A red-team tester has been contracted to emulate the threat posed by a malicious insider...

Halting the assessment and following the reporting procedures as outlined in the contract is the best action to take after identifying that an application being tested has already been compromised with malware. This is because continuing the assessment might interfere with an ongoing investigation or compromise evidence collection. The reporting procedures are part of the contract that specifies how to handle any critical issues or incidents during the penetration testing engagement. They should include details such as who to contact, what information to provide, and what steps to follow.