CrowdStrike’s Cyber Outage Will Cost $Billions

Uploaded on 2024-07-26 in NEWS-Cybersecurity News, FREE TO VIEW

The CrowdStrike defective software update that crashed computers, cancelled flights and disrupted hospitals around the world and the outage may have cost Fortune 500 companies as much as $5.4 billion in revenues.

The largest direct financial losses will likely be suffered by Fortune 500 companies in the healthcare and banking sectors.

With litigation and numerous lawsuits waiting in the wings, Crowdstrike is probably looking at billions more in fines, legal fees and lost revenue. 

CrowdStrike will probably be fined by US Government Regulators. Worse, as the CrowdStrike’s outage could have involved breaches and issues related to personal data, it could come under investigationby European regulators, which can impose fines of up to 4% of annual revenues.

In the US, CrowdStrike is also likely to see an avalanche of class action lawsuits. US law firms, including San Francisco-based Lieff Cabraser Heimann & Bernstein, are already reviewing and collecting data from clients related to business losses that “will help us hold Crowdstrike accountable for its disruption of global business and the consequences thereof for all Internet users.”

Further, CrowdStrike could see customers leave for competing firms and the outage has already cost the company and its investors $billions, including the damages to its stock market value, which it will likely not recover from any time soon.  

The primary cause of the failure stemmed from an update that CrowdStrike pushed to its flagship Falcon platform, which functions as a cloud-based service intended to protect businesses from cyber-attacks and disruptions. The update contained a bug which caused 8.5m Windows machines to crash en masse.

CrowdStrike is one of the world’s most important cyber security companies, and was valued at around $83bn before the outage. It services about 538 of the Fortune 1000 companies, according to its website, and operates around the world. 

The incident has taken a significant bite out of CrowdStrike’s stock price and CrowdStrike’s shares fell to $294 per share, and are presently trading at around $264. That’s a decline of more than 20%, and its market capitalisation could fall even further.

The consequences of its botched software update are proving severe, demonstrating just how many companies are reliant on a single supplier for the same services to keep operations running.

CrowdStrike have now said that it has laid out plans to ensure a similar issue can be prevented, including additional validation checks and improved testing by using testing types such as local developer testing and content update and rollback testing.

Fast Company   |     Lieff Cabraser   |   Reddit   |     Guardian   |     CNN   |    Silicon Republic   |   NYPost  

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