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Insurers see cyber extortion on the rise.

Extortion isn't just a business for local neighborhood thugs anymore.

While the Internet has helped both small and large companies expand their businesses, it's also opened the door to criminals savvy in technology. Today, companies can be threatened by organized criminals in other countries, who can disrupt their networks--and their business--if the victim doesn't pay them cash.

"It's an epidemic," said Brad Gow, vice president of Ace Professional Risk. Five or six years ago, cyber crime was mostly individual hackers targeting individual companies. But today, gangs of programmers with ties to organized crime, often in Eastern Europe, are targeting not only major financial institutions, but small and middle-market companies.

The most common cyber extortion threat is denial of service attacks, where the hackers threaten to flood a site with so much traffic that it crashes, blocking legitimate business from reaching the site. It's estimated 60% to 70% of viruses on the Web are written by these cyber extortionists, Gow said.

The viruses come with programs called "bots," which act like robots and allow the extortionists to take control of the infected systems and use them to attack their victims. "They've taken control of tens of thousands of both private and corporate systems," Gow said during an interview at the Risk and Insurance Management Society's annual conference in Philadelphia.

Larger companies have the finances to act defensively to thwart attacks by blocking sites of offending Internet service providers. "It's expensive though, maybe $150,000 to $200,000," Gow said.

Many small companies opt to simply pay off the extortionists, he said. Extortionists have found many victims will cough up $40,000 to $50,000 to make them go away. It's estimated 6,000 to 7,000 companies may have been victims of cyber extortionists, but only about one-third of all companies report the crime to the FBI, because they'd rather not have the publicity.

Ace has launched a policy, Ace Digital DNA, geared to protect companies from a number of cyber risks, including cyber extortion.

The policy covers extortion money and associated costs.
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Article Details
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Author:Green, Meg
Publication:Best's Review
Geographic Code:1USA
Date:Jun 1, 2005
Previous Article:Aon says terror risk continues to rise.
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