What the Kidnapping & Ransom Economy Teaches Us About Ransomware

1. SESSION ID:SESSION ID: #RSAC Jeremiah Grossman What the Kidnapping & Ransom Economy Teaches Us About Ransomware SEM-M03 Chief of Security Strategy SentinelOne @jeremiahg

2. #RSAC SentinelOne THE BIRTH OF A $BILLION CYBER-CRIME INDUSTRY “THE FBI RECENTLY PUBLISHED THAT RANSOMWARE VICTIMS PAID OUT $209 MILLION IN Q1 2016 COMPARED TO $24 MILLION FOR ALL OF 2015.”

3. #RSAC SentinelOne 3

5. #RSAC SentinelOne 5 Dec 11, 1989: 20,000 envelopes containing 5 1/4" floppy disks loaded w/ the first known ransomware (‘AIDS') were mailed.

7. MEDICAL CARE TRANSPORTATION GOVERNMENT EDUCATION POLICE IOT SECURITY PEOPLE HOTELS

8. #RSAC SentinelOne Internet of Things 8 “FAMILY MEMBER'S TV IS BRICKED BY ANDROID MALWARE. #LG WONT DISCLOSE FACTORY RESET. AVOID THESE "SMART TVS" LIKE THE PLAGUE.”

9. #RSAC SentinelOne People “A 'RANSOMWARE' PROGRAM HAD INFECTED HIS COMPUTER ALLOWING THE HACKERS TO FILM HIM THROUGH THE WEBCAM. HE HAD BEEN FILMED IN A COMPROMISING SITUATION. NOW THEY WANTED MONEY.” 9

10. #RSAC SentinelOne Hotels “ONE OF EUROPE'S TOP HOTELS HAS ADMITTED THEY HAD TO PAY THOUSANDS IN BITCOIN RANSOM TO CYBERCRIMINALS WHO MANAGED TO HACK THEIR ELECTRONIC KEY SYSTEM, LOCKING HUNDREDS OF GUESTS OUT OF THEIR ROOMS UNTIL THE MONEY WAS PAID.” 10

11. #RSAC SentinelOne Transportation “A RANSOMWARE ATTACK TOOK TICKET MACHINES FOR SAN FRANCISCO'S LIGHT RAIL TRANSIT SYSTEM OFFLINE ALL DAY SATURDAY DURING ONE OF THE BUSIEST SHOPPING WEEKENDS OF THE YEAR, BUT RATHER THAN SHUTTING DOWN, THE AGENCY DECIDED INSTEAD TO LET USERS RIDE FOR FREE.” 11

12. #RSAC SentinelOne Event Security “CRIMINALS INFECTED 70% OF STORAGE DEVICES TIED TO CLOSED-CIRCUIT TVS IN WASHINGTON DC EIGHT DAYS BEFORE THE INAUGURATION OF PRESIDENT DONALD TRUMP.” 12

13. #RSAC SentinelOne Emergency Services “THE ATTACK FORCED DEPARTMENTS SUCH AS THE LICKING COUNTY 911 CENTER, COUNTY AUDITOR'S OFFICE AND CLERK OF COURTS TO PERFORM THEIR JOBS WITHOUT THE USE OF COMPUTERS OR OFFICE TELEPHONES.” 13

14. #RSAC SentinelOne Law Enforcement “LOST DATA GOES BACK TO 2009. DATA FROM THAT PERIOD BACKED UP ON DVDS AND CDS REMAINED INTACT. WHILE ARCHIVED DATA HAS ITS IMPORTANCE, MORE WORRYING IS THAT THE DEPARTMENT LOST DATA FROM ONGOING INVESTIGATIONS.” 14

15. #RSAC SentinelOne Medical Care “THE TRUST DID NOT PAY ANY RANSOM AS A RESULT OF THE ATTACK BUT IT DID HAVE TO CANCEL 2,800 PATIENT APPOINTMENTS DURING 48 HOURS WHEN IT SHUT DOWN SYSTEMS.” 15

16. #RSAC Industry Reports and Anecdotes

17. #RSAC SentinelOne IBM Security’s X-Force (Dec, 2016) 17 70% of Enterprise Ransomware Victims Paid Up. 20% of compromised organizations paid more than $40,000 (USD). 25% have paid between $20,000 (USD) and $40,000 (USD).

18. #RSAC SentinelOne SentinelOne (Nov, 2016) 18 Over the past 12 months, 50% of organizations have responded to a ransomware campaign. Those organizations that suffered a ransomware attack in the past 12 months, 85% stated that they were hit with three or more attacks.

19. #RSAC SentinelOne Kaspersky Lab (Dec, 2016) 19 The number of ransomware infections suffered by companies 3-fold up from January to September. 1-in-5 businesses worldwide has been victims of a ransomware and the rate of ransomware attacks increased from one every 2-min to one every 40-sec.

