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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

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.

Article

Ransomware Trends & Data Insights: August 2026

Although INC Ransom was the most active ransomware threat group observed in August 2026, overall activity remained relatively distributed across the threat landscape, with approximately 30 unique ransomware and extortion groups, including both established and newly emerged actors, observed during the month. Alongside INC Ransom, Storm, DragonForce, Qilin, and The Gentlemen were among the top five most active threat groups, underscoring the continued diversity and competitiveness of the ransomware ecosystem.

Figure 1. Activity from the top 5 threat groups in August 2026 

Throughout the month, analysts at Arete identified several trends behind the threat actors perpetrating cybercrime activities: 

  • August 2026 was a significant month for the emergence of new threat actors, with Arete identifying several previously untracked ransomware groups, including Storm, Dark Project, DireWolf, Morpheus, Orova, Spirals, Wallstreet Team, and Zawoo Team. This trend underscores the ongoing evolution of the threat landscape and the low barriers to entry for new cybercriminal operations. 

  • Arete observed a continued use of AI-enabled capabilities across the ransomware ecosystem during August. Similar to Fulcrumsec and Setra, the newly emerged Zawoo Team appears to leverage AI-assisted analysis of stolen data, publishing highly structured and detailed victim assessments on its data leak site (DLS). Additionally, both the Aurora and Storm ransomware groups have been observed utilizing AI-driven or AI-assisted chat representatives during victim communications. These developments suggest that threat actors are increasingly incorporating AI to enhance data analysis, automate victim engagement, and improve the effectiveness and scalability of extortion operations. 

  • In August, Arete also observed that despite sustained law enforcement disruption efforts, LockBit continues to demonstrate operational resilience, likely through the expansion of its affiliate ecosystem and the evolution of its tactics. Recent activity indicates an increased reliance on data theft and exfiltration-only operations, with observed victimology suggesting a notable focus on organizations within the financial sector. 

Sources

  • Arete Internal

Report

Arete's H1 2026 Crimeware Report

Explore intelligence and operational data from the frontlines of ransomware and extortion response as we detail the most significant trends and developments in the cyber threat landscape in the first half (H1) of 2026.

Article

WinRAR Path-Traversal Vulnerability Exploited in Ransomware Attacks

CISA has warned that CVE-2025-8088, a path-traversal vulnerability in WinRAR, is being exploited in ransomware attacks. The vulnerability allows attackers to use specially crafted archive files to place malicious executables in locations such as the Windows Startup folder, enabling code execution when the system restarts. WinRAR addressed this vulnerability in version 7.13, but exploitation has continued due to challenges in updating the software. CISA's updated KEV entry now specifically identifies the vulnerability as being used in ransomware attacks. 

What’s Notable and Unique

  • The vulnerability was initially exploited as a zero-day by the Russia-linked RomCom group, enabling malware execution at user logon and supporting credential theft, cyberespionage, and ransomware-related activities.

  • CVE-2025-8088 continues to be actively exploited by both government-backed and financially motivated threat actors. Observed campaigns have been attributed to Russian- and Chinese-linked groups targeting several organizations.

  • Phishing campaigns leveraging weaponized RAR attachments exploited CVE-2025-8088 to silently place malicious payloads in autorun locations using directory traversal and Alternate Data Streams (ADS). 

  • The widespread exploitation of CVE-2025-8088 highlights strong demand for effective WinRAR exploits, with multiple underground vendors previously supplying exploit capabilities to a diverse range of threat actors. One such vendor, zeroplayer, advertised a WinRAR exploit in July 2025. 

Analyst Comments

Organizations should immediately upgrade WinRAR to version 7.13 or later and conduct an enterprise-wide inventory to identify unmanaged installations. Given that WinRAR lacks automatic updates, Group Policy support, and integration with common enterprise patch management platforms, manual verification and remediation may be required to ensure all vulnerable instances are addressed. Security teams should also enhance defenses against archive-based phishing attacks by blocking or scrutinizing unsolicited compressed files, monitoring for suspicious file creation in Windows Startup directories, and detecting abuse of ADS. With CISA now linking CVE-2025-8088 to ransomware activity, organizations should treat remediation as a high priority and actively monitor for indicators of WinRAR-based exploitation across their environments.

Sources

  • CISA Adds Three Known Exploited Vulnerabilities to Catalog

  • WinRAR vulnerability being exploited in ransomware attacks, CISA warns