Ransomware Recovery Costs: Beyond the Ransom Payment

The Rising Cost of Ransomware Attacks

Ransomware incidents continue to garner significant media attention. Recent examples include attacks targeting IT consultancy Accenture and Taiwan-based laptop manufacturer Gigabyte, the latter resulting in the exposure of sensitive data belonging to AMD and Intel.

Beyond Ransom Payments: The True Expense

Ransomware activity has seen a substantial increase during the pandemic, consistently ranking as a major financial burden for businesses. Large U.S. companies experience an average annual loss of $5.66 million due to these attacks.

However, recent research indicates that the primary driver of these costs isn't what many assume.

Deconstructing the Financial Impact

While substantial ransom payments often make headlines, data from Proofpoint and the Ponemon Institute reveals that these payments typically represent less than 20% of the total cost associated with a ransomware attack.

Of the $5.66 million average annual loss, only approximately $790,000 is attributed to ransom payments themselves.

The majority of financial damage stems from lost productivity and the extensive efforts required to contain and remediate the effects of a ransomware incident.

The Hidden Costs of Remediation

The average remediation process for an organization requires 32,258 hours. Considering an average IT hourly wage of $63.50, this translates to a cost exceeding $2 million.

Downtime and subsequent productivity losses further contribute to the financial strain. Phishing attacks, identified as the origin of nearly one-fifth of ransomware attacks in the previous year, resulted in employee productivity losses of $3.2 million in 2021, a significant increase from $1.8 million in 2015.

Operational Disruption and Increased Scrutiny

According to Proofpoint’s Andrew Rose, a ransomware attack necessitates a dramatic increase in communication and collaboration between employees and external stakeholders.

This often compels teams to suspend their regular duties and dedicate themselves to addressing the urgent situation, potentially for days, weeks, or even months.

Organizations facing these attacks also encounter heightened scrutiny from customers and regulatory bodies, alongside increased reliance on external support.

Additional Financial Burdens

Businesses impacted by ransomware frequently experience rising cyber insurance premiums, substantial IT expenditures, and the need to engage public relations firms, legal counsel, customer service representatives, and specialized consultants.

Furthermore, the attacks can inflict significant damage to brand reputation. Research from Cybereason indicates that over half of U.S. companies reported a tarnished brand image following a ransomware incident.

Long-Term Consequences

For publicly traded companies, a ransomware attack can potentially lead to a decline in share price. Customers may also lose confidence in a business if their data is compromised, potentially leading to customer attrition and revenue loss, as Rose points out.