It’s 2020 and Only 20% of Companies Are Ready for a Ransomware Attack

A recent study of preparedness for various types of data breach shows that many companies are struggling to keep up with emerging exposures.
By: | March 10, 2020

Only 20% of companies feel confident in their ability to respond to a ransomware attack, according to the latest data breach preparedness study conducted by the Ponemon Institute and sponsored by Experian.


In most incidents, attackers don’t ask for a huge sum … the smaller the dollar amount, the more likely it is victims will pay. According to the survey, the average ransom in 2019 was $6,128 — and 68% of targets paid it.

When the requested ransom is small, some cyber security experts recommend simply paying it off for the sake of regaining control as quickly as possible. The financial loss often doesn’t outweigh the long-term impact of business interruption and the reputational damage that stems from not resolving a situation quickly.

“Companies are waking up to reality that ransomware attacks can be very serious and costly. Even when cyber criminals demand a paltry sum, the attack can end up costing hundreds of thousands or even millions due to business interruption and reputational impact,” said Larry Ponemon, chairman and founder of the Ponemon Institute.

Other survey data suggests that most companies submit to the attackers’ demands primarily because they are unsure of other options and unprepared to launch any other response.

Of 1,106 professionals surveyed, 63% said their organization had prepared for ransomware attacks by auditing and increasing back up of data and systems — up 8% from 2017. Forty-nine percent said they had worked a planned system outage into the business continuity plan in the event of ransomware incident — an increase of 7% from 2017.

Only 12%, however, had defined the circumstances under which they would pay a ransom to resolve the incident — a percentage unchanged from 2017.

This suggests that companies have taken steps in the backend to protect systems and data that come under siege, but still stumble over the immediate, front-facing response. This extends to management of reputational impact as well.

Reputational Impact

Only 23% of respondents were confident in their ability to minimize both the financial and reputational impact of a data breach, and only 38% believed themselves effective at preventing the loss of customers’ and business partners’ trust and confidence.

Larry Ponemon, chairman and founder, Ponemon Institute

“However, we have seen that a swift response telling impacted parties what happened, why it happened, and how to protect themselves is the key to repairing the company’s reputation,” said Mike Bruemmer, VP of data breach resolution, Experian.

“According to a consumer survey we conducted in 2019, we found that 60% of respondents would forgive a company if the breached business has an effective consumer response and communicates quickly and concisely about what happened.

“So the ability to regain consumers’ trust again is possible. It takes a timely response as well as offering resources to affected consumers,” he said.

Increasing Vulnerability to Phishing Attacks

If preparedness for ransomware attacks is middling at best, the scenario is even worse for phishing attacks.

The percentage of respondents expressing confidence in their ability to recognize and respond to phishing attacks has actually declined over the past three years from 31% in 2017 to 23% in 2019.

Only half of respondents said employees were trained to identify the tell-tale signs of a phishing attempt.

According to the FBI’s 2019 Internet Crime Report, the Bureau’s Internet Crime Complaint Center fielded more reports of phishing attacks than any other type of cyber incident, which collectively caused nearly $58 million in losses. Digital thieves are clearly exploiting companies’ apparent inattention to this type of cyber crime.

“In general, the way I put it is that companies need to be right 100% of the time while criminals need to be right only once. Those odds are in the criminals favor,” Bruemmer said. “Phishing is one of the easiest for criminals to execute and they have a lot of targets in employees.”

Said Ponemon, “There’s less institutional knowledge about how to handle these issues. And adversaries are getting much smarter in their attacks. The skills needed to identify and contain an attack are different and more difficult when dealing with ransomware and phishing.”

Bruemmer said the threat is growing with the advent of “smishing” — phishing attacks conducted over SMS text.

“Companies should be on alert that employees’ company mobile devices can also be a breach surface,” he said.

Preparedness for Privacy-Related Risks Looks Promising

Despite lack of preparedness for newer types of cyber attack, companies have gotten better and girding against and responding to breaches of confidential data.

Mike Bruemmer, vice president of data breach resolution, Experian

Respondents felt more confident handling matters like notification to regulators and customers, forensic investigation, and provision of services like credit monitoring and identity theft protection.

More companies say they are strengthening the security of their IT systems, practicing response plans with table-top exercises and drills, training employees more thoroughly on cyber exposures, and regularly reviewing who has access to their systems and through what points of entry.

This is likely because this exposure is older — privacy-related risks are what cyber insurance policies were originally created to cover.

Companies have a greater wealth of experience and loss history to learn from. Risk mitigation and incident response have improved as privacy risks became better understood.

Trends to Watch

This suggests that preparedness for newer methods of cyber crime could follow the same curve.


As time goes on, a greater volume of incidents may help to flesh out the most effective defense strategies.

Continued evolution of the cyber insurance market will also help.

Despite increasing awareness of the frequency and severity of data breaches, only 49% of survey respondents carried a cyber policy.

