Article
What To Do When A Hacker Encrypts Your Data
Combating Ransomware
Cyber Threats
RANSOMWARE, RANSOMWARE...
It’s the boogeyman looming in the corners of every digital task we do. Even businesses that don’t operate primarily online have data points that can be exploited, and hackers are always on the lookout for those with poor cyber health.
[This article originally appeared in Risk & Insurance at:
We Talk About Ransomware All the Time. So What Do We Actually Do When a Hacker Has Our Data? : Risk & Insurance (riskandinsurance.com)]
The cost of an attack is growing, too. As Gallagher reported in its 2022 Cyber Insurance Market Conditions Report, during the first six months of 2021, $590 million were paid in ransom payments, as opposed to $416 million paid in all of 2020.
While we talk about best practices to protect ourselves, how often do we flip the conversation and look at the steps we must take when a hack actually occurs? “Unfortunately, no one is safe from ransomware,” said Evgueni Erchov, head of security research & strategy, Arete.
“The most sophisticated groups can focus on larger organizations … but we also see the small companies being targeted all the time.”
Erchov is an experienced hacker negotiator, with more than 20 years in IT security, application development, cybercrime investigations, computer forensics, cryptocurrency blockchain and cyber threat intelligence analysis.
Erchov, alongside John Farley, managing director, cyber practice, at Gallagher, put on a recent webinar on what to do when a hacker strikes, running through a simulated hack to give businesses recovery tips.
The presentation, “What Really Happens When You Negotiate With a Hacker: An Insider’s View,” illuminated several key points, from how to communicate with hackers, where to gather cryptocurrency if a hacker demands it, and what conversations with underwriters should look like when reviewing cyber controls.
Getting in Touch with Your Hacker
Believe it or not, hacking is a business, and hackers treat what they do as such.
Organized criminals work together to suss out vulnerable targets — from a large corporation all the way down to the neighborhood corner store. If the business has the capability to store data — credit card info, health records, trade secrets, you name it — the business is a viable target.
When a hacker infiltrates a system, the language used in their demand can follow a similar pattern. Hackers will note the data they have access to — employee personal records, partner and client data, financial and accountant documents — and how they intend to gain ransom for encrypting these files.
Next steps will focus on how to communicate with the hacker.
“It depends on how sophisticated the group is,” Erchov said. “Sometimes a ransom note will contain an email address that will be used to go back and forth and negotiate a ransom.”
Money and Extortion: How Demands Lives Have Changed
“In the old days, five or six years ago, we had hackers typically freezing our data, we had extortion, but if you didn’t pay, you just didn’t get your data back,” Farley said.
The scare tactics being used by hackers are changing.
In the simulation during the presentation, the fictive hacker threatens to reveal extremely sensitive data from the company CEO if they don’t receive $1 million in bitcoin within five days. To prove how serious they are, the hacker sends an excerpt of that sensitive info.
Extortion and double extortion are commonplace for hackers these days, Erchov said.
“That really happens quite often, on average, close to 70% of cases nowadays will involve data exfiltration along with the encryption,” he said.
It’s a tactic used to encourage payment, because it not only involves the encryption of sensitive data, but it also hangs corporate reputation in the balance. The ransom becomes more than just retrieving data; it becomes about keeping that data out of public hands.
Bitcoin: How the Heck Do I get My Hands on That?
Once the decision to pay the hackers is made, the next issue is figuring out how to follow through. More hackers are demanding bitcoin payments in their ransoms, but not all companies are working in bitcoin.
So then, what do companies do when their data is held for ransom?
As noted by Farley and Erchov, people believe the first place to go for bitcoin is their cyber insurer. But this is not correct.
“The forensic investigator … the company that deals with forensic investigation and interim response, that’s typically the company that will be handling that,” Erchov said.
However, the cyber insurer can be there to guide the process.
“The beauty of the cyber insurance policy is that you have access to these companies [like a forensic investigation company] that have access to bitcoin and can facilitate the payments,” added Farley.
Forensic investigation companies are often operating on a 24/7 basis as well, and the cyber insurance policy acts as a bridge between client and forensics.
Farley noted these payments are also on reimbursement, so the cyber policy is typically designed to reimburse ransoms after the fact.
