Ransomware Part 1: How It Works, Who It Hits, and Its Growing Impact

Ransomware has become one of the most dangerous and complex threats in the modern digital world. What once began as rudimentary malware has evolved into a multi-faceted weapon capable of crippling businesses, governments, and individuals alike. Leveraging cutting-edge encryption techniques, automation, and the increasing interconnection of global systems, ransomware is not only a threat but a continually evolving business model.

Understanding ransomware in detail—its mechanics, targets, and future trends—is essential for preparing defenses and reducing its impact. This analysis dives deep into the technical specifics of ransomware attacks, the devastation they cause, and what’s changing in the current landscape.

How Ransomware Works: A Step-by-Step Breakdown

At its most basic level, ransomware is a form of malware that encrypts files, locks systems, or otherwise makes data inaccessible. It then demands payment—almost always in cryptocurrency—to restore access. To fully understand ransomware, it’s critical to break down its attack stages and examine the technology underpinning each one.

1. Initial Access

The success of a ransomware attack begins with gaining a foothold in the target environment. Modern ransomware operators employ a variety of initial access techniques, depending on the victim’s infrastructure and defenses.

• Phishing Emails: The most common entry point involves socially engineered emails containing malicious attachments (e.g., Microsoft Word macros, PDFs) or links to compromised websites. Once executed, these payloads drop malware onto the system. For instance, the Emotet botnet often serves as a delivery vehicle for ransomware by distributing malicious email campaigns.
• Exploitation of Vulnerabilities: Attackers scan networks for unpatched systems with known vulnerabilities. Critical flaws in remote-access software, VPNs, or servers (like ProxyShell or PrintNightmare) are a goldmine for attackers. For instance, flaws in Microsoft Exchange servers were heavily exploited to deploy ransomware in recent years.
• RDP Compromise: Remote Desktop Protocol (RDP) remains a popular attack vector. Attackers brute-force weak credentials or purchase compromised login details on dark web forums to gain access to corporate networks. Once inside, they can escalate privileges and spread malware.
• Supply Chain Attacks: In supply chain attacks, malicious actors infect trusted third-party software providers to distribute ransomware. The Kaseya REvil attack in 2021 demonstrated how a single compromised tool could push ransomware downstream to thousands of endpoints simultaneously.

2. Payload Deployment and Evasion

Once attackers gain initial access, the focus shifts to deploying ransomware and ensuring it spreads efficiently across the target network while avoiding detection.

• Privilege Escalation: Tools like Mimikatz extract credentials from memory to gain administrative privileges. This allows attackers to disable antivirus software, tamper with security logs, and access critical servers.
• Living Off the Land (LotL): Attackers leverage legitimate system tools (e.g., PsExec, Windows Management Instrumentation (WMI), PowerShell) to avoid detection. These tools are trusted components of the operating system, making malicious activity harder to spot.
• Automated Lateral Movement: Once inside a network, ransomware spreads laterally to maximize damage. Tools like BloodHound map Active Directory environments to identify high-value targets, while Cobalt Strike or Metasploit automate the exploitation of additional systems.
• Encryption Trigger: Ransomware encrypts files using two-stage encryption:
• Symmetric Encryption (AES-256): AES encrypts individual files because it’s fast and efficient.
• Asymmetric Encryption (RSA-2048/4096): The AES key itself is encrypted using RSA public-key encryption. The private key needed for decryption remains with the attacker.

This layered encryption ensures files remain inaccessible without the attacker’s private key. Many ransomware variants selectively encrypt parts of large files to operate quickly before detection tools can respond.

3. Double Extortion and Data Exfiltration

Modern ransomware operators rarely stop at file encryption. They also exfiltrate data before encrypting it, a tactic known as double extortion. If victims refuse to pay the ransom, attackers threaten to publish the stolen data on leak sites.

• Tools for Exfiltration: Attackers use tools like Rclone, MegaSync, or custom scripts to upload data to cloud services or attacker-controlled servers.
• Impact: Double extortion increases pressure on victims—particularly those handling regulated data like healthcare records, financial information, or intellectual property. For businesses, a public data leak can result in fines under laws like GDPR or HIPAA, reputational damage, and lawsuits.

