Cyber extortion

What is cyber extortion?

Cyber extortion is a type of cybercrime where hackers threaten to block your use of your own hardware, apps, files, networks or other digital assets — essentially locking you out of your business systems — unless you pay them.

Cybercriminals typically use phishing techniques (deceitful emails or links) to trick you or your employees into installing malware on your computers or networks. They may also use infected computers around the world to flood your network with so many messages that it shuts down your systems.

Both result in encrypted access to your applications and files. The hacker then notifies you that they’ll sell you a decryption key if you pay their ransom.

Read more about cybercrime and cyber extortion.

How does cyber extortion hurt your business?

Cyber extortion can shut down your business for days or weeks. Some studies have found that the average ransomware attack results in 22 days of downtime. Depending on the size of your business, that can mean tens or hundreds of thousands of dollars in lost revenue and recovery costs.

Most victims end up paying the ransom. Sophos, an IT security firm, says the average 2023 ransom was $1.54 million, double the 2022 amount of $812,380. The vast majority of cyber extortion victims (84%, according to Sophos) lost business or revenue, and 24% take anywhere from one to six months to recover.

In addition to financial loss, businesses can suffer extensive reputational loss from defecting customers poached by competitors.

Cyber insurance can help shield your company from the stress and costs associated with cyber extortion, cybercrimes and digital fraud.

Are small businesses vulnerable to cyber extortion?

Your small business could be susceptible to cybercrime if you:

• Have a computer connected to the internet.
• Use the internet to make sales.
• Store large amounts of client data in the cloud or on a local server.

Cybercriminals might target you if:

• Your IT systems and policies are outdated or configured incorrectly.
• You don’t have a chief IT or information security professional on staff.
• You have an awkward mix of hardware, networks and apps.
• You employees aren’t trained in cybersecurity.
• You rarely or never back up your data or test your backup systems.

If you own an engineering or construction firm, you might have an especially high cyber extortion risk. One study revealed that small- to medium-sized engineering and construction firms were the fourth most common small business to get extorted. Only companies in the retail, federal government and technology/software sectors had a higher risk.

How NEXT can help protect your small business from cyber extortion

The risk of cyber extortion is significant for most U.S. small businesses. Harden your defenses by:

• Shielding your business with cyber insurance to protect against data breaches, ransomware, cybercrime, wire fraud and hardware failures.
• Creating a comprehensive cybersecurity plan.
• Developing an incident response plan.

NEXT can help with affordable, custom cyber insurance. We provide policies for more than 1,300 small business professions. Learn how we can help provide your small business with just the protection you need.

Start a quote, customize your options and access your proof of insurance in about 10 minutes.

Get a free instant quote with NEXT.