Massive SolarWinds Hack Prompts Up to $25 Million in New Security Costs for Company

In the aftermath of the massive SolarWinds hack, the company is incurring up to $25 million in additional expenses related to security initiatives and other increases.

This was announced during SolarWinds’ fourth-quarter 2020 earnings call. News of the massive SolarWinds hack first broke in mid-December. It has heavily impacted the federal government and cybersecurity industry.

According to the latest headlines, SolarWinds blames an intern for a critical password lapse that went unnoticed for several years.

Initiatives, Higher Insurance

Bart Kalsu is SolarWinds’ chief financial officer. He detailed the additional costs from the hack.

SolarWinds’ Bart Kalsu

“The $20 million-$25 million is the cost that we expect to incur throughout all of 2021,” he said. “And that’s a combination of both security initiatives that (president and CEO) Sudhakar Ramakrishna talked about, as well as just some general increases in some of our expenses, such as we expect our insurance cost to go up in 2021. And then there are other charges — some of our professional fees will go up as a result of the cyberattack as well.”

Ramakrishna said most customers understand the hack could have happened to “any vendor, and especially a broadly deployed vendor like SolarWinds.”

SolarWinds’ Sudhakar Ramakrishna

“Equally, they’re eager to see us address the issue and share our learnings, which we are doing,” he said. “The other opportunity that keeps coming up in these discussions is our ability to provide guidance and input to protect the entire environment of our customers as opposed to just focusing on our products, making us a more strategic partner. The majority of our customers that downloaded a version of the affected code have upgraded to our latest version and continue to renew their contracts with us.

Top Priorities

The first priority continues to be ensuring the safety and security of SolarWinds customers, Ramakrishna said. Furthermore, conversations with customers and partners have provided an opportunity to discuss the strength of the company’s portfolio and its future plans.

“I have also spent a significant amount of time on the cyberattack on SolarWinds, both in managing the investigation, as well as working closely with our employees, customers and partners,” he said.

The malicious code known as Sunburst has been removed and is not an ongoing threat in existing versions of SolarWinds’ Orion platform, Ramakrishna said. Additionally, the company hasn’t found Sunburst in any of its more than 70 non-Orion products.

Sunburst exploited substantially fewer customers among those who installed the affected version of SolarWinds’ Orion platform, he said.

3 Primary Areas

SolarWinds‘ efforts are now focused on three primary areas: further securing its internal environment, enhancing its product development environment and ensuring the security and integrity of its products.

“We’ve added a level of security and review through tools, processes, automation and, where necessary, manual checks around our product development processes that we believe goes well beyond industry norms to ensure the integrity and security of all of our products,” Ramakrishna said. “We firmly believe that the Orion software platform and related products, as well as all of our other products can be used by our customers without risk of the Sunburst malicious code. We also formed a new technology and cybersecurity committee of our board.”