to malware, enabling them to infect targets and share ransom payments.

  • Data-Stealing Ransomware: Some variants focus on data theft rather than encryption, leveraging the threat of exposing sensitive information to extort payments.

How Ransomware Works?

How Ransomware Works

Ransomware operates through a series of well-defined steps, aiming to infiltrate systems, encrypt files, and extort ransom payments from victims.

Infection and Distribution Vectors

Ransomware gains access to systems through various means, including phishing emails containing malicious links or attachments. Attackers may also exploit vulnerabilities in services like Remote Desktop Protocol (RDP) or directly infect systems with malware.

Data Encryption

Once inside a system, ransomware encrypts files using an attacker-controlled key. This process involves accessing files, encrypting them, and replacing the originals with encrypted versions. Some variants also delete backup and shadow copies of files to hinder recovery efforts.

Ransom Demand

After encrypting files, the ransomware displays a ransom note demanding payment, typically in cryptocurrency, in exchange for a decryption key. This note may appear as a changed desktop background or text files within encrypted directories.


Ransomware scans for targeted file types across local and network-accessible systems, encrypting them to render them inaccessible to users.

User Notification

Ransomware adds instruction files detailing the payment process, providing victims with information on how to make the ransom payment.


Upon completion of encryption and ransom demand, ransomware often terminates and deletes itself, leaving behind only payment instruction files.

Payment and Decryption

Victims are directed to a payment page where they can make the ransom payment, usually via the attacker’s Bitcoin address. Upon payment, victims may receive a decryption key to regain access to their files, though there’s no guarantee of receiving the key even after payment.

Consider reading our blog on the 4 phases of ransomware attacks to get a better understanding of how ransomware targets your system.

Popular Ransomware Variants

Understanding these popular ransomware variants is crucial for implementing robust cybersecurity measures and safeguarding against potential attacks.

Ransomware VariantDescription
LockyEmerged in 2016, Locky encrypts over 160 file types, spreading through phishing emails with infected attachments.
WannaCryNotorious for its 2017 global rampage, WannaCry exploited a Windows vulnerability, affecting 230,000 systems across 150 countries.
Bad RabbitSpread via drive-by attacks in 2017, Bad Rabbit tricked users into running a fake Adobe Flash installation, infecting computers.
RyukAppearing in 2018, Ryuk targeted US organizations, encrypting data and disabling Windows recovery functions, resulting in substantial damages.
Shade/TroldeshIn 2015, Shade ransomware spread through spam emails, offering discounts to victims who communicated directly with the attackers.
JigsawIntroduced in 2016, Jigsaw deletes files hourly until ransom is paid, using a horror movie puppet image to intimidate users.
CryptoLockerOriginating in 2007, CryptoLocker encrypted data via infected email attachments, with a global network dismantled by law enforcement.
Petya/GoldenEyeIn 2016 and 2017, Petya variants encrypted entire hard disks, disrupting organizations worldwide, with GoldenEye causing widespread havoc.
GandCrabKnown for threatening to expose victims’ private information, GandCrab evolved into multiple versions until decryption tools were developed.
B0r0nt0kTargeting Windows and Linux servers, B0r0nt0k encrypts files and disrupts system functions, posing a severe threat to server security.
Dharma BrrrManual installation by hackers leads to file encryption with “.id-[id].[email].brrr” extensions, targeting desktop services connected to the internet.
FAIR RANSOMWAREEmploying a powerful encryption algorithm, FAIR RANSOMWARE encrypts files, appending “.FAIR RANSOMWARE” to encrypted data.
MADOAnother crypto-ransomware variant, MADO encrypts files with “.mado” extensions, rendering them inaccessible to users.

The Impact and Consequences of Ransomware

Ransomware attacks pose severe consequences for businesses, ranging from crippling financial losses to irreparable damage to reputation and operations. 

In industries where data is mission-critical, such as healthcare, emergency services, energy, and government, the implications can be catastrophic. Some key impacts have been outlined below. 

Financial Losses

Ransom payments, often demanded in cryptocurrency and reaching hundreds of thousands of dollars, constitute direct financial losses. Moreover, organizations incur additional costs related to system shutdowns, data recovery, and cybersecurity measures implementation.

Productivity Loss

The shutdown of critical business systems leads to significant productivity losses as employees are unable to access essential data and applications, disrupting workflow and operations.

Data Loss

Ransomware attacks result in the loss of files and data, which may represent hundreds of hours of work. This loss not only affects operational efficiency but also compromises sensitive information, including customer data, leading to legal and compliance exposure.

Damage to Reputation

Loss of customer data damages trust and reputation, impacting brand credibility and customer loyalty. Rebuilding trust post-attack is challenging and may require extensive efforts and resources.

Operational Disruption

Organizations face operational disruption as they grapple with data recovery, system restoration, and cybersecurity enhancement measures. Recovery efforts typically take at least a week, leading to prolonged downtime and further financial strain.

