Hearing Aid Giant Warns of $95m in Ransomware Losses
A Danish firm has revealed that a suspected ransomware attack on its IT systems last month may end up costing as much as $95m.
Demant, which is one of the world’s leading makers of hearing aids, said it experienced a “critical incident” on September 3. Although it refuses to clarify the nature of the incident, local reports were less circumspect.
Although the firm had backed up data, the sheer scale of the attack appears to have had a major impact on its recovery.
“The Group’s IT infrastructure was hit by cybercrime. Our quick response to the issue by shutting down IT systems across multiple sites and business units contained and limited the issue, but key business processes throughout the value chain were nevertheless impacted by the incident, including R&D, production and distribution,” Demant admitted in an update late last week.
“We continue ramping up to accommodate the back-log built up since the incident, to rebuild necessary inventories across the supply chain and to reduce turnaround times of repair and custom-made hearing aids. We are still in the recovery and ramp-up phase at our amplifier production site in Denmark and at our cochlear implants production site in France.”
The cumulative effect of these outages will have a negative financial impact on the firm in the region of DKK 550-650m ($80-95m). This includes a DKK 100 ($15m) deduction thanks to the firm’s cyber insurance policy.
Demant expects DKK 50m ($7m) to be incurred due to direct losses.
The firm’s hearing wholesale business was particularly badly affected, accounting for around half of estimated lost sales.
“The incident has prevented us from executing our ambitious growth activities in some of the most important months of the year – particularly in the US, which is our biggest market,” it continued.
“Despite our efforts to operate the business in the best possible way, our immediate focus on supporting existing customers to prevent them from being impacted by the incident has impacted sales and will likely impact our organic growth rate throughout the rest of the year.”
The news is another cautionary tale for firms currently unprepared to deal with the ransomware epidemic that continues to spread across the globe. Norwegian aluminium giant Norsk Hydro was hit earlier this year, leading to losses in the tens of millions of dollars.