Ransomware, Cyber Insurance, and the GC's Role: Current Executive Order, Risks Related to Payment, FBI Guidance

Description

Ransomware has become a multibillion-dollar criminal enterprise. Ransomware attacks can result in disrupted or even crippled operations, as seen in the massive ransomware attack against Kaseya by REvil or Colonial Pipeline by the Darkside group. As companies continue to enhance their security and restoration capabilities to prevent or minimize the impact of a successful attack, ransomware actors likewise continue to escalate threats and adapt their tactics to overcome these measures.

Whether a company makes a payment or not, the cost of lost business is the largest cost factor in determining the total cost of a data breach. Whether data is restored from backups or via a decryption tool, ransomware attacks typically involve significant downtime, and that downtime is increasing. Due to the likelihood of downtime and the inherent uncertainty surrounding restoration following a ransomware incident, general counsel may be especially well-served by incorporating a ransomware playbook into incident response plans, including considerations into whether to engage with the threat actor, whether to pay a ransom, how to evaluate the costs and value of a ransom, and the potential benefits and risks associated with paying a ransom.

The increasing frequency of ransomware attacks and rising amounts of ransom payments have placed renewed focus on the need for cyber insurance coverage. Some policies are unclear or ambiguous about their coverage of cybersecurity events, and other policies explicitly cover certain costs associated with cybersecurity events. Still, the unexpected severity of those events has contributed to industry-wide strain across insurers.

The Biden administration released a lengthy Executive Order on May 12, 2021, designed at least in part to respond to the supply chain risks associated with ransomware incidents. The Executive Order is broadly geared to address cybersecurity supply chain risk across the federal government. It is likely to create a series of digital safety standards with which federal agencies and their contractors will need to comply. These standards may include certifications of the integrity of their software, information systems, and vulnerability management provisions, with additional reporting requirements and penalties for violations.

Listen as our expert panel discusses the current upswing in ransomware attacks, what general counsel can do to assist a company in responding to these attacks, what types of cyber insurance are necessary, and how the Biden administration Executive Order--together with renewed FBI and other regulatory enforcement--will affect future attacks.