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The Hidden Costs of Cybercrime

Arete Analysis

By Kevin Baker, Director of Cyber Strategy and Defense

This year, the global cost of cybercrime is expected to hit $6 trillion.[i] Up from $3 trillion in 2015, it’s nothing short of a big, flourishing business whose operators are relentless innovators.

Since COVID, the FBI recorded a 300% increase in cybercrime[ii], with pandemic-related scams baiting people to click on malicious links or attachments. Even ransomware attacks have recently soared — in fact, one is said to be occurring every 11 seconds.[iii] And why not? It’s a lucrative business model!

In the past, kidnappers were always caught at the money-transfer point. But digital currency changed all that, facilitating anonymous handoffs. With Bitcoin, for example, organizations can no longer trace ransoms back to individuals and threat actors can sit in Russia, Eastern Europe, China, Brazil, the United States, often where they may be protected from extradition.

The Evolution of Ransomeware

Ransomware began as a game of keep away. The bad guys didn’t have to steal anything; they simply denied companies or individuals access to their data. This tactic worked well until companies caught on and started to move their backups offline, so they could restore their critical systems without having to pay the ransom.

Like legitimate businesses, cybercriminals looked to pivot, innovate, and find new revenue streams. When encryption alone began to fail, they concocted the double extortion scheme, whereby they opted to encrypt and exfiltrate data. First, they demanded payment for decrypting the stolen data. Next, they asked for a second payment to prevent its public release.

Depending on the sensitivity of the data stolen, companies had to weigh the potential reputational damage related to its exposure along with the broken client trust of not protecting it in the first place.

A Case Study in Costs

In a 2019 Radware survey[i], 43% of participants said they’d experienced negative customer trust and reputational loss because of a successful cyberattack.

Let’s examine the SolarWinds attack. Dubbed the Pearl Harbor of American IT, the SolarWinds hack impacted 18,000 government and private networks. That’s a lot of customers to have mad at you.

SolarWinds had been a reputable, long-time provider of IT monitoring services. But immediately after the hack, its stock price tanked, presumably due to the potential for reputational damage, material loss of customers, a slowdown in business performance, and high remediation and legal costs.

It’s easy to think that only big companies are targets — Microsoft was also recently hacked — but cybercriminals are often emboldened by such successful hacks. While advanced persistent threat actors may not hit smaller targets themselves, they have no qualms about selling their proven exploit methods to other players in the threat actor marketplace. Often, the smaller, less sophisticated players are willing to take smaller pay days.

Thus, no matter an organization’s size and scope of activities, it will be targeted, baited, and attacked.

So, Let's Count the Costs

The direct cost of exploitation includes remediation, repair, restoration of data and IT infrastructure, ransom payment, and legal counsel to help navigate through these complex problems. And if a breach notification to customers is required, those costs can quickly skyrocket, especially depending on how much personally identifiable information (PII) may have been lost.

Not to be forgotten is the cost of business downtime. While production ceases, organizations must continue to pay salaries, rent, the electric bill, the telephone bill, all the normal operating expenses. None of these go away while organizations are trying to restore operations.

Next, there are the indirect costs of reputation damage and lost customer trust, which impacts the ability to gain future customers. There’s also the potential for litigation defense costs should customers decide to sue for what they believe was a failure to protect information that a company had pledged to protect. On top of all that, multiple state attorneys general, the Federal Trade Commission, the Security Exchange Commission, and other regulators may fine the “hacked” company.

And lastly, insurance rates go up. It’s a bit different than with car insurance. For cyber carriers, there’s less actuarial science available and thus, increases go up faster than they would in any other form of insurance right now.

In a worst-case scenario, if the sum proves too high, a company could confront the greatest cost of all: going out of business.

[i] Radware Report Shows That Respondents Claim Average Cost of Cyberattack Now Exceeds $1 Million

[i] Cybercrime to Cost the World $10.5 Trillion Annually By 2025 (cybersecurityventures.com)

[ii] COVID-19 News: FBI Reports 300% Increase in Reported Cybercrimes – IMC Grupo

[iii] Ransomware Attacks Predicted to Occur Every 11 Seconds in 2021 with a Cost of $20 Billion | Robinson+Cole Data Privacy + Security Insider – JDSupra

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Article

Attack Patterns in Settra Incidents

Recent Settra ransomware incidents demonstrate a consistent operational pattern involving compromised credentials, VPN access, and the deployment of ransomware executables tailored to victim environments. Researchers have observed Settra naming ransomware executables after the targeted organization's domain while following similar attack sequences across multiple intrusions. Arete has also identified overlapping tactics, techniques, and tools in Settra engagements observed from June to August, including the use of MeshAgent for remote access and Bring Your Own Vulnerable Driver (BYOVD) techniques to weaken endpoint security controls. 

What’s Notable and Unique 

  • Settra operators have been observed naming ransomware executables after the victim organization's domain, creating a direct association between the payload and the targeted environment.

  • Initial access vectors have included targeting exposed VPN infrastructure and the use of compromised credentials, reducing the need for traditional exploitation of vulnerabilities.