The Targets: Businesses, Governments, and Individuals

Ransomware attacks spare no one. From enterprises and local governments to everyday users, the reach of ransomware is extensive. However, the motivations and tactics used vary based on the target.

1. Businesses and Enterprises

Organizations are prime targets for ransomware because they rely on continuous access to their systems and data to operate.

• Critical Infrastructure: Industries like energy, healthcare, and logistics are attractive targets because downtime has immediate and catastrophic consequences. The Colonial Pipeline attack caused fuel shortages across the Eastern U.S., while ransomware attacks on hospitals have delayed surgeries and critical care.
• SMBs: Small and medium businesses (SMBs) often lack robust security systems, making them easy targets. Ransom demands are often sized proportionally, with many SMBs paying to minimize disruption.
• Cloud Services: Ransomware is increasingly targeting cloud storage providers and cloud-hosted infrastructure, exploiting misconfigurations or poor security practices.

Technical Insight: Attacks on businesses often leverage Active Directory attacks to gain full control over corporate networks. Tools like Kerberoasting exploit weak service account passwords to escalate privileges, while domain admin access ensures ransomware spreads rapidly.

2. Governments and Municipalities

Governments, local municipalities, and school districts are frequent targets due to their outdated infrastructure and limited budgets for cybersecurity.

• Example: The Baltimore ransomware attack disrupted critical city services for weeks, including water billing and real estate transactions, costing the city over $18 million.
• Impact: Government systems often contain sensitive citizen data, making the double-extortion model particularly effective. Ransomware attacks can halt emergency services, police operations, and utilities.

3. Individuals and Mobile Users

While businesses often make headlines, home users are far from safe. Ransomware targeting personal devices is becoming increasingly common, especially on mobile platforms.

• Mobile Ransomware: Malware like SLocker encrypts files on Android devices, while variants like LockerPIN lock phones entirely. Attackers demand smaller ransoms, typically ranging from $100–$1,000.
• Common Infection Vectors: Malicious apps, third-party app stores, and phishing campaigns remain the primary attack vectors for mobile ransomware.

Trends Shaping the Future of Ransomware

Ransomware is no longer a simple malware attack—it’s an industry. Its evolution reflects advancements in both attack methods and monetization strategies. Here are the trends driving ransomware forward:

1. Ransomware-as-a-Service (RaaS):
   Ransomware operators now offer subscription-based services, where affiliates pay a fee to use pre-built ransomware kits. Groups like LockBit, BlackCat (ALPHV), and REvil provide tools, infrastructure, and even customer support. Affiliates perform the attacks and share profits with the developers.
2. Automation and Speed:
   Attackers are automating the encryption process, exfiltration, and lateral movement to reduce dwell time. By using AI-driven tools, ransomware spreads faster and evades detection more effectively.
3. Triple and Quadruple Extortion:
   Beyond encryption and data leaks, attackers are now threatening victims with additional pressure points:
• Contacting customers or partners directly to alert them to the breach.
• Launching Distributed Denial-of-Service (DDoS) attacks to further cripple operations.
4. Targeting IoT and Cloud Systems:
   As cloud adoption grows, attackers are focusing on cloud-hosted services, misconfigured S3 buckets, and IoT devices like smart cameras or industrial equipment.

The Growing Cost and Impact of Ransomware

Ransomware’s impact isn’t just financial—it’s operational, reputational, and personal.

• Financial Losses: Global ransomware damages are projected to hit $265 billion annually by 2031, with payments growing larger each year.
• Downtime: On average, ransomware incidents cause 21 days of downtime, which can cripple small businesses.
• Reputational Harm: Organizations that suffer data leaks face long-term damage to customer trust and brand value.

What’s Next?

Ransomware will continue to evolve, driven by automation, advanced encryption, and monetization strategies. In Part 2, we’ll look at practical defenses, detection strategies, and real-world tools that individuals, businesses, and governments can use to prepare for, mitigate, and recover from ransomware attacks.

This isn’t just a fight for data—it’s a fight for control. Stay ahead or risk being left behind.