The VNC authentication mechanism bases on a challenge-response system where both server and client use the same password for encryption. The challenge is sent from the server to the client, is encrypted by the client and sent back. The server does the same encryption locally and if the responses match it is prooven that the client knows the correct password. Since all VNC communication is unencrypted, an attacker can obtain the challenge and response and try to derive the password from this information.
Workaround:
The product uses a broken or risky cryptographic algorithm or protocol.