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Business / Tech


WE FINALLY KNOW WHAT CAUSED THE GLOBAL TECH OUTAGE - AND HOW MUCH IT COST

By Brian Fung, CNN
4 minute read
Updated 7:30 PM EDT, Wed July 24, 2024
Link Copied!
After multiple cancelled flights to Washington D.C., Delta Airlines passengers
Patty (L) and Alice Crump get ticketing assistance from an agent at
Hartsfield-Jackson Atlanta International Airport.
Jessica McGowan/Getty Images
CNN  — 

Insurers have begun calculating the financial damage caused by last week’s
devastating CrowdStrike software glitch that crashed computers, canceled flights
and disrupted hospitals all around the globe — and the picture isn’t pretty.

What’s been described as the largest IT outage in history will cost Fortune 500
companies alone more than $5 billion in direct losses, according to one
insurer’s analysis of the incident published Wednesday.

The new figures put into stark relief how a single automated software update
brought much of the global economy to a sudden halt — revealing the world’s
overwhelming dependence on a key cybersecurity company — and what it will take
to recover.

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The estimates come the same day that CrowdStrike issued a preliminary report on
how it inadvertently caused the widespread IT meltdown. It is the most detailed
technical analysis to date of the outage.

Businesses are scrambling to recover – especially Delta Air Lines. Delta is
still dealing with fallout from the glitch, as thousands of flights have been
canceled. The Department of Transportation is investigating.

Numerous Fortune 500 companies use CrowdStrike’s cybersecurity software to
detect and block hacking threats. But when CrowdStrike issued an update last
week to its signature cybersecurity software, known as Falcon, millions of
computers around the world running Microsoft Windows crashed because of the way
that the update interacted with Windows.

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The health care and banking sectors were the hardest hit by CrowdStrike’s
mishap, with estimated losses of $1.94 billion and $1.15 billion, respectively,
said Parametrix, the cloud monitoring and insurance firm behind Wednesday’s
analysis.

Fortune 500 airlines such as American and United were the next most affected,
losing a collective $860 million, Parametrix said.

All told, the outage may have cost Fortune 500 companies as much as $5.4 billion
in revenues and gross profit, Parametrix said, not counting any secondary losses
that may be attributed to lost productivity or reputational damage. Only a small
portion, around 10% to 20%, 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.


WHAT WENT WRONG

On Wednesday, CrowdStrike released a report outlining the initial results of its
investigation into the incident, which involved a file that helps CrowdStrike’s
security platform look for signs of malicious hacking on customer devices.

The company routinely tests its software updates before pushing them out to
customers, CrowdStrike said in the report. But on July 19, a bug in
CrowdStrike’s cloud-based testing system — specifically, the part that runs
validation checks on new updates prior to release — ended up allowing the
software to be pushed out “despite containing problematic content data.”

The bad release was published just after midnight Eastern time on July 19, and
rolled back an hour and a half later, at 1:27 a.m. Eastern, CrowdStrike said.
But by then millions of computers had already automatically downloaded the
faulty update. The issue affected only Windows devices, not Mac or Linux
machines, and only those that were switched on and able to receive updates
during those early morning hours.

Thanks to the timing of the incident, organizations in Europe and Asia “had more
of their work day affected by the outage, unlike the Americas,” Fitch wrote in
its blog post.

When Windows devices using CrowdStrike’s cybersecurity tools tried to access the
flawed file, it caused an “out-of-bounds memory read” that “could not be
gracefully handled, resulting in a Windows operating system crash,” CrowdStrike
said.

That’s the Blue Screen of Death that many people reported seeing on their
machines, and that only a manual intervention to delete the bad file could fix —
a slow, painstaking process when you consider that as many as 8.5 million
individual devices will need to be reset this way.

That figure is small as a percentage of the wider Windows ecosystem, said
Microsoft — a company that played no direct role in the outage. Still, Microsoft
said in a blog post, it “demonstrates the interconnected nature of our broad
ecosystem.”

CrowdStrike said that the testing and validation system that approved the bad
software update had appeared to function normally for other releases made
earlier in the year. But it pledged Wednesday to keep software glitches like
last week’s from happening again, and to publicly release a more detailed
analysis when it becomes available.

The company added that it is developing a new check for its validation system
“to guard against this type of problematic content from being deployed in the
future.”

And CrowdStrike said it also plans to move to a staggered approach to releasing
content updates so that not everyone receives the same update at once, and to
give customers more fine-grained control over when the updates are installed.

CNN’s Sean Lyngaas contributed to this report


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build new products and services based on user interactions, the type of
audience, etc. This specific purpose does not include the development or
improvement of user profiles and identifiers.

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ENSURE SECURITY, PREVENT AND DETECT FRAUD, AND FIX ERRORS 45 PARTNERS CAN USE
THIS SPECIAL PURPOSE

Always Active

Your data can be used to monitor for and prevent unusual and possibly fraudulent
activity (for example, regarding advertising, ad clicks by bots), and ensure
systems and processes work properly and securely. It can also be used to correct
any problems you, the publisher or the advertiser may encounter in the delivery
of content and ads and in your interaction with them.

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DELIVER AND PRESENT ADVERTISING AND CONTENT 36 PARTNERS CAN USE THIS SPECIAL
PURPOSE

Always Active

Certain information (like an IP address or device capabilities) is used to
ensure the technical compatibility of the content or advertising, and to
facilitate the transmission of the content or ad to your device.

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MATCH AND COMBINE DATA FROM OTHER DATA SOURCES 31 PARTNERS CAN USE THIS FEATURE

Always Active

Information about your activity on this service may be matched and combined with
other information relating to you and originating from various sources (for
instance your activity on a separate online service, your use of a loyalty card
in-store, or your answers to a survey), in support of the purposes explained in
this notice.

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LINK DIFFERENT DEVICES 28 PARTNERS CAN USE THIS FEATURE

Always Active

In support of the purposes explained in this notice, your device might be
considered as likely linked to other devices that belong to you or your
household (for instance because you are logged in to the same service on both
your phone and your computer, or because you may use the same Internet
connection on both devices).

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IDENTIFY DEVICES BASED ON INFORMATION TRANSMITTED AUTOMATICALLY 33 PARTNERS CAN
USE THIS FEATURE

Always Active

Your device might be distinguished from other devices based on information it
automatically sends when accessing the Internet (for instance, the IP address of
your Internet connection or the type of browser you are using) in support of the
purposes exposed in this notice.

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STRICTLY NECESSARY COOKIES

Always Active

These cookies are necessary for the website to function and cannot be switched
off in our systems. You can set your browser to block or alert you about these
cookies, but some parts of the site will not work.

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