The influx of Fortune 500 companies like IBM, Toyota and Starwood Hotels into the virtual world of Second Life has generated much publicity in 2006 and 2007. The virtual world landscape has changed substantially since. Many early adopters have abandoned virtual worlds, and the number of security-related incidents in virtual worlds has risen substantially. This paper discusses key security threats in virtual worlds, and highlights the need for users and stakeholders to better understand these threats in order to manage them more effectively. The issue of managing security threats in virtual worlds is especially important in ensuring that virtual worlds remain a friendly environment to thriving online communities and ebusiness; and represent an environment whereby the interests of various stakeholders are protected and upheld. The paper contributes to practice and research by (i) raising security awareness among virtual world users and stakeholders, and (ii) prescribing a systematic approach for analyzing the nature and implication of security threats in virtual worlds.