21. #RSAC SentinelOne The Ransomware Landscape 21 Not all critical systems are backed-up Your Anti-Virus software SUCKS Infection rates rising fast (still) Rising ransom demands CFOs - or their law firms - must learn how to transact in Bitcoin Innovation in business models, victim targeting, and malware Cyber-Insurance reimbursement

22. #RSAC Kidnapping & Ransom “K&R” REPORTEDLY A $500 MILLION (USD) MARKET

23. #RSAC SentinelOne Hollywood 23 LA Times

24. #RSAC SentinelOne 24 ”IN 75 BCE, 25-year-old Julius Caesar was sailing the Aegean Sea when he was kidnapped by Cilician pirates. when the pirates asked for a ransom of 20 talents of silver, Caesar laughed at their faces. They didn't know who they had captured, he said, and demanded that they ask for 50 (1550 kg of silver), because 20 talents was simply not enough.”

25. #RSAC SentinelOne 25 “On OCT 22, the family of billionaire Pearl Oriental Oil chairman Wong Yuk-Kwan paid Taiwanese kidnappers $1.68 million (USD) in bitcoin after they threatened to “dig out the eyeballs or chop off the legs” of Yuk-Kwan.”

26. #RSAC SentinelOne 26 "Most of Somalia's modern-day pirates are fishermen who traded nets for guns. They've learned that ransom is more profitable than robbery, and rather than squandering their loot, they reinvest in equipment and training."

27. #RSAC SentinelOne 27 “An ordinary Somali earns about $600 (USD) a year, but even the lowliest freebooter can make nearly 17 times that — $10,000 (USD) — in a single hijacking. Never mind the risk; it's less dangerous than living in war-torn Mogadishu.”

28. #RSAC SentinelOne 28 “Fewer than 1-in-3 hijack attempts is successful. A savvy captain can ward off marauders by maneuvering the ship to create a turbulent wake while calling for help. If the attackers don't board within 15-min, a nearby naval ship might send a helicopter gunship. Once the pirates control the vessel, though, it's game over: Like convenience-store clerks, crews are trained not to resist.”

29. #RSAC SentinelOne High Seas Piracy Mission Set-up & Costs 29 $50K-$250K (USD) in seed capital Crew of 12-24 men (varied skills) Speed boats, larger ship to launch boats, caterer, ladders, ropes, intelligence, weapons, communications, etc. Select targets by the cargo, owner, and port of origin “Trustworthy” financial system for money-laundering

30. #RSAC SentinelOne Back Office Logistics 30 Tribe Elders: Liaisons with the outside world Financiers: Capital comes from local businessmen as well as the Islamist militant group Commander: Marshal resources, recruits crew, and organizes operations Security Squad: Protects the commander, ferries supplies and backs up attackers Mother Ship Crew Attack Squad: Extends the marauders' reach hundreds of miles out to sea; Carries attack squad made up of fishermen Negotiators: English speaking; Point of contact for the hostage takers

31. #RSAC SentinelOne Negotiation Process 31 May take days, weeks, months — sometimes years Negotiations by professional K&R consultants (ex-military, law enforcement, or intelligence) No “supernormal profits.” "Pirates routinely demand far more than they expect to receive. For catches with valuable cargo, bargaining can open at 10 times the previously highest settlement. The limiting factor is time: With each passing day, chances increase that a hostage will die or the ship will become damaged, and the likelihood of a peaceful resolution — and a fat bag of cash — dwindles."

32. #RSAC SentinelOne 32 “One new technique is to airdrop the money. A million dollars in $100 notes weighs about 29 pounds. It is placed into a container like an inflatable ball and dropped out of an airplane using a parachute guided by a Global Positioning System.”

33. #RSAC SentinelOne Divvying Up the Booty 33 Reimbursement of supplier(s) Financiers: 30-70% of the ransom Elders: 5-10 %of the ransom (anchoring rights) Crew: Remaining sum divided up by shares “Gullestrup's ship and crew were returned safely, although the pirates didn't actually want to get off the ship right away. That's because they were afraid of getting robbed by other pirates on their way back to shore, Gullestrup says, so he gave them a ride north, dropping them closer to home.”

34. #RSAC SentinelOne High Seas Piracy Prevention 34 Armed private security guards on board ships Shippers harden vessels or take evasive action A change in Somalia at national and local level Pre-emptive action by combined navies in the region “It lasted just a few minutes, with a helicopter crew launching from a ship just offshore and raking beached and unmanned pirate speedboats - known as "skiffs" - with machine-gun fire. Fuel stores and other equipment were also fired on, but EU Navfor says there were no casualties on either side and there were no European "boots on the ground.”

