Earlier this month, the Federal Trade Commission (FTC) blogged about How to defend against ransomware, and published Ransomware – A Closer Look in the “Tips and Advice” section of its website. This follows warnings from other federal agencies and law enforcement concerning this serious online threat to organizations, such as Dept. of Health and Human Services and the Federal Bureau of Investigation. The FTC’s guidance also follows a ransomware attack on a union pension plan and came at the same time as recommendations to the Department of Labor concerning cybersecurity. Organizations in all industries are exposed to this threat, particularly organizations that need data all the time to function, such as healthcare providers, professional service providers (e.g., legal and accounting services), financial service providers and others. From an FTC perspective, failing to take appropriate steps to prevent and address ransomware attacks could violate Section 5 of the FTC Act.

What is “ransomware” and how can we be attacked?

Ransomware is a type of malware that denies the affected organization access to its data, typically by encrypting it. Once the data is encrypted, the hacker who launched the ransomware attack notifies the organization that, in order to obtain a key to decrypt the data, it must pay a ransom, often in a cryptocurrency, such as Bitcoin.

According to the FTC’s article, most ransomware arrives through email phishing attacks that are carried out when someone at the organization clicks on a link or downloads a malicious attachment, allowing the malware to infect the system or device. Ransomware also can get on to an organization’s computer if a user visits a malicious or compromised website.

How can a ransomware attack affect our business?

Some of the effects will be obvious and others not so much. Ransomware locks your data while bad actors look to extract money from you in order to regain access. Such an attack can disrupt services to your customers and be costly to remediate. However, the attack also may have resulted in a breach of the security of your system triggering notification obligations to individuals whose personal information was accessed or acquired, or to your business partners for whom you maintain confidential information. If the malware is not competently and completely remediated, it can spread to other systems and equipment causing future attacks.

What should we be doing?

Prepare. Prepare. Prepare.

Confirm you have the right team. A key component of your team will be either your internal IT department or a third party vendor that provides IT services. However, these professionals are not always well versed in data security or the latest techniques used by the bad guys to access your systems. The IT department/third party may be saying “We got this.” But, while it is OK to trust, you should verify. And, if you are not sure, get help.

Secure your systems.  With the right team in place, there are a number of steps that should be taken to stop an attack before it happens:

  • Conduct a risk assessment and penetration test to understand your potential for exposure to malware. This includes understanding the websites visited by users on your systems and their other activities online.
  • Implement technical measures and policies that can prevent an attack, such as endpoint security, email authentication, regular updates to virus and malware protections, intrusion prevention software and web browser protection, and monitor user activity for unauthorized and high risk activities.

Make your workforce aware of the risks and steps they need to take in case of an attack. In many cases, users of an organization’s systems are unaware of these kinds of attacks and how they can occur. Education can be critical prevention tool:

  • Help users recognize phishing attacks and dangerous sits – don’t just say it, show them and do it regularly. It may help if you also explain that they can be victims too.
  • Instruct them on what to do immediately if they believe there may be an attack. This might include notifying the IT department, disconnecting their computer from the organization’s network, and other measures.
  • Also instruct them on what not to do. For example, deleting system files may make it more difficult if not impossible later on to forensically determine the source of the problem and what happened.

Maintain backups. The FTC advises, back up your data early and often, and keep backup files disconnected from your network. Organizations that can rely on backups to be up and running quickly without being forced to cooperate with (or pay) the ransomware attacker, are in a much better position to remediate the attack.

Develop and practice a “Ransomware Game Plan.”  Organizations should already have incident response plans that address a number of issues, including breaches of personal information. Some of the key components in such a plan may include the following:

  • Identify the internal team (e.g., CIO/CISO, General Counsel, CFO) and the allocation of responsibilities.
  • Identify the external team (e.g., insurance carrier, outside counsel, forensic investigator, public relations) and involve them in your planning processes before an attack happens.
  • Outline steps for business continuity during the attack, including use of backup files and new equipment, safeguarding systems, and communication to customers, employees and business partners, as necessary.
  • Strategy for involvement of law enforcement and other agencies as applicable, such as the FBI, Internal Revenue Service, or Office for Civil Rights. This includes making contacts before an attack, which may help expedite access to assistance in the event of an attack.
  • Assessment of and compliance with legal and contractual obligations, including notification obligations based on the nature and extent of the access to information.
  • Process for (i) practicing the plan with internal and external teams, and (ii) reviewing and updating the game plan, including after an incident to improve performance

Ransomware and similar forms of attacks on information systems are not going away. Organizations need to be prepared.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.