The Decision to Negotiate
While paying a hacker immediately to get encrypted data back seems like a no brainer, sometimes negotiating down the ransom is the best line of action, especially if a ransom demand is really large or unfeasible.
But what if low-balling a hacker leads to a bigger data leak?
“They almost expect the initial demand is not going to be paid,” said Erchov.
But it’s important to partner with a negotiator, he said, because the negotiation strategist knows what is a reasonable offer versus what could anger the hacker.
The good news: On average, hackers will negotiate down a ransom by 70%, according to Erchov, based on the cases his company Arete has dealt with in the past.
But that depends on several different factors.
“Potentially, the backups might be available. So in that case, if we only have to negotiate for promise of data deletion, it gives us additional leverage because we don’t need a decryption tool,” Erchov gave as an example.
Questions Your Underwriter Will Ask
“We have a very hard cyber insurance marketplace today,” said Farley. “We’re in a place where ransomware and other factors are really getting the underwriting community very nervous.”
Because of the risk landscape and the size of demand, rates are increasing. Some entities with less cyber controls in place are facing nonrenewal.
So, how can a company make itself a good risk for an underwriter?
“They are going to have a lot of questions for you,” said Farley. He noted his list was not all encompassing, but these are key areas to start.
“Multi-factor authentication. If you don’t have that in place, there’s a chance you might not get underwritten at all,” he said.
Underwriters will also want to see patch management — a written and detailed plan to manage any hacker exploitation. Point detection and response, which is technology used to find a hacker in your system and alert you to them, is another control underwriters like to see.
At the end of the day, the key thing to remember is if your company is on the receiving end of a cyber ransomware event, call your cyber partners immediately.
They will know which resources, from bitcoin, negotiators, forensics and more, will aid in appeasing the hacker and getting your data secured.
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FortiGate Exploits Enable Network Breaches and Credential Theft
A recent security report indicates that threat actors are actively exploiting FortiGate Next-Generation Firewall (NGFW) appliances as initial access vectors to compromise enterprise networks. The activity leverages recently disclosed vulnerabilities or weak credentials to gain unauthorized access and extract configuration files, which often contain sensitive information, including service account credentials and detailed network topology data.
Analysis of these incidents shows significant variation in attacker dwell time, ranging from immediate lateral movement to delays of up to two months post-compromise. Since these appliances often integrate with authentication systems such as Active Directory and Lightweight Directory Access Protocol (LDAP), their compromise can grant attackers extensive access, substantially increasing the risk of widespread network intrusion and data exposure.
What’s Notable and Unique
The activity involves the exploitation of recently disclosed security vulnerabilities, including CVE-2025-59718, CVE-2025-59719, and CVE-2026-24858, or weak credentials, allowing attackers to gain administrative access, extract configuration files, and obtain service account credentials and network topology information.
In one observed incident, attackers created a FortiGate admin account with unrestricted firewall rules and maintained access over time, consistent with initial access broker activity. After a couple of months, threat actors extracted and decrypted LDAP credentials to compromise Active Directory.
In another case, attackers moved from FortiGate access to deploying remote access tools, including Pulseway and MeshAgent, while also utilizing cloud infrastructure such as Google Cloud Storage and Amazon Web Services (AWS).
Analyst Comments
Arete has identified multiple instances of Fortinet device exploitation for initial access, involving various threat actors, with the Qilin ransomware group notably leveraging Fortinet device exploits. Given their integration with systems like Active Directory, NGFW appliances remain high-value targets for both state-aligned and financially motivated actors. In parallel, Arete has observed recent dark web activity involving leaked FortiGate VPN access, further highlighting the expanding risk landscape. This aligns with the recent reporting from Amazon Threat Intelligence, which identified large-scale compromises of FortiGate devices driven by exposed management ports and weak authentication, rather than vulnerability exploitation. Overall, these developments underscore the increasing focus on network edge devices as entry points, reinforcing the need for organizations to strengthen authentication, restrict external exposure, and address fundamental security gaps to mitigate the risk of widespread compromise.
