CrowdStrike IT outage could cost UK economy up to £2.3bn: Kovrr

Kovrr has estimated that the total cost to the UK economy from the CrowdStrike IT outage will likely fall between £1.7-£2.3 billion.

For those unaware, back in July, an automatic update of CrowdStrike’s Falcon sensor software crashed more than 8.5 million Microsoft Windows machines globally.

According to Kovrr, the incident resulted in major disruption, including supermarkets being unable to take card payments, TV broadcasters going off the air, and airlines cancelling thousands of flights.

The firm noted that its estimate is based upon the uptake of endpoint detection software across the market in combination with CrowdStrike’s market share and assumes an average downtime of 1 working day.

Kovrr’s estimate considers the costs associated with business interruption and the response and post-response expenses, such as litigation.

“For the downtime, we know that 97% of systems have been fixed after nine days, and CrowdStrike released a fix within 20 hours. Examples show that business-critical systems were restored on varying timescales, with Sky News going off air for only a couple of hours and American Airlines grounding 400 flights on the first day and 50 flights the following day,” the firm added.

Kovrr continued, “Many larger companies likely have cyber insurance, so they will not have to bear the total cost of this event.

“Moreover, because of the existence of these policies, the resulting impact on the cyber insurance market is still unfolding.

“Estimates of the global insured losses range from mid to high single digit billion USD and are unlikely to be material for the re/insurance market. Beazley, the largest insurer of cyber risk in 2023, stated that the incident will not affect their profitability projections for the year.

“For a broader insurance context, the 2011 Japan Earthquake and tsunami produced insured losses of around $56 billion. Hurricane Katrina (2005) was the costliest natural catastrophe event and resulted in insured losses of $102 billion.

“The CrowdStrike event will be an interesting test of how insurance terms apply to these types of non-malicious incidents.”

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