With large-scale ransomware attacks dominating headlines this year, particularly WannaCry and Petya, businesses are responding by taking active steps to back up their data and block malware. While this is certainly important, the cost of ransomware attacks pales in comparison to the losses resulting from spear phishing scams, which have already cost companies more than $5 billion and growing, according to the FBI.

Spear phishers continue to exploit security weaknesses in organisations using social engineering. It's rapidly becoming the most significant security threat today – costing companies millions in lost revenue. The damage to brand and reputation is often far worse. Businesses can't afford to ignore this potentially financially devastating scam.

How spear phishing works

Spear phishing attacks work because they're so simple and believable. A successful attack doesn't require advanced hacking techniques – all it takes is some careful research to gather information about you or your business from a variety of sources online and five minutes to write a well-crafted email.

Some research suggests that the average cost of a spear phishing attack is more than a million dollars. Most attacks involve wire fraud or stolen customer and employee credentials. Countless individuals and organisations unwittingly wire money, send tax forms or share credentials to criminals impersonating as their boss, colleague or a trusted customer.

These attacks are highly personalised and most don't contain malicious files or links, making it very hard for traditional email security solutions to stop them. Since most of them rely on some form of impersonation, they aren't easily tracked, which often makes the funds unrecoverable. This leaves your business completely vulnerable.

One of the most widely publicised spear phishing attacks was on US-based Ubiquiti Networks in 2016, which cost the company US$46.7 million. It managed to recover about $15 million from its bank as soon as it was clear the company was a victim. According to reports, the attack was a result of employee impersonation and fraudulent requests from an outside entity targeting the company's finance department.

Most companies don't have sufficient reserves to take such a severe financial hit. As with all cyberattacks, the best defence is a good offence.

Attacks evolving at a rapid rate

Three new trends have emerged this year as attackers explore new ways to scam their victims:

Targets are changing

Spear phishing attacks traditionally targeted large organisations in the US, particularly Fortune 500 companies. There's been a shift, however, with attacks now targeting any type of business around the world, regardless of size or vertical market. Businesses in Europe and Asia Pacific are now being hit with local emails in their own languages.

Attackers are also targeting different types of information and amounts of money depending on the target. For example, a small government organisation in the UK with about 150 employees fell victim to spear phishing. The attackers knew they wouldn't be able to extract one million pounds from it, so they chose a modest sum of 10,000 pounds and were successful.

Targeting broader range of employees

Spear phishing attacks have historically targeted the finance department or HR. However, with these departments generally more trained and aware of spear phishing, attackers have moved on to marketing, operations, engineering, sales, IT and other departments to make their impact.

They're now also focusing more on mid to lower level employees, rather than senior executives, as they typically don't have the same training and awareness.

Level of sophistication is increasing

Spear phishing attacks are becoming increasingly sophisticated, moving on from simple wire fraud emails to leveraging multi-stage and account compromise attacks. Attackers target low level employees to get in the door by taking control of their account, which is then used to target other employees within the organisation, working towards their end goal.

There's also increasing use of social media to target victims. In a recent case, attackers used social media to track a CEO going on holidays and used the opportunity to send an email to the CFO asking him to do something quickly for the CEO as internet connectivity was limited where he was – the CFO fell for it.

How to prevent spear phishing

Social engineering is a very powerful tool and we all need to be on high alert to it. There are three key steps you can take to help prevent your organisation from being attacked:

User training and awareness

Regular training to test employees and increase security awareness of various targeted attacks is crucial. Simulated targeted attack training is the most effective form of training. Focus on training high-risk individuals, not just senior executives.

Deploy DMARC authentication

Deploy DMARC (domain-based message authentication, reporting - conformance), an email authentication, policy and reporting protocol that prevents attackers from sending emails from your domain. It blocks domain spoofing and helps you understand who's sending both legitimate and fraudulent email on your behalf.

Real-time defence

Deploy a dedicated solution for real-time quarantine and defence against spear phishing. Even the most trained employees can fall victim, so find a solution that incorporates employee awareness and real-time defence.