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The financial impact of cyber attacks on your veterinary practice

By January 10, 2022June 9th, 2022No Comments

The financial aftermath of a cyberattack on a veterinary practice is not always about the size of ransom you pay to get the ransomware decryption key or the amount spent troubleshooting your computer systems with professionals to get your systems up and running again. The most serious financial repercussion of a cyberattack on a veterinary practice is the collateral damage to your revenue and the impact the cyberattacks have on your bottom line.

To get a fuller picture of the total cost resulting from a cyberattack, you have to take into account the visible collateral damages and the hidden costs of a cyberattack. In this section, we have compiled a list of collateral damages and hidden costs that your veterinary practice is likely to incur after a cyberattack. These costs go far beyond the amount a veterinary practice is demanded to pay as ransom during cyberattacks.

Collateral damages

Veterinary practices that fall victim to ransomware attacks will have to contend with collateral financial losses that hit them directly and affect their bottom. Some of these collateral financial damages that you should expect after a cyber-attack include:

  1. The ransom

Cyber experts agree that, in case of a ransomware attack, veterinary practices should not pay the ransom.

 However, after several high-profile ransomware attacks that have included ransom payments, including the multimillion ransom payouts from the Colonial Pipeline and JBS, it is clear that even the big firms are sometimes pushed into a corner and forced to pay the ransom.

 The cost involved in the payment of ransom is one of the most direct forms of financial loss that your veterinary practice is likely to incur after a cyber attack.

Before paying the ransom, however, you should know that data shows that victims who pay ransom experienced a rise in cyberattacks. In some instances, the data recovered after the decryption key was provided was damaged and unusable, while some victims never hear back from their attackers after paying the ransom. The cybercriminals simply disappear with their money without providing the decryption key.

2. Labor cost

 

In most cases, veterinary practices have no in-house cybersecurity experts, and although they may have an IT department, the scope of a ransomware attack may be out of their depth and, as a practice owner, forced to bring in cybersecurity experts to address your problems.

 Labor costs can also shoot up due to disruption caused by cybersecurity attacks, resulting in staff being unable to carry out their duty. This causes a labor backlog, which must be done when the systems come back online. The same goes for other employees and users who are supported by your data and cannot continue with their work due to cyber attacks.

3. The cost of downtime

Sometimes it is possible for a veterinary practice to recover all their data without paying a ransom to cybercriminals. However, the time spent offline costs money and can also paralyze your ability to interact with clients, further resulting in more losses.

The inability of a veterinary practice to service their clients, sell their products and services during downtime also affects their bottom and can result in your practice not meeting its financial goals.

4. Legal expenses

 One of the unavoidable consequences of a security breach is that you can get sued by your clients. In most cases, your clients can claim direct compensation resulting from your inability to keep the data safe, and your veterinary practice can end up at substantial financial risk.

Legal expenses can also arise in attorney fees if you decide not to have an out-of-court settlement and take the lawsuit to courts. By law, depending on which regulations apply to you, you are also required to inform your clients immediately after the data breach, which can also add to your legal troubles once you are attacked.

5. Brand reputation

 Once you are attacked by cybercriminals and the information about the attack is out, it is hard to repair your veterinary practice’s reputation and regain the confidence you once had with your clients. This loss of trust will have a direct financial impact on your practice as more clients flee to avoid future attacks that expose their personal data.

6. Data loss

 Losing your clients’ data is a multi-faced problem that will certainly affect your veterinary practice’s financial standings.

 First, you no longer have a way to reach your clients, hence losing one of the primary methods you had of reaching out to them. This is especially true when a practice management system has been compromised.

 Secondly, your clients also have no way of reaching your veterinary practice. This means they cannot book appointments or enquire about your services, further resulting in financial losses.

Hidden costs of a cyber attack

Every cyberattack targeted at your veterinary practice will also come with hidden costs that, in the long run, will affect your bottom line. Some of these hidden costs include:

  1. Increase in premiums: Whether you are renewing or purchasing a new one, your next insurance policy will likely cost more than what you were used to paying. This is because insurance companies will now consider your veterinary practice a high-risk business prone to cyberattacks. In 2020 the AVMA stated that their average cyber security claim was $135,000.00.

  2. Operational disruption or destruction cost: This is the cost associated with losses tied to manipulation or alteration of normal business operation and costs associated with rebuilding. These costs include the costs involved in repairing equipment, setting up temporary infrastructure during a cyber attack, money diverted from other departments of your veterinary practices to address the cyberattack and the cost of replacing damaged systems as a result of a cyberattack.

  3. Increase in cost of raising debts: An attack in your veterinary practice will result in a drop in credit rating. This, in turn, results in the victim organization facing higher interest rates for borrowed capital when raising capital or negotiating already borrowed debts. The reason this happens is that, after a cyber-attack, you are regarded as a high-risk borrower who may fail to pay the debts due to future cyber attacks.

  4. Value of lost contract revenue: Once cybercriminals attack your veterinary practice, organizations and other veterinary practices you do business with may put a pause to working with you or permanently cancel contracts they had with you to cut costs and safeguard their businesses and public relations. This risk is called the lost contract revenue and is one of the most severe losses that many veterinary practices suffer after a cyber attack.

  5. Lost value of customer relationship: After a cyber-attack, you can expect some clients to avoid doing business with your veterinary practices. Although it is difficult to know how many customers are lost following a cyber attack, economists and marketing teams approach this challenge by attaching a “value” to each customer to determine the value of customer lost and the amount it will take to acquire the customers back. This also gives them a good idea of what revenue has been lost as a result of the cyber attack. This can be very difficult for a veterinary practice and can affect your bottom line.

  6. Devaluation of trade name: This is very similar to losing brand reputation, with the difference being the trade name is an intangible cost category that refers to the loss of value of names, marks, and symbols that distinguishes your veterinary practices’ products and services. A trade name refers to an organization as a whole. In contrast, a brand name is associated with a name of a specific branch or a specific product and service your veterinary practice offers. Therefore, devaluation of your trade name has a far-reaching impact than brand reputation loss.

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