If your wealth management firm suffers a ransomware attack, should the firm pay the ransom or not? This seems like a straight-forward question, but in reality, is anything but. A number of factors have to be taken into account, including what kind of ransomware attack you have suffered, the possible financial costs associated with the attack and the attack aftermath, the possible reputational damage and attendant loss of clients, and also legal and regulatory consequences that may arise from the attack.
Let’s start by looking at the two main types of ransomware attacks your firm might encounter. In the “traditional” ransomware attack, cyber-criminals break into your network and encrypt your important data so that you cannot access it without the key they used. They then demand a ransom payment for this key. This is an attack on only one of the three pillars of information security: availability. If your firm doesn’t have safely stored backups, you must pay or suffer likely permanent loss of your data. If your firm has safely stored backups, all you have to do is restore your system from these backups. The decision to pay or not in this case seems simple for a wealth management firms: if you pay you get your data back quickly. If you don’t pay, you still get your data back, but not so quickly. It may take days to go through the restoration process. If you think your clients will stand for this downtime, you don’t pay. If you don’t think the business interruption will be tolerated, then maybe it is better to pay and take the financial loss.
The other type of ransomware attacks we’re seeing today are not so simple. If your important data is not properly encrypted, the attackers may not only re-encrypt your data, they may also copy it and threaten to release it publicly if they are not paid. This is a much thornier problem because it also affects another pillar of information security: confidentiality. Financial institutions are heavily regulated and are required to adequately protect the confidentiality of their client’s financial and personal private information. If the firm pays the ransom, they may get the key to unencrypt their data and a promise not to post this data publicly. But what level of trust can you put in the word of criminals?! What is to prevent them from publicly releasing the data anyway, or keeping the data and demanding further payments in the future? This complicates the decision to pay or not considerably. If the firm doesn’t pay the ransom, they are in for public scandal that might cause present clients to go elsewhere and prospective clients to choose a different firm. They may also be subject to regulatory sanction if their information security program is judged to be inadequate. In addition, the firm may be sued by affected clients which can lead to even more scandal and reputational loss.
But wait, there is more! Paying the ransomware is actually illegal is some instances. Under the International Emergency Economic Powers Act or the Trading with the Enemy Act, U.S. persons are generally prohibited from engaging in transactions with individuals or entities that are on OFAC’s Specially Designated Nationals and Blocked Persons List or with persons from embargoed regions and countries (see the Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments at https://home.treasury.gov/system/files/126/ofac_ransomware_advisory_10012020_1.pdf for more information). And how is the firm to know if the blackmailers they are dealing with are among those on the proscribed list? I would hate to have to be the one to make the decision to pay ransomware or not in these cases. To quote an old cliché, these decision makers are caught between a rock and hard place!
There is no simple, easy or right decision to make if your firm is caught up in this second type of ransomware attack. The real answer is to not be in such a position in the first place. Financial firms should ensure that their information security program is compliant with regulatory and best practices standards at all times. You should ensure that your data is properly encrypted and backed up, patch and update your systems religiously, test and monitor your systems and ensure that your partners and services providers are doing the same. To quote another old cliché: an ounce of prevention is worth a pound of cure!