A global technology outage caused by CrowdStrike's faulty update will cost U.S. Fortune 500 companies $5.4 billion, according to insurance estimates, and the cybersecurity company has vowed to make changes to prevent such an incident from happening again. The estimated economic losses do not include Microsoft, because it was the technology giant's operating system that suffered widespread failures in the crash.
Companies in the banking and healthcare sectors, as well as major airlines, are expected to be hardest hit, according to insurance company Parametrix. Total insured losses for non-Microsoft Fortune 500 companies could range from $540 million to $1.08 billion.
CrowdStrike's failure caused thousands of flights to be grounded, hospitals to be paralyzed, and payment systems to collapse. It was called by experts the largest IT failure in history, and all walks of life are still trying to remedy it. The outage exposed how modern technology systems are built on unstable foundations, with faulty code in a single update capable of paralyzing businesses around the world.
CrowdStrike, a multi-billion-dollar company based in Texas, has lost about 22% of its stock market value since the outage. The company released a report on Wednesday detailing the issues with the update.
The main cause of the outage was CrowdStrike pushing an update to its flagship Falcon platform, a cloud-based service designed to protect enterprises from cyberattacks and breaches. The update contained a bug that caused a collective crash on 8.5 million Windows machines.
CrowdStrike said in a post-event summary that the company plans to increase software testing before releasing updates in the future and gradually roll out updates to prevent the large-scale simultaneous failures that occurred last week. The company also plans to release a more in-depth report on the cause of the failure in the coming weeks.
CrowdStrike is one of the best-known cybersecurity companies in the world, valued at approximately $83 billion before the outage. According to its website, the company serves approximately 538 companies in the Fortune 1000 and operates globally. This ubiquitous nature makes the consequences of failed updates particularly severe, showing how many companies rely on the same products to stay afloat.
Several companies have had a particularly difficult time recovering from failures. Days later, Delta Air Lines is still in chaos after it canceled and rescheduled hundreds of flights, leaving frustrated passengers unable to get home and parents scrambling to find their children stranded at the airport. The U.S. Department of Transportation launched an investigation Tuesday into Delta Air Lines' handling of the incident.