Wide-ranging Financial Impacts

Statistics reveal the wide-ranging financial impacts of ransomware attacks, with median losses averaging $11,150 per incident. Despite varying ransom amounts, ranging from $70 to $1.2 million, a significant portion of victims opt to pay the ransom to regain access to their data.

Escalating Ransomware Activity

The prevalence of ransomware attacks is on the rise, with $590 million in ransomware-related activity reported in the first half of 2021 alone. This trend highlights the urgency for organizations to bolster their cybersecurity defenses and invest in active mitigation strategies.

How to Prevent and Mitigate Active Ransomware Attacks: 7 Steps.

Preventing and mitigating ransomware attacks requires a comprehensive approach that involves every aspect of your organization’s cybersecurity strategy. By following these proactive measures and integrating them into your organization’s cybersecurity framework, you can significantly reduce the risk of ransomware attacks and minimize their impact if they occur. 

  • Maintain backups securely: Regularly backup important data and ensure they’re stored offline or in a separate, secure environment. Test backups routinely to verify their effectiveness and ensure they’re not infected in case of an attack.

  • Develop incident response plans: Create a clear incident response plan with defined roles and communication strategies for your IT security team. Include a list of contacts to be notified during an attack and establish policies for handling suspicious emails.

  • Review and secure port settings: Evaluate the necessity of open ports like RDP and SMB, and limit connections to trusted hosts. Review and adjust port settings for both on-premises and cloud environments to minimize potential attack vectors.

  • Harden endpoint security: Configure systems with security in mind using industry-standard benchmarks like the CIS Benchmarks. Secure configurations help reduce the threat surface and close security gaps left by default settings.

  • Keep systems updated: Regularly update operating systems, applications, and software to patch known vulnerabilities. Enable auto-updates wherever possible to ensure timely deployment of security patches.

  • Provide security awareness training: Educate employees about recognizing and avoiding malicious emails to enhance the organization’s overall security posture. Security awareness training empowers team members to identify potential threats and take appropriate action.

  • Implement an Intrusion Detection System (IDS): Deploy an IDS to monitor network traffic for signs of malicious activity. Ensure the IDS is regularly updated with the latest threat signatures and configured to alert promptly upon detection of potential threats.

Consider reading our blog on How to Recover and Prevent Ransomware Attacks to get more insights on critical steps you can take to protect yourself from Ransomware.

On the other hand, it is also essential to detect ransomware as early as possible, as impossible as it may sound. It is achievable with cloud forensics and data visualization.

Common Ransomware Target Industries

Ransomware attacks target a wide range of industries, with some sectors being particularly vulnerable due to the nature of their operations and the criticality of their data. 


Hospitals, medical centers, and healthcare organizations are prime targets due to the sensitive patient information they hold. Ransomware attacks in this sector can have devastating consequences, potentially impacting patient care and safety.


Schools, colleges, and universities are frequently targeted by ransomware gangs seeking to exploit vulnerabilities in their IT infrastructure. These attacks can disrupt learning environments and compromise sensitive student and faculty data.


Both central and local government agencies face significant ransomware threats, with attacks aimed at disrupting essential services and causing widespread disruption. These incidents can have serious implications for public safety and national security.

Financial Services

Banks, financial institutions, and insurance companies are attractive targets for ransomware attacks due to the potential for financial gain and the sensitive nature of the data they handle. A successful attack in this sector can lead to significant financial losses and damage to reputation.

Manufacturing and Production

Manufacturing companies are increasingly targeted by ransomware groups looking to disrupt operations and extract ransom payments. These attacks can result in production delays, supply chain disruptions, and financial losses for affected organizations.

IT, Technology, and Telecommunications Industry

Between January 2022 and March 2023, half of the organizations within the IT, technology, and telecommunications sectors experienced ransomware attacks, according to research by Sophos.

However, the incidence rate within this sector was relatively lower compared to others, attributed to their advanced cyber-readiness and strong cyber defense mechanisms.

Notably, these organizations were less likely to have their data encrypted in ransomware attacks compared to counterparts in other industries, where encryption occurred in over two-thirds of incidents.

How can CloudDefense.AI Help?

Protect your company from ransomware attacks with CloudDefense.AI‘s cutting-edge threat detection and response solution. Our advanced AI/ML-driven technology swiftly identifies and addresses evolving cyber threats, ensuring the safety of your critical assets. 

With unified threat visibility and rapid investigation capabilities, we keep you steps ahead of attackers. Our risk-based prioritization and end-to-end visibility features enable effective incident mitigation. 

Plus, with advanced attack simulation and API configuration auditing, we fortify your defenses against ransomware. Stay ahead of the curve with CloudDefense.AI and protect your company’s data and infrastructure effortlessly.
Get in touch with us now to book a free complimentary demo and get a hands-on user experience of our powerful platform!

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Anshu Bansal
Anshu Bansal, a Silicon Valley entrepreneur and venture capitalist, currently co-founds CloudDefense.AI, a cybersecurity solution with a mission to secure your business by rapidly identifying and removing critical risks in Applications and Infrastructure as Code. With a background in Amazon, Microsoft, and VMWare, they contributed to various software and security roles.
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