As brokers and carriers grow more adept at pitching the value of cyber insurance — and as policies expand to affirmatively cover things like ransomware and phishing which may otherwise fall under K&R and crime policies — it’s likely that more companies will purchase coverage. &

Katie Dwyer is a freelance editor and writer based out of Philadelphia. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

The Betrayal of Elizabeth

In this Risk Scenario, Risk & Insurance explores what might happen in the event a telemedicine or similar home health visit violates a patient's privacy. What consequences await when a young girl's tele visit goes viral?
By: | October 12, 2020
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.


Elizabeth Cunningham seemingly had it all. The daughter of two well-established professionals — her father was a personal injury attorney, her mother, also an attorney, had her own estate planning practice — she grew up in a house in Maryland horse country with lots of love and the financial security that can iron out at least some of life’s problems.

Tall, good-looking and talented, Elizabeth was moving through her junior year at the University of Pennsylvania in seemingly good order; check that, very good order, by all appearances.

Her pre-med grades were outstanding. Despite the heavy load of her course work, she’d even managed to place in the Penn Relays in the mile, in the spring of her sophomore season, in May of 2019.

But the winter of 2019/2020 brought challenges, challenges that festered below the surface, known only to her and a couple of close friends.

First came betrayal at the hands of her boyfriend, Tom, right around Thanksgiving. She saw a message pop up on his phone from Rebecca, a young woman she thought was their friend. As it turned out, Rebecca and Tom had been intimate together, and both seemed game to do it again.

Reeling, her holiday mood shattered and her relationship with Tom fractured, Elizabeth was beset by deep feelings of anxiety. As the winter gray became more dense and forbidding, the anxiety grew.

Fed up, she broke up with Tom just after Christmas. What looked like a promising start to 2020 now didn’t feel as joyous.

Right around the end of the year, she plucked a copy of her father’s New York Times from the table in his study. A budding physician, her eyes were drawn to a piece about an outbreak of a highly contagious virus in Wuhan, China.

“Sounds dreadful,” she said to herself.

Within three months, anxiety gnawed at Elizabeth daily as she sat cloistered in her family’s house in Bel Air, Maryland.

It didn’t help matters that her brother, Billy, a high school senior and a constant thorn in her side, was cloistered with her.

She felt like she was suffocating.

One night in early May, feeling shutdown and unable to bring herself to tell her parents about her true condition, Elizabeth reached out to her family physician for help.

Dr. Johnson had been Elizabeth’s doctor for a number of years and, being from a small town, Elizabeth had grown up and gone to school with Dr. Johnson’s son Evan. In fact, back in high school, Evan had asked Elizabeth out once. Not interested, Elizabeth had declined Evan’s advances and did not give this a second thought.

Dr. Johnson’s practice had recently been acquired by a Virginia-based hospital system, Medwell, so when Elizabeth called the office, she was first patched through to Medwell’s receptionist/scheduling service. Within 30 minutes, an online Telehealth consult had been arranged for her to speak directly with Dr. Johnson.

Due to the pandemic, Dr. Johnson called from the office in her home. The doctor was kind. She was practiced.

“So can you tell me what’s going on?” she said.

Elizabeth took a deep breath. She tried to fight what was happening. But she could not. Tears started streaming down her face.

“It’s just… It’s just…” she managed to stammer.

The doctor waited patiently. “It’s okay,” she said. “Just take your time.”

Elizabeth took a deep breath. “It’s like I can’t manage my own mind anymore. It’s nonstop. It won’t turn off…”

More tears streamed down her face.

Patiently, with compassion, the doctor walked Elizabeth through what she might be experiencing. The doctor recommended a follow-up with Medwell’s psychology department.

“Okay,” Elizabeth said, some semblance of relief passing through her.

Unbeknownst to Dr. Johnson, her office door had not been completely closed. During the telehealth call, Evan stopped by his mother’s office to ask her a question. Before knocking he overheard Elizabeth talking and decided to listen in.


As Elizabeth was finding the courage to open up to Dr. Johnson about her psychological condition, Evan was recording her with his smartphone through a crack in the doorway.

Spurred by who knows what — his attraction to her, his irritation at being rejected, the idleness of the COVID quarantine — it really didn’t matter. Evan posted his recording of Elizabeth to his Instagram feed.

#CantManageMyMind, #CrazyGirl, #HelpMeDoctorImBeautiful is just some of what followed.

Elizabeth and Evan were both well-liked and very well connected on social media. The posts, shares and reactions that followed Evan’s digital betrayal numbered in the hundreds. Each one of them a knife into the already troubled soul of Elizabeth Cunningham.

By noon of the following day, her well-connected father unleashed the dogs of war.

Rand Davis, the risk manager for the Medwell Health System, a 15-hospital health care company based in Alexandria, Virginia was just finishing lunch when he got a call from the company’s general counsel, Emily Vittorio.

“Yes?” Rand said. He and Emily were accustomed to being quick and blunt with each other. They didn’t have time for much else.

“I just picked up a notice of intent to sue from a personal injury attorney in Bel Air, Maryland. It seems his daughter was in a teleconference with one of our docs. She was experiencing anxiety, the daughter that is. The doctor’s son recorded the call and posted it to social media.”

“Great. Thanks, kid,” Rand said.

“His attorneys want to initiate a discovery dialogue on Monday,” Emily said.