  • Arete observed MeshAgent in multiple Settra engagements, which provides threat actors with a mechanism for remote access and continued activity within compromised environments.

  • Settra engagements have also included Bring Your Own Vulnerable Driver (BYOVD) activity, which can be used to bypass or impair security controls by abusing legitimate but vulnerable drivers.

Analyst Comments

Recent Settra activity demonstrates how ransomware operators can combine credential-based access, remote management tooling, and security control evasion techniques to establish and maintain access before ransomware deployment. The repeated use of similar tools and operational patterns across incidents provides useful detection opportunities for defenders. Organizations should closely monitor VPN authentication activity, unusual use of compromised credentials, unexpected MeshAgent deployment, ransomware executables with victim-specific naming conventions, and suspicious driver activity associated with attempts to disable or bypass endpoint security controls.

Arete’s MDR practice detects Settra’s full attack chain, with special attention to the staging of BYOVD activity for defense evasion. However, for us to detect it, SentinelOne needs to be fully deployed across an environment. To support organizations with full deployment, Arete offers SentinelOne Deployment Assistance. This service is designed to ensure that SentinelOne is deployed across all eligible endpoints, eliminating coverage gaps that could otherwise expose the organization to ransomware, malware, credential theft, and other advanced threats. Through endpoint discovery, inventory reconciliation, and deployment assistance, Arete helps organizations achieve comprehensive protection and maximize the effectiveness of their SentinelOne investment. Contact clientcares@areteir.com to learn more.

Sources

  • Ready, Settra, Go: New Settra Ransomware Variant Deploys MeshAgent RMM

Article

AI Agents Used in Campaign Against PaperCut

In late August, a threat actor used hundreds of AI agents to develop and launch a global exploitation campaign targeting vulnerable PaperCut NG and MF servers. PaperCut is print management software, and researchers determined that the operation compromised at least 440 PaperCut instances linked to 395 distinct organizations across 48 countries. The AI agents were tasked with building, testing, and refining exploits for CVE-2026-81578 and CVE-2026-82078 both security flaws affecting PaperCut software and flagged as actively exploited earlier this month.  It is currently unclear if the threat actor is solely focused on access development to be handed off to other affiliated actors, or if they will directly leverage their access to achieve follow-on objectives such as data theft or ransomware deployment.

What’s Notable and Unique

  • Researchers observed three attack paths following the exploitation of vulnerable PaperCut servers. Threat actors would harvest credentials from LSASS memory and registry secrets to perform pass-the-hash attacks, leverage older unpatched Windows vulnerabilities (CVE-2021-42278 and CVE-2021-42287) to escalate privileges in unpatched environments, or, in some cases, directly add newly created accounts to the Domain Admins group when PaperCut was running with domain-level privileges.


  • Upon achieving remote code execution and credential harvesting within a self-hosted lab environment, the threat actor deployed hundreds of AI-powered agents that leveraged OpenAI Codex, DeepSeek models, and publicly available offensive security tools, including Mimikatz, SharpHound, Certipy, Rubeus, and Impacket, to automate reconnaissance, exploitation, and post-compromise activities. The attackers subsequently used a DCSync attack to obtain a database dump containing domain credentials. 

Analyst Comments

The observed activity demonstrates how threat actors are increasingly leveraging AI and large language models (LLMs) to accelerate cyber operations at unprecedented speed and scale. In this campaign, the adversary progressed from exploit development to remote code execution within hours and, in some cases, achieved Domain Administrator privileges in as little as five minutes. The AI-assisted workflow enabled rapid reconnaissance, exploitation, credential theft, privilege escalation, and lateral movement, allowing the compromise of multiple organizations within seconds. This activity highlights the growing threat posed by AI-enabled adversaries capable of conducting large-scale intrusions with greater efficiency and operational velocity. Organizations affected by the PaperCut vulnerabilities are strongly advised to apply the latest security updates and implement the vendor's recommended mitigation measures to reduce the risk of compromise and unauthorized access. 

Sources

  • Agents Gone Wild: An AI-Orchestrated Global Campaign Against PaperCut NG/MF 

  • AI-powered attack exploited PaperCut flaws to hack 395 organizations 

  • PaperCut Attacker Uses Hundreds of AI Agents to Compromise 440+ Instances 

Article

Adversarial AI Evolves from Prompting to Autonomous Attack Workflows

Cybercriminals and state-linked threat actors are increasingly incorporating artificial intelligence (AI) into multiple stages of offensive operations. Rather than relying on AI only for content generation or research, threat actors are now consistently using it to support reconnaissance, vulnerability discovery, credential theft, malware development, social engineering, and activities following initial compromise. The growing use of automated and agent-based workflows is allowing adversaries to coordinate offensive malicious activities with less manual involvement, potentially increasing the speed, scale, and efficiency of future campaigns.

What’s Notable and Unique

  •  In one observed campaign, threat actors used AI to plan, build, and conduct an automated credential-harvesting operation within just several hours, demonstrating how compromised infrastructure can be rapidly repurposed to support larger-scale malicious activity.

