A worm that recently hit the Internet is another reminder that the new generation of viruses and worms at hand is building in complexity and potential for damage.

Frethem.E is the latest variant on a worm designed to take advantage of a security vulnerability in Microsoft Corp.'s Internet Explorer. The worm, which only attacks Windows systems, is roaming around the Internet but few companies have been hit, say security experts, who have given the worm various grades of potential threat. The worm hasn't caused much mayhem because a security patch that Microsoft recently released in response to the Klez virus also will take care of the Frethem worm.

What makes the worm interesting is its ability to propagate itself.

The Frethem worm collects email addresses from the Windows Address Book and uses its own SMTP engine to send infected messages. It uses a MIME vulnerability in Internet Explorer to execute the attachment automatically when the email is opened. The user doesn't have to double click on the attachment to activate the worm. It can do that itself.

Many companies have set up strict policies warning users not to double click on executable attachments that are emailed to them. This variant gets around that.

"We definitely see a trend toward complexity," says Dee Liebenstein, a product manager with Santa Monica, Calif.-based Symantec Security Response, the security arm of Symantec Corp. "Since Frethem carries its own SMTP engine, it becomes more independent of the mail environment it's trying to affect."

Word of the Frethem.E worm comes only weeks after the discovery of the Simile.D virus, which was considered to be another evolutionary step in the complexity of virus attacks. It was largely thought to be the first complicated virus with cross-platform capabilities --t was able to attack both Windows and Linux operating systems.

"It definitely provides a new challenge," says Liebenstein. "Every time they evolve to a new level, the anti-virus software has to evolve to that level as well."

Frethem.E may not be the first worm to be able to execute itself but it's a painful reminder to network administrators and security officers that the technology and the hackers' abilities are evolving.

"This is obviously not a good thing," says Tony Magallanez, a systems engineer with F-Secure, Inc., a data security company with U.S. headquarters in San Jose, Calif. "This is showing us what viruses can do. I'm afraid it's something that we will see more of in the future."

Both Magallanez and Liebenstein say network administrators need to think about a multi-pronged approach when it comes to defending their companies against viruses and worms. They both recommend reinforcing their policies that employees are never to double click on an executable. But they say administrators should be setting up filters at the gateway to keep executable attachments from ever entering the network. Set up intrusion detection software, and make sure to install security patches and update anti-virus software.

"It's an ongoing challenge," says Liebenstein. "We need to continue to analyze every new virus and worm and make sure we're protected from various areas."