Technology has a funny way of being our best friend or our worst enemy.  We rely on technology for almost every operational task to run our businesses and make each day successful. It is nearly an afterthought until it isn’t. Quite a few incidents have shown how strong that technological dependence is within the global economy and the dramatic consequences an outage, or a shutdown, can have downstream.

First, there was the CDK Global ransomware attack that forced the service provider to shut down its systems for almost two weeks. During this downtime, automotive dealerships couldn’t access CDK’s dealer management system (DMS), and this forced many to revert to pen-and-paper and third-party software workarounds.

To shed some light on how integrated CDK can be for a dealership, this software is used by six of the largest dealerships in the country and is used for

• Dealership Management Systems
• Customer relationship management tools
• Third-party software integration
• End-of-month financial accounting processes

During a crucial summer sales period, it is estimated the outage resulted in a $1.02 BILLION loss for dealerships nationwide, which doesn’t include CDK’s losses (per Anderson Economic Group study).

You might be thinking, “This CDK example is too specific to apply to other industries.” Well, an incident that occurred with Crowdstrike and Microsoft is a great example of a counter-argument. This coding error caused the shutdown across multiple industries, including healthcare, airline travel, banking and media. To help those affected, here is some information on how your insureds can navigate this incident and what to be aware of moving forward:

Global IT Meltdown: Crowdstrike Software Update Causes Widespread Outages.

While it is too soon to tell what financial impact this outage will have on the financial outlook of a business, it’s just another reminder that a business has potential exposure to losses outside of its control. So, we encourage you to provide this resolution information and this recovery tool information to your insureds and remind them that, even with the proper risk management plans in place, some threats are outside of their control. One of the best ways to manage this risk is to transfer some of this risk to a cyber policy that will offer Dependent/Contingent Business Interruption coverage.

If you would like to discuss this further, please give one of our brokers a call.