Danish company Demant expects to incur losses of up to $95 after cyber attack

Demant, a leading international hearing health care company, expects to incur losses of up to $95 million following a ransomware attack.

Last month, Demant suffered a cyber attack that caused important problems to its operations, the company has yet to recover after the attack, a circumstance that suggests it was hit by a ransomware attack.

Demant expects to incur losses of up to $95 million following the incident, which includes a deduction of $14.6 million of expected insurance coverage.

We are therefore talking about figures that come into the list of the most important losses caused by cyber attacks.

“The cyber-crime has had a significant impact on our ability to generate the growth we expected for the second half-year, and even though our commercial operations are doing their utmost to make up for the impact of the incident, we are in a situation where we cannot execute on our ambitious commercial growth activities to the planned extent. We are working around the clock to return to our growth-oriented business focus, while minimising the impact on customers and users of our products. We are grateful for the patience and loyalty shown, and the Demant organisation will continue to approach the incident with extreme dedication until we are completely recovered and have re-established what was severely disrupted by the incident,” says Søren Nielsen, President & CEO of Demant.

On September 3, Demant was forced to shut down its entire internal IT infrastructure following an act of “cyber-crime,” but the firm did not confirm a ransom incident.

“As previously communicated in Company announcements on 3, 4 and 17 September, the Demant Group experienced a critical incident on our internal IT infrastructure on 3 September 2019. The Group’s IT infrastructure was hit by cyber-crime.” reads a message sent by the company to the investors.

“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.”

The company published a statement that confirmed that a large portion of its infrastructure was impacted.

“It remains unclear whether it was a hacker attack that caused a critical crash in the IT infrastructure of the Danish company Demant on Tuesday evening.” reported ComputerWord.

“But there are many indications that it could be a ransomware attack that has hit the company, according to security expert Jens Monrad, who is a daily employee of IT security firm FireEye.”

The company reported “delays in the supply of products as well as an impact on our ability to receive orders.” The incident impacted production lines in Poland as well as production in Mexico.

Many clinics across Demant network have not been able to regularly provide to their service to end-users.

The impact is predominately related to the estimated lost sales and on the growth momentum.

“Approximately half of the estimated lost sales relates to our hearing aid wholesale business. 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,” concludes Demant.

“A little less than half of the estimated lost sales relates to our retail business where a significant number of clinics have been unable to service end-users in a regular fashion. We estimate that our retail business will see the biggest impact in Australia, the US and Canada followed by the UK. The vast majority of our clinics are now fully operational, however, due to the effect of the incident on our ability to generate new appointments during September, we expect some lost sales in the next one or two months, which is also included in the current estimate.”

The incident is important because demonstrates the potential impact of a cyber attack on organizations and urges them to adopt necessary countermeasures.

The massive NotPetya ransomware attack caused billions of dollars to organizations worldwide, the shipping giant Maersk and courier service FedEx incurred in over $300 million each. In April, the Aluminum producer Norsk Hydro estimated the cost of the massive attack cyber attack targeting the company in March at around $50 million.

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Pierluigi Paganini

(SecurityAffairs – Demant, ransomware)

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