What Is Ransomware?
Ransomware is malware that encrypts your data and demands payment for the decryption key. Modern attacks are professional criminal operations running affiliate programs, customer support, and negotiation playbooks. Most now also steal data before encryption ("double extortion") so refusing to pay still means a leak.
ACSC position: do not pay
- No guarantee files are restored
- Stolen data often leaked anyway
- Payment funds further attacks and marks you as a paying target
- May breach sanctions law depending on the threat group
Ransomware is overwhelmingly an SMB problem
The Verizon 2026 DBIR is the largest annual breach study in the industry. Two figures should anchor any Australian ransomware conversation: 96% of ransomware victims in the dataset are small or medium businesses, and the median time from edge-device CVE disclosure to mass exploitation is now effectively zero. The rest of this guide is built around that reality.
Read the Verizon 2026 DBIR96%
96% of ransomware victims in the DBIR dataset are small or medium businesses
Attackers run a volume model. Smaller operators are the easier mark, not the safer one.
Top vector
Vulnerability exploitation now the leading initial access vector for breaches
Overtook stolen credentials in 2026. The patch backlog has become the front door.
0 days
0 days median time from edge-device CVE disclosure to mass exploitation
Firewalls, VPN gateways and remote-access appliances are now hit at internet speed.
38%
38% of SMB breaches started with compromised credentials
MFA on every account that matters is the highest-leverage control left for SMBs.
Source: Verizon 2026 Data Breach Investigations Report. Dataset window Oct 2024 to Nov 2025. 31,000+ incidents and 22,000+ confirmed breaches across 145 countries.
How Attackers Actually Get In
Phishing and credential theft
Single most common. Staff click a link, enter credentials, attacker logs in. MFA bypass via AiTM is now normal.
Unpatched internet-facing systems
VPN appliances, firewalls, Exchange, ERP. CVE is published Monday, exploitation starts Wednesday.
RDP exposed to the internet
Brute-force, credential stuffing, or bought from an initial access broker. Still the fastest way in.
Supply chain compromise
MSP tool, RMM, software update, third-party vendor. Recent high-profile attacks all used this.
Insider threat or disgruntled staff
Not the most common but the most damaging. Strong offboarding and least-privilege mitigate it.
How Ransomware Spreads Through Your Network
The first compromised machine is rarely the target. Ransomware operators use it as a foothold to move through your network, steal credentials, find backups, and spread to as many systems as possible before triggering the encryption. Understanding how ransomware spreads is the key to stopping it before it becomes a business-ending event.
In Australian SMB environments, the lateral spread typically follows a predictable sequence. Here is what actually happens inside your network after the initial breach.
Credential theft and harvesting
The attacker dumps credentials from the first machine using tools like Mimikatz or LSASS memory extraction. They collect saved passwords, browser cookies, and session tokens. Within minutes they have credentials for service accounts, admin accounts, and any other user who logged into that machine. MFA slows this down but does not stop it if the attacker uses adversary-in-the-middle (AiTM) phishing to intercept MFA tokens.
Lateral movement via RDP, PsExec and WMI
Using stolen credentials, the attacker moves to other machines via Remote Desktop Protocol, PsExec, Windows Management Instrumentation, or SMB file sharing. These are built-in Windows administration tools, so they do not trigger antivirus. The attacker is effectively a legitimate admin at this point. Every machine they reach gives them more credentials to harvest.
Domain controller compromise
In environments with an on-premises Active Directory domain controller, the attacker escalates to domain admin using techniques like Kerberoasting or pass-the-hash. Once they own the domain controller, they own every account, every machine, and every service in the environment. This is the point of no return for many attacks.
Reconnaissance and target selection
The attacker maps the network, identifies file shares, databases, backup systems, and cloud connections. They look for the backup server or NAS first, because destroying backups before encryption prevents recovery. They also identify high-value data for exfiltration, which is used for the double extortion leverage.
Backup deletion and data exfiltration
Before any encryption begins, the attacker silently deletes or corrupts backups, unmounts NAS volumes, and disables recovery services. They also exfiltrate sensitive data through tools like RClone or Mega, uploading it to attacker-controlled storage. This stage can take hours or days, and it is completely silent. Most businesses do not know it is happening.