Sources
FortiGate Edge Intrusions | Stolen Service Accounts Lead to Rogue Workstations and Deep AD Compromise
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Vulnerability Discovered in Anthropic’s Claude Code
Security researchers discovered two critical vulnerabilities in Anthropic's agentic AI coding tool, Claude Code. The vulnerabilities, tracked as CVE-2025-59536 and CVE-2026-21852, allowed attackers to achieve remote code execution and to compromise a victim's API credentials. The vulnerabilities exploit maliciously crafted repository configurations to circumvent control mechanisms. It should be noted that Anthropic worked closely with the security researchers throughout the process, and the bugs were patched before the research was published.
What’s Notable and Unique
The configuration files .claude/settings.json and .mcp.json were repurposed to execute malicious commands. Because the configurations could be applied immediately upon starting Claude Code, the commands ran before the user could deny permissions via a dialogue prompt, or they bypassed the authentication prompt altogether.
.claude/settings.json also defines the endpoint for all Claude Code API communications. By replacing the default localhost URL with a URL they own, an attacker could redirect traffic to infrastructure they control. Critically, the authentication traffic generated upon starting Claude Code included the user's full Anthropic API key in plain text and was sent before the user could interact with the trust dialogue.
Restrictive permissions on sensitive files could be bypassed by simply prompting Claude Code to create a copy of the file's contents, which did not inherit the original file's permissions. A threat actor using a stolen API key could gain complete read and write access to all files within a workspace.
Analyst Comments
The vulnerabilities and attack paths detailed in the research illustrate the double-edged nature of AI tools. The speed, scale, and convenience characteristics that make AI tools attractive to developer teams also benefit threat actors who use them for nefarious purposes. Defenders should expect adversaries to continue seeking ways to exploit configurations and orchestration logic to increase the impact of their attacks. Organizations planning to implement AI development tools should prioritize AI supply-chain hygiene and CI/CD hardening practices.
Sources
Caught in the Hook: RCE and API Token Exfiltration Through Claude Code Project Files | CVE-2025-59536 | CVE-2026-21852
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Ransomware Trends & Data Insights: February 2026
After a slight lull in January, Akira and Qilin returned to dominating ransomware activity in February, collectively accounting for almost half of all engagements that month. The rest of the threat landscape remained relatively diverse, with a mix of persistent threats like INC and PLAY, older groups like Cl0p and LockBit, and newer groups like BravoX and Payouts King. Given current trends, the first quarter of 2026 will likely remain relatively predictable, with the top groups from the second half of 2025 continuing to operate at fairly consistent levels month to month.
Figure 1. Activity from the top 5 threat groups in February 2026
Throughout the month of February, analysts at Arete identified several trends behind the threat actors perpetrating cybercrime activities:
In February, Arete observed Qilin actively targeting WatchGuard Firebox devices, especially those vulnerable to CVE-2025-14733, to gain initial access to victim environments. CVE-2025-14733 is a critical vulnerability in WatchGuard Fireware OS that allows a remote, unauthenticated threat actor to execute arbitrary code. In addition to upgrading WatchGuard devices to the latest Firebox OS version, which patches the bug, administrators are urged to rotate all shared secrets on affected devices that may have been compromised and may be used in future campaigns.
Reports from February suggest that threat actors are increasingly exploring AI-enabled tools and services to scale malicious activities, demonstrating how generative AI is being integrated into both espionage and financially motivated threat operations. The Google Threat Intelligence Group indicated that state-backed threat actors are leveraging Google’s Gemini AI as a force multiplier to support all stages of the cyberattack lifecycle, from reconnaissance to post-compromise operations. Separate reporting from Amazon Threat Intelligence identified a threat actor leveraging commercially available generative AI services to conduct a large-scale campaign against FortiGate firewalls, gaining access through weak or reused credentials protected only by single-factor authentication.
The Interlock ransomware group recently introduced a custom process-termination utility called “Hotta Killer,” designed to disable endpoint detection and response solutions during active intrusions. This tool exploits a zero-day vulnerability (CVE-2025-61155) in a gaming anti-cheat driver, marking a significant adaptation in the group’s operations against security tools like FortiEDR. Arete is actively monitoring this activity, which highlights the growing trend of Bring Your Own Vulnerable Driver (BYOVD) attacks, in which threat actors exploit legitimate, signed drivers to bypass and disable endpoint security controls.
Sources
Arete Internal