U.S. Fortune 500 companies excluding Microsoft face $5.4 billion in losses thanks to last week’s CrowdStrike outage — and Microsoft’s losses will add hundreds of millions more to the total, cloud insurer Parametrix said Wednesday.
The global technology outage — caused by a botched CrowdStrike security software update — crashed computers powered by Microsoft Windows on Friday, causing airlines to delay flights and doctors to postpone operations.
Among the hardest hit has been Delta Air Lines, which has continued to deal with flight delays and cancellations this week. According to Stephen Trent, an airline analyst at Citi Research, the Atlanta-based company could take a hit of $500 million by the end of this quarter.
Citigroup cut its quarterly forecast for Delta by 60 cents a share to $1.37 a share, citing “operating expenses and potential customer compensation costs” incurred during the technology crisis, according to a Bloomberg report.
Conor Cunningham, director of Melius Research, estimated Delta would take a $350 million hit to operating profit as well as a fine from the Department of Transportation — which launched an investigation into the airline after it canceled more than 5,000 flights during the failure. of Crowdstrike.
“What is more uncertain is the reputational damage Delta’s image could take given the operational issue,” Cunningham said in a note. “Certainly future bookings are likely to be affected.”
Cyber insurance policies are likely to cover no more than 10% to 20% of losses, or between $540 million and $1.08 billion, Parametrix said, as many of the companies have high risk retention.
Parametrix CEO Jonathan Hatzor told The Post that he estimates Microsoft’s financial losses will be in the hundreds of millions of dollars because of the company’s sheer size.
He said it was difficult to assess the exact losses for the IT company because they did not bear much responsibility for the outage, but “got mixed up in the responsibility.”
“As time goes on, it’s clearer to everyone that CrowdStrike bears responsibility for the event,” he said.
While tech buffs knew the name CrowdStrike before the outage, most people didn’t — but they did know the name Microsoft. So the company is likely to face “a lot of operational costs and reputational damage,” he said.
A Microsoft representative could not immediately be reached for comment Wednesday.
“This is a huge wake-up call for the industry,” Hatzor told The Post.
The weighted average loss for each Fortune 500 company is $44 million, but the range is wide. Most manufacturers will lose about $6 million, while airlines will average $143 million, the insurer said.
The impact of losses is also uneven. The healthcare and banking sectors, for example, account for only 20% of the Fortune 500’s revenue, but will absorb 57% of the total $5.4 billion in financial losses, Parametrix said.
Direct financial losses will be greatest in the healthcare industry, followed by the banking and airline industries, Parametrix said.
Hatzor recommended that companies move away from their reliance on physical computers and toward cloud-based systems.
“The recovery was more dramatic and faster for cloud companies compared to older industries such as healthcare and airlines,” Hatzor said.
While Hatzor said prevention is important, risk carriers have limited control over these disruptions. Instead, he recommended that they focus on designing their collection risk.
“Once you understand which services are your primary points of failure, now you can really think about redundancy and come up with a plan,” Hatzor told The Post.
Hatzor said companies should take a fresh look at their insurance policies to understand how they’ll be covered if future outages occur.
About 40,000 New York City computers were still up and running Tuesday, plagued by “blue screens of death.”
City officials said the total number of devices affected by the outage rose from 90,000 to 300,000 over the weekend.
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