link to original reddit post by /u/StackedSquares
In the 20th century kidnapping evolved into a criminal enterprise on a mind-boggling scale. Abducting the children of rich families made headlines, from the baby son of aviator Charles Lindbergh in 1932, to Patty Hearst, heiress to a media fortune, in 1974. Then criminals realised that it made more sense to kidnap a higher number of lower-profile targets. In Argentina in the 1970s, guerrillas began kidnapping executives at big companies. Employers were reluctant to negotiate and paid whatever they were asked, which encouraged more kidnappings and caused ransoms to spiral upwards. In one case $60m was handed over – the highest known ransom paid in modern times.
The kidnappers’ bonanza didn’t last. Companies started to take out insurance against kidnapping and ransom, which meant they’d be reimbursed if ransoms were paid. But insurance companies demanded control of negotiations, and provided their own experts to negotiate with kidnappers. Skilled negotiators, who are trained to calm criminals and reduce the risk of harm to captives, may haggle a ransom down by 90%. With companies no longer willing to pay up instantly, the number of kidnappings fell. Holding hostages for longer increased the direct cost for kidnappers and made it more likely that they’d be caught. The rewards of kidnapping fell and the risks increased.
That didn’t stop some from having a go. In the 2000s the collapse of the government during the civil war in Somalia left waters unpoliced. Pirates took boat crews hostage and demanded ransoms from shipping firms, which – like the Argentine companies – initially caved in to their demands. The average ransom paid doubled between 2009 and 2011. Once again insurers stepped in, negotiating smaller ransoms, sharing information to ensure consistency of payments, and requiring companies to employ security guards on their ships. An international coalition also began operating naval patrols off the Somali coast. Piracy no longer made economic sense.
Source: From pirates to ransomware: the secret economics of extortion (Paywall), Archived version