35. #RSAC Kidnapping & Ransom Insurance Originated following the kidnapping of Charles Lindbergh’s baby in 1932. The boost in policies began in the late 70’s.

36. #RSAC SentinelOne Kidnapping & Ransom Insurance 36 “K&R INSURANCE IS DESIGNED TO PROTECT INDIVIDUALS AND CORPORATIONS OPERATING IN HIGH-RISK AREAS AROUND THE WORLD. LOCATIONS MOST OFTEN NAMED IN POLICIES INCLUDE MEXICO, VENEZUELA, HAITI, AND NIGERIA, CERTAIN OTHER COUNTRIES IN LATIN AMERICA, AS WELL AS SOME PARTS OF THE RUSSIAN FEDERATION AND EASTERN EUROPE.”

37. #RSAC SentinelOne 37 “The insurance business is a gamble. Insurers know that some ships will be hijacked, forcing the companies to dispense multimillion-dollar settlements. However, they know the chance of this happening is minuscule, which by the calculations of their industry makes it worth issuing policies.”

38. #RSAC SentinelOne 38 AIG TRAVELERS HISCOX CHUBB XL CATLIN CHARTIS “K&R” Insurance Carriers

39. #RSAC SentinelOne K&R Insurance Coverage 39 Ransom Amount Transportation Costs Accidental Death or Dismemberment Legal Liability Medical Expenses Crisis Response Team Lost Wages Replacement Personnel Costs Extortionist Bounty

40. #RSAC SentinelOne 40 “All kidnapping insurance is either written or reinsured at Lloyd’s of London. Within the Lloyd’s market, there are about 20 firms (or “syndicates”) competing for business. They all conduct resolutions according to clear rules. The Lloyd’s Corp. can exclude any syndicate that deviates from the established protocol and imposes costs on others. Outsiders do not have the necessary information to price kidnapping insurance correctly.”

41. #RSAC SentinelOne Costs and Fine-Print 41 Price varies: $500 a year for $1M (USD) of liability coverage; $50,000 for $25M (USD) in coverage Policy Confidentiality Ransom is reimbursed, not paid directly Customer Training LA Times

42. #RSAC What Does the Kidnapping & Ransom Economy Teaches Us About Ransomware?

43. #RSAC SentinelOne Similarities 43 Sentient adversary When you are a victim, you know it (unlike traditional malware) Time is on the adversaries side Adversary’s leverage fear and anxiety Bilateral monopoly (1 buyer, 1 seller) Market value of the ‘asset’ is subjective and very little info Victims are targeted (not always in ransomware) If adversaries break an agreement, they'll ruin the business for everyone LA Times

44. #RSAC SentinelOne Differences 44 Ransomware requires far less upfront costs and logistics Ransomware is less risky for adversaries (attribution) Ransomware hostage (the data) is not a witness Ransomware scales Ransomware negotiation process is way faster Ransomware is easier to pay logistically (Bitcoin vs cash) LA Times

45. #RSAC SentinelOne Trends 45 Ransomware campaigns increasingly professionalized and funded Emergence of professional ransomware negotiators Cyber-insurers require clients to keep ransomware policies secret Adversaries will increasingly target backup systems LA Times

46. #RSAC SentinelOne Prevention and Response Actions 46 Backups! Test your backups! (DO NOT destroy encrypted data) Fast system recovery via virtualization Patch, disable MS Office macros, etc Law enforcement investigates and arrests Formation of insurance “syndicates” for ransomware pricing (ie Lloyd’s of London) Listen to your cyber-insurer (security guidance) LA Times

47. #RSAC SentinelOne 47 “IN 2010, $148 MILLION OF RANSOMS WERE PAID TO PIRATES. ON THE OTHER HAND, $ 1.85 BILLION DOLLARS WERE SPENT ON INSURANCE TO COVER PIRACY, THAT’S 10 TIMES MORE THAN THE ACTUAL RANSOMS THAT ARE GIVEN TO PIRATES.”

48. #RSAC SentinelOne 48 “RANSOMWARE PROTECTION MARKET TO REACH $17 BILLION BY 2021 - ANALYSIS BY SOLUTION, SERVICE, APPLICATION, DEPLOYMENT, ORGANIZATION SIZE, VERTICAL & REGION - RESEARCH AND MARKETS”

49. #RSAC Thank You! @jeremiahg https://www.facebook.com/jeremiahgrossman https://www.linkedin.com/in/grossmanjeremiah https://www.jeremiahgrossman.com/ http://blog.jeremiahgrossman.com/

What the Kidnapping & Ransom Economy Teaches Us About Ransomware

What the Kidnapping & Ransom Economy Teaches Us About Ransomware

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