Mass encryption
Once backups are gone and data is stolen, the attacker deploys the ransomware payload across as many machines as possible simultaneously. This is the stage everyone notices: files are encrypted, ransom notes appear, systems stop working. But by this point the attack has been inside for hours, days, or sometimes weeks.
Why this matters for Australian businesses
The average dwell time in Australian SMB environments is still measured in days, not minutes. That means the window between initial compromise and mass encryption is your opportunity to detect and contain. EDR, audit logging, and 24/7 monitoring exist to catch the spread phase, not just the encryption phase. If your only detection is a ransom note on screen, the attack has already succeeded.
The controls that stop lateral spread are the same ones in the ACSC Essential Eight: application control (stops unauthorised tools running), restricting administrative privileges (limits what a compromised account can do), patching operating systems (closes the exploits used for escalation), and multi-factor authentication (slows credential theft). Network segmentation between office IT and any operational technology adds another barrier. Read more in our Essential Eight guide.
Prevention: Stop Attacks Before They Start
Four control areas block the vast majority of ransomware:
ACSC Essential Eight
Application control, patching, Office macro hardening, user app hardening, admin restriction, OS patching, MFA, regular backups. See our full guide.
Read the guideIdentity and MFA
Phishing-resistant MFA for privileged accounts. Conditional Access. Disable legacy auth. Strong offboarding.
Read the guideEmail and web filtering
Advanced threat protection, DMARC p=reject, DNS filtering, user training. Blocks 90%+ of initial access.
Read the guideEndpoint protection
EDR not just antivirus. Microsoft Defender, Huntress, SentinelOne, CrowdStrike. Detection over blocking.
Read the guideDetection: Spot Attacks Early
Early detection drops the incident from catastrophic to containable.
First 24 Hours: The Critical Window
Response in the first hour decides whether you recover in days or weeks. Follow the sequence. Do not improvise.
Minute 1
ISOLATE
Power off affected devices. Unplug network cables. Stops lateral spread immediately.
Minute 5
DOCUMENT
Photograph ransom notes, file extensions, timestamps. Evidence for insurance and law enforcement.
Minute 15
CONTAIN
Disconnect servers, NAS, backup targets. Ransomware spreads fast. Isolate aggressively.
Hour 1
NOTIFY
IT team, legal counsel, cyber insurance broker, executive leadership. Do not panic. Focus on containment.
Hour 2
ASSESS
Scope: how many systems, what data, are clean backups available, is data exfiltrated. Determines recovery path.
Hour 3
ESCALATE
ACSC (1300 CYBER1), ReportCyber to AFP. Engage DFIR (digital forensics and incident response) firm.
Hour 6
COMMUNICATE
Customers, staff, regulators. Align with legal before external statements.
Recovery: Back to Business
Verify backup integrity
Do not restore blindly. Test one file first. Confirm backups predate the intrusion (often weeks earlier than encryption).
Forensic investigation
Understand how they got in, what was taken, and whether persistence remains. Skipping this means reinfection.
Rebuild, do not clean
Wipe infected systems. Reinstall fresh. Restore data, not the OS. Clean rebuild is the only reliable path.
Rotate all credentials
Every password, every service account, every API key. Assume all were seen.
Notify stakeholders
Customers, staff, regulators. Privacy Act breach notifications to OAIC within 30 days of becoming aware.
Post-Incident Hardening
After recovery you have a rare window of executive attention and budget. Use it.
Phishing-resistant MFA
Hardware keys or passkeys for admins. No more SMS.
Full Essential Eight maturity target
Agree ML2 or ML3 with the board. Fund it. Measure quarterly.
Immutable backups
If they were not immutable before, they must be now.
Staff training
Quarterly phishing simulations. Report-a-phish culture.
24/7 monitoring
MDR or SOC-as-a-service. Someone watching when you are not.
Tested IR plan
Runbook. Rehearsed annually. Board-level tabletop exercises.
Common Mistakes
Paying the ransom
No guarantee of recovery, funds further attacks, marks you as a paying target.
Restoring before forensics
You rebuild straight back into a compromised environment. Attackers return in days.
Only restoring files, not rebuilding systems
Persistence mechanisms survive in the OS, scheduled tasks, and service accounts.
Not engaging insurance early
Many policies require notification within 24-72 hours. Late notification voids cover.
Communicating before legal review
Wrong messaging triggers regulatory, customer, and media problems that outlast the incident.
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