Tech outage cost large corporations $5.4 bn
Sopuruchi Onwuka, with agency reports
Large global companies whose operating systems hibernated across day after faulty security update may have lost staggering $5.4 billion in operating cost and revenues as banks suffered downtimes, airlines cancelled flights and hospitals all around the globe delayed procedures.
Insurers said that the financial damage caused the devastating CrowdStrike software glitch impacted global companies with direct losses.
The most detailed technical analysis of the outage published on Wednesday holds that the outage may have cost Fortune 500 companies as much as $5.4 billion in revenues and gross profit.
The cloud monitoring and insurance firm behind Wednesday’s analysis, Parametrix, reported that millions of computers around the world running Microsoft Windows crashed because of the way that the update interacted with Windows.
According to the report, the health care and banking sectors dipped with estimated losses of $1.94 billion and $1.15 billion respectively,
Airlines such as American and United were the next most affected, losing a collective $860 million, Parametrix said. The published loss estimates did not count secondary losses that may be attributed to lost productivity or reputational damage.
In all, the outage may have cost world’s biggest companies about $5.4 billion in revenues and gross profit, and only around 10% to 20% of the losses may be covered by cybersecurity insurance policies, Parametrix added.
Fitch Ratings, one of the largest US credit ratings agencies, said Monday that the types of insurance likely to see the most claims stemming from the outage include business interruption insurance, travel insurance and event cancellation insurance.
“This incident highlights a growing risk of single points of failure,” Fitch said in a blog post, warning that such single points of failure “are likely to increase as companies seek consolidation to take advantage of scale and expertise, resulting in fewer vendors with higher market shares.”
The eye-popping damage estimates underscore how a preventable mistake at one of the world’s most dominant cybersecurity firms has had cascading effects for the global economy — and may prompt more calls for CrowdStrike to be held accountable.
