The worst outage of IT systems in history: Who will pay for the damage they caused? – World – News

After Friday’s global IT system outage, which was without a doubt the worst the world has ever seen, questions are starting to emerge as to who will foot the bill for the damage caused during it.

A large number of industries were affected, from airlines to financial services, the server wrote Sky News.

Somewhat surprisingly, shares of CrowdStrike, which is at the center of the blackout, fell just 11 percent, after plunging twice as much during pre-market trading. This indicates that investors are sufficiently convinced that the company will be able to save its reputation after this disaster and, above all, will not have to pay compensation. There are several reasons.

The first of them is that so soon after the outage it is not possible to determine the actual amount of losses caused by it. Second, even if businesses or consumers were affected by the outage, it will not always be easy to prove that all losses incurred were a consequence of the outage. Third, there is an assumption that CrowdStrike will be covered by insurance.

The aviation industry probably suffered the most serious losses. The key question is where and from where people wanted to travel, as compensation rules differ in the United States and the European Union. It is also not clear from whom passengers should seek compensation.

Although compensation should usually be sought from the airlines themselves in the first instance, airlines – as pointed out by consumer protection group Which? – they can argue that they are not obliged to pay compensation for delayed or canceled flights because there were “extraordinary circumstances”.

This may result in some passengers who booked their flight using a credit card needing to find out if they are eligible for chargeback protection. Disputes can also be expected over whether travelers with travel insurance will take advantage of trip disruption cover – which not all policies allow. Insurers themselves suffered some of the biggest declines in share prices in connection with the outage.

It is also not at all certain whether the damages caused as a result of this event are insured at all. If so, it will likely be under a cyber policy that specifically covers loss of revenue due to a third-party provider disruption. The wording can also specifically refer to a malicious attack on software or IT service providers and also to the time the system was down. Many such insurance policies only cover losses after the system is down for six to twelve hours.

Another key area for compensation is likely to be the financial services sector, although it does not appear to have been badly affected. As Jennifer McKeown, chief global economist at Capital Economics, told clients on Friday, the disruption to financial markets was minimal: “Industries with strong supporting IT systems will be in the best position to feel only minor and short-term impacts. This could explain why the impact on financial markets has been small so far – note, for example, that the London Stock Exchange says it has been barely hit,” she said.

Another reason for the lackluster impact on markets, she said, was that George Kurtz, founder and head of CrowdStrike, ruled out a cyber attack. Still, analysts expect a significant hit for CrowdStrike itself, both in terms of the cost of fixing the problem and the subsequent investment in restoring its reputation. The company had a notoriously high marketing budget.

But some analysts believe the broader IT sector could benefit from the outage. “Businesses are likely to review their incident response capabilities and the need to have backup plans. We anticipate that the spending cycle will be driven by extraordinary events,” said Shaun Eyal, managing director and principal analyst for the communications, security and infrastructure software industries at TD Cowen.

So it is far from clear what the financial consequences of this outage will be – and certainly not who will foot the bill. It is a well-known phenomenon that after the infamous gun crime in the USA, gun sales rise, and with it, the stocks of firearms and ammunition manufacturers. Similarly, it would be ironic if the information technology industry benefited from increased client spending following this outage.