  • Arete has observed several threat groups using AI-assisted capabilities to facilitate the analysis of data obtained during exfiltration so far this year, including INC Ransom, FulcrumSec, and Settra.

  • Attackers are also attempting to reproduce proprietary AI capabilities. Large-scale automated prompting campaigns have been used to extract information about the behavior and capabilities of proprietary AI models. The use of numerous accounts and intermediary infrastructure can make these activities more difficult to identify and attribute.

Analyst Comments

AI is increasingly becoming an operational component in the threat landscape rather than simply a tool that improves attacker productivity. By connecting reconnaissance, development, credential operations, and other activities through automated workflows, threat actors can conduct campaigns more quickly and reduce reliance on continuous human input. This trend also impacts security requirements for organizations deploying AI technologies. AI models, development environments, cloud resources, identities, repositories, and automated workflows should increasingly be considered interconnected elements of the enterprise attack surface, and organizations should maintain visibility across these areas and ensure that security controls account for both conventional threats and AI-enabled attack techniques.

Sources

  • GTIG AI Threat Tracker: From Prompting to Autonomy – The Evolution of Adversarial AI

Article

Top 9 Security Controls for SMBs

In today’s complex cyber threat landscape, small and medium-sized businesses (SMBs) should implement a layered, multi-pronged approach to security. Here are some proven, effective controls to consider:

1.        Implement MFA for All Users
Multi-factor authentication (MFA) is an effective and accessible way to protect sensitive data, comply with regulatory standards, and prevent unauthorized access to critical systems. By ensuring that users not only use a password but also a secure token, an organization can significantly reduce phishing attempts, credential stuffing attacks, and ransomware incidents. MFA should be enabled for email, VPN, and critical system access.

2.        Update Patch Management Programs
A modern patching program should include policies and mechanisms to manage software updates in a timely manner. Patching efforts should address not just operating system updates, but also commonly utilized software within the environment. An active patching plan aims to reduce the mean time to patch and provide metrics on existing patch efforts. In the event of a high-severity vulnerability, a mature patching program should also be able to identify the risks and exposure for a given set of systems based on the average time to patch. This helps stakeholders make informed decisions when a new exploit is released.

3.        Leverage a Properly Managed Endpoint Detection and Response (EDR) Tool
With real-time threat detection and advanced visibility, endpoint detection and response (EDR) solutions can enhance an organization’s ability to detect and investigate potential malicious activity, including ransomware, lateral movement, fileless attacks, and more. Effective management of EDR should include proper configuration, regular agent updates, and established procedures for responding to alerts.

4.        Enhance EDR with Frontline Incident Intelligence
While EDR solutions are an important component of a security program, threat actors are continually adapting their techniques to evade detection, and as a result, standard detection methods may not always identify emerging threats or novel attack behaviors. To strengthen protection, organizations can supplement EDR tools with custom detection rules informed by incident response data. These rules can help identify indicators of compromise observed during cyber incidents, providing an additional layer of visibility beyond traditional detections.

Arete Bloktd℠ illustrates this approach by transforming threat intelligence and malware analysis into curated detection rules for EDR tools. Applying frontline intelligence to security tools can result in earlier detection, less investigative burden, and a more confident response. 

5.        Create and Continuously Test an Incident Response (IR) Plan
An incident response plan can help an organization effectively identify, respond to, and recover from a cybersecurity incident while minimizing disruption and downtime. An IR plan defines clear roles, escalation paths, communication strategies, and decision frameworks for both internal and external teams. To be effective, these plans should be regularly tested with post-incident reviews or tabletop exercises involving key stakeholders.

6.        Maintain Encrypted and Tested Data Backups
In the case of a cyberattack, backups can help organizations maintain business continuity, support ransom negotiations with threat actors, and contribute to a timely and successful recovery. Encrypting backups makes it more difficult for threat actors to access or alter them, and regular testing ensures they remain accessible during a security incident.

7.        Conduct Employee Security Awareness Training
Human error is a leading cause of cybersecurity incidents, and an organization’s employees are its first line of defense against cyber threats. Security awareness training reinforces the importance of data confidentiality, supports regulatory compliance, and helps employees recognize and understand red flags such as suspicious emails, malicious links, and social engineering attempts.

8.        Assess and Address Existing Risk and Vulnerabilities
To maintain a proactive approach to risk management and improve resilience, organizations should regularly assess existing vulnerabilities through expert-led Vulnerability Assessments, Penetration Testing, and Threat Hunting Assessments. These exercises can help identify security gaps, support regulatory compliance, and prevent potential incidents. During remediation, prioritize high-impact vulnerabilities and make a plan for periodic assessments.

9.        Apply Least-Privilege Access Controls
Employees should have access only to the systems, applications, and data necessary to perform their jobs. By removing unnecessary administrative privileges and regularly reviewing user permissions, organizations can reduce the risk of unauthorized access and limit the damage caused by compromised accounts or insider threats.

Organizations should regularly review their cybersecurity programs, stay informed about emerging threats, and evaluate whether their security controls are adapting to the evolving threat landscape.