The cost of failure

The “largest outage in history” has forced the cancellation of more than 5,000 commercial airline flights worldwide, disrupting businesses from retail to package deliveries to hospital procedures, according to a cybersecurity expert. It led to loss of profit, working time and productivity of staff.

The issue was caused by a few faulty codes that CrowdStrike introduced in a software update. It was not interacting properly with Windows and was causing a blue screen of death. Unfortunately, fixing the bug took much longer than it caused, and it took several more days to get all systems back to normal.

CrowdStrike said in a social media post late Sunday that a “significant portion” of the roughly 8.5 million affected devices were back online and functioning normally. But the company did not say whether it planned to compensate affected customers and did not respond to questions from reporters.

Experts generally agree that it is too early to determine the exact cost of failure, but they say these costs It can easily exceed $1 billionClaims and lawsuits are expected to arise in the near future.

If you’re a CrowdStrike lawyer, you’re probably not going to enjoy the rest of your summer very much.
– says Dan Ives, technical analyst at Wedbush Securities.

A recent outage at software developer CDK Global due to a hacker attack on its systems cost $1 billion, but only affected car dealerships in the US. Entire industries have been affected by the same new incident.

For example, this is what happened on flights in the US, where only three American airlines using CrowdStrike software were penalized:

“This disruption is impacting a much larger number of consumers and businesses, causing hardship and severe business disruptions, and creating out-of-pocket expenses that they cannot easily recover,” said Patrick Anderson, CEO of Anderson Economic Group, a Michigan-based research firm that specializes in estimating the economic cost of events such as strikes and other business disruptions.

Anderson added that the costs could be particularly significant for airlines because of lost revenue from cancelled flights and excessive labor and fuel costs on planes that take off but face significant delays.

Can CrowdStrike save everything?

Despite CrowdStrike’s dominance in the cybersecurity space, its revenue is just under $4 billion a year. A billion in compensation, or likely more, can have a serious impact on a company’s ability to do business.

But one expert said CrowdStrike’s contracts with its customers could provide legal protection against liability. “My guess is that the contracts protect them,” said James Lewis, a researcher at the Center for Strategic and International Studies.