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Fortune 500 Losing $5.4 Billion from CrowdStrike Outage
Health care and banking lost the most from the outage.
4 Min Read
Dikushin Dmitry/Shutterstock
U.S. Fortune 500 companies are facing a $5.4 billion direct financial loss from last week’s global CrowdStrike outage, and that number doesn't include Microsoft,
That’s according to Parametrix, a provider of cloud monitoring, modeling and insurance services. The amount of total coverage cyber insurance providers will provide for the loss most likely will be no more than 10% to 20%, according to Parametrix. Parametrix states that many businesses hold large risk retentions and low policy limits compared to potential outage losses.
The Fortune 500 averaged $44 million in losses per company, but the per-company averages varies by industry, ranging from $6 million (manufacturing) to $143 million (airlines).
Jonatan Hatzor, Parametrix’s co-founder and CEO, said this outage's financial impact is “indeed significant and ranks among the most severe we have observed.”
Parametrix's Jonathan Hatzor
“The degree of impact varied between different industries and segments,” he said. “Large legacy businesses like airlines and health care were more dramatically impacted and experienced a prolonged recovery compared to the tech segment. Size was also a significant factor in the recovery. Small and medium-sized enterprises recovered much faster than large organizations.”
Organizations should conduct a thorough mapping of their service providers and assess the level of dependency on each, Hatzor said.
“For mission-critical systems, it is imperative to develop a robust disaster recovery (DR) plan to mitigate the effects of future outages,” he said. “In addition to risk mitigation, companies should consider hedging their financial risk with insurance.”
What Caused the Global CrowdStrike Outage?
According to CrowdStrike’s preliminary post-incident review, Falcon, which provides a range of capabilities to assist in adversary response, contained problematic content data that forced computers running Microsoft’s Windows operating system to crash.
“Due to a bug in the Content Validator, one of the two Template Instances passed validation despite containing problematic content data,” it said.
The Content Validator is a component that checks and validates Template Instances, which are sets of instructions that guide the software on what threats to look for and how to respond.
CrowdStrike said it has added a new check to “guard against this type of problematic content from being deployed in the future.”
Who Lost the Most?
The CrowdStrike outage unevenly impacted various industries. Parametrix estimates the largest direct financial loss will be suffered by Fortune 500 companies in the health care sector ($1.938 billion), followed by banking ($1.149 billion). Companies in those sectors suffered 57% of the total loss from the outage, while accounting for only 20% of Fortune 500 revenues.
Manufacturing, the largest sector in the Fortune 500 by revenue, lost only $36 million in total. Compare that to the industry's annual revenue of $3.4 trillion spread across 130 company.
In contrast, the six Fortune 500 airlines lost approximately $860 million, against their combined revenue of $187.1 billion.
CrowdStrike’s impact on critical services resulted in a cascade of operational delays affecting the Fortune 500 companies and their downstream entities, according to Parametrix.
Traditional industries relying on physical computers experienced longer recovery times, which underlines the resilience and rapid recovery of cloud-based systems, it said.
Preventing Another CrowdStrike Disruption
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IGEL's Jason Mafera
Jason Mafera, field chief technology officer at IGEL, offered considerations to prevent another CrowdStrike disruption:
The Windows endpoint environment has reached the point of unmanageable complexity. A steady stream of updates and layering of security features has created a web of complexity that is difficult to manage or fix, and therefore promotes risk.
Organizations that run their business applications at the Windows endpoint are highly vulnerable to disruption since they cannot recover those applications and data when a bug or outage occurs.
While some comments have been made that redundancy would be an answer to restoring workflows in the event of an outage like CrowdStrike, the reality is redundancy would create another layer of complexity and be subject to similar risks.
Moving Windows to the cloud and replacing the endpoint with a secure by design operating system simplifies management through centralization and aids in recovery should an outage or breach occur, saving millions of dollars in lost productivity.
“We have grown somewhat numb to the steady stream of data breaches,” Mafera said. “This latest incident of the shepherd turning on the metaphorical sheep that it was protecting highlights that we must consider approaching this problem differently. The move to Windows 11 and the opportunity for cloud transformation, along with the proliferation of SaaS, are proven technologies that can enable a much more secure endpoint strategy.”
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