It was Thursday. Rand’s dreams of slipping onto his fishing boat over the weekend evaporated, just like that. He closed his eyes and tilted his face up to the heavens.

Wasn’t it enough that he and the other members of the C-suite fought tooth and nail to keep thousands of people safe and treat them during the COVID-crisis?

He’d watched the explosion in the use of telemedicine with a mixture of awe and alarm. On the one hand, they were saving lives. On the other hand, they were opening themselves to exposures under the Health Insurance Portability and Accountability Act. He just knew it.

He and his colleagues tried to do the right thing. But what they were doing, overwhelmed as they were, was simply not enough.


Within the space of two weeks, the torture suffered by Elizabeth Cunningham grew into a class action against Medwell.

In addition to the violation of her privacy, the investigation by Mr. Cunningham’s attorneys revealed the following:

Medwell’s telemedicine component, as needed and well-intended as it was, lacked a viable informed consent protocol.

The consultation with Elizabeth, and as it turned out, hundreds of additional patients in Maryland, Pennsylvania and West Virginia, violated telemedicine regulations in all three states.

Numerous practitioners in the system took part in teleconferences with patients in states in which they were not credentialed to provide that service.

Even if Evan hadn’t cracked open Dr. Johnson’s door and surreptitiously recorded her conversation with Elizabeth, the Medwell telehealth system was found to be insecure — yet another violation of HIPAA.

The amount sought in the class action was $100 million. In an era of social inflation, with jury awards that were once unthinkable becoming commonplace, Medwell was standing squarely in the crosshairs of a liability jury decision that was going to devour entire towers of its insurance program.

Adding another layer of certain pain to the equation was that the case would be heard in Baltimore, a jurisdiction where plaintiffs’ attorneys tended to dance out of courtrooms with millions in their pockets.

That fall, Rand sat with his broker on a call with a specialty insurer, talking about renewals of the group’s general liability, cyber and professional liability programs.

“Yeah, we were kind of hoping to keep the increases on all three at less than 25%,” the broker said breezily.

There was a long silence from the underwriters at the other end of the phone.

“To be honest, we’re borderline about being able to offer you any cover at all,” one of the lead underwriters said.

Rand just sat silently and waited for another shoe to drop.

“Well, what can you do?” the broker said, with hope draining from his voice.

The conversation that followed would propel Rand and his broker on the difficult, next to impossible path of trying to find coverage, with general liability underwriters in full retreat, professional liability underwriters looking for double digit increases and cyber underwriters asking very pointed questions about the health system’s risk management.

Elizabeth, a strong young woman with a good support network, would eventually recover from the damage done to her.

Medwell’s relationships with the insurance markets looked like it almost never would. &


Risk & Insurance® partnered with Allied World to produce this scenario. Below are Allied World’s recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

The use of telehealth has exponentially accelerated with the advent of COVID-19. Few health care providers were prepared for this shift. Health care organizations should confirm that Telehealth coverage is included in their Medical Professional, General Liability and Cyber policies, and to what extent. Concerns around Telehealth focus on HIPAA compliance and the internal policies in place to meet the federal and state standards and best practices for privacy and quality care. As states open businesses and the crisis abates, will pre-COVID-19 telehealth policies and regulations once again be enforced?

Risk Management Considerations:

The same ethical and standard of care issues around caring for patients face-to-face in an office apply in telehealth settings:

  • maintain a strong patient-physician relationship;
  • protect patient privacy; and
  • seek the best possible outcome.

Telehealth can create challenges around “informed consent.” It is critical to inform patients of the potential benefits and risks of telehealth (including privacy and security), ensure the use of HIPAA compliant platforms and make sure there is a good level of understanding of the scope of telehealth. Providers must be aware of the regulatory and licensure requirements in the state where the patient is located, as well as those of the state in which they are licensed.

A professional and private environment should be maintained for patient privacy and confidentiality. Best practices must be in place and followed. Medical professionals who engage in telehealth should be fully trained in operating the technology. Patients must also be instructed in its use and provided instructions on what to do if there are technical difficulties.

This case study is for illustrative purposes only and is not intended to be a summary of, and does not in any way vary, the actual coverage available to a policyholder under any insurance policy. Actual coverage for specific claims will be determined by the actual policy language and will be based on the specific facts and circumstances of the claim. Consult your insurance advisors or legal counsel for guidance on your organization’s policies and coverage matters and other issues specific to your organization.

This information is provided as a general overview for agents and brokers. Coverage will be underwritten by an insurance subsidiary of Allied World Assurance Company Holdings, Ltd, a Fairfax company (“Allied World”). Such subsidiaries currently carry an A.M. Best rating of “A” (Excellent), a Moody’s rating of “A3” (Good) and a Standard & Poor’s rating of “A-” (Strong), as applicable. Coverage is offered only through licensed agents and brokers. Actual coverage may vary and is subject to policy language as issued. Coverage may not be available in all jurisdictions. Risk management services are provided or arranged through AWAC Services Company, a member company of Allied World. © 2020 Allied World Assurance Company Holdings, Ltd. All